Costco (NASDAQ: COST) just released its latest earnings report, and memberships are booming.
Costco now has 78.4 million paid memberships, a 6.8% increase from last year, with an impressive 93% renewal rate in the U.S. and Canada—even after a price hike in September.
That’s brand loyalty at its finest.
So, what’s the secret behind Costco’s devoted customer base?
And how can we apply these lessons to our own businesses?
Here’s what I’ve learned.
Membership Model: The Power of Buy-In
Costco’s annual membership fee isn’t just about revenue—it’s about commitment. When customers pay to be part of an exclusive club, they feel invested. This creates a sense of belonging and a psychological pull to keep shopping there. For me, the takeaway is simple: Give customers a reason to feel like insiders.
Private Label Products: Trust Through Quality
Costco’s Kirkland Signature brand has become a cult favorite, offering premium quality at lower prices. By consistently delivering value, they strengthen trust—and trust builds loyalty. I believe brands that create their own high-quality offerings can achieve a similar effect.
Loss Leaders: The Hidden Hook
Ever notice how Costco’s gas stations have some of the lowest prices around? That’s no accident. Loss leaders like cheap fuel lure customers into the store, where they end up spending more. I see this as a smart strategy—offering an irresistible deal that brings customers in, then keeping them engaged with great products and experiences.
Limited Selection: Less is More
Unlike traditional retailers, Costco offers a curated selection of products, simplifying decision-making for customers. This not only streamlines operations but also reinforces a sense of exclusivity—only the best make it onto Costco’s shelves. I think any business can benefit from refining its offerings to focus on what truly matters to its customers.
Employee Satisfaction: Happy Team, Happy Customers
One factor in customer loyalty that often gets overlooked? Employee happiness. Costco is known for paying higher wages and offering great benefits, leading to better customer service. Happy employees create positive shopping experiences, which keeps customers coming back. In my experience, investing in your team isn’t just good ethics—it’s good business.
A Winning Formula for Any Business
Costco’s approach isn’t just for warehouse clubs—it’s a masterclass in customer loyalty that any business can learn from.
Whether you’re in retail, hospitality, or services, focusing on membership-like engagement, trust, strategic pricing, curated offerings, and employee satisfaction can set you apart.
Costco’s stock has skyrocketed over the past few years, and I believe its commitment to customer relationships is a major reason why.
Loyalty isn’t just about points and perks—it’s about making customers feel like they’re part of something bigger.
And that’s a lesson I think every business can use.