In my last entry, I compared the customer service strategies and standards of two wholesale retail giants â€“ Samâ€™s Club and Costco. When all was said and done, thanks to Costcoâ€™s remarkable attention to detail, extensive market research, and clearly-defined target market, the Washington-based retail chain came out on top.
Still not convinced? The cold, hard proof lies in their customer retention. 91% of Costcoâ€™s current members renew their memberships every year. Bear in mind that they achieve this outstanding metric for success without advertising, and without compromising the culture of the company.
So whatâ€™s responsible for their customer loyalty? The answer lies, at least in part, in an unconventional return policy. With a few exceptions (computers, cameras, and mobile phones), any items bought at Costco can be returned by members at any time, with or without a receipt. Even if youâ€™re not able to access one of their stores, Costco coordinates with UPS to allow their customers to return items via mail.
I once saw a man return unhealthy pea plants, no questions asked, to a Costco in my area. On the same visit, I was able to return a broken DVD player without a receipt over a year after the original purchase date.
Sometimes, I hear people ask why anyone would want to pay just to walk in the door of a Costco. The short answer is that unconventional customer service policies such as these incentivize membership to such a degree that people choose to renew year after year.
Stay tuned for more updates from John Tschohl, founder and president of the Service Quality Institute.