"You can't say 'People are our most important product,' and hang signs all over the place that say 'People are our most important product,' and then treat them like shit.... Your customers or your suppliers are going to see that you don't really mean it," he recently told an interviewer. Which is why a recent policy change by the retailer is so fascinating. Starting this month, Costco began enforcing a new benefit for "executive tier" members."
"The plus sides of tiered pricing From a straight revenue maximization perspective, the new rules make sense. Executive tier members make up 47 percent of Costco shoppers but drive 73 percent of its revenue. Add to that fierce competition from the likes of Sam's Club and BJ's, and locking in more customers with a premium membership is a clear economic win."
James Sinegal insists companies must genuinely prioritize customers and avoid treating them poorly. Costco began enforcing an early-access benefit for Executive tier members, granting an extra hour on weekdays and a half hour on Saturdays. Executive members pay $130 versus $65 for Gold or Business memberships and account for 47 percent of shoppers while driving 73 percent of revenue. Intense competition from Sam's Club and BJ's increases the importance of premium membership retention. The early-access perk leverages exclusivity and loss aversion to create perceived value and help justify the $65 membership premium.
Read at Fast Company
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