Speaking Engagements

Another Membership Marketing Success Story

If membership as a way to connect with your community and customers is a dead or dying concept, why are so many for-profit companies running to embrace it?

There are lots of success stories around membership.  Here are some key statistics from one for-profit organization that focuses on membership, Costco.  From new member input, to growing the top membership tier, to maintaining a high renewal rate, Costco’s numbers are enviable.

New Member Input -- Costco continues to see a growth in the addition of members.  They added 2.3 million members in 2009, more than 4 million in 2011, and over 1.6 million new members joined Costco during the first two quarters of fiscal 2013.

Tiered Membership – Costco offers a higher tier of membership called “Executive” membership for $110 compared to the typical $55 rate.  Today that higher tier of membership represents one-third of Costco’s overall members and is rising.

Membership Renewal – The membership renewal rate for Costco has made incremental improvements over the past year.  It now stands at 89.9% and Costco even had a fee increase of 10% late in 2011[1].

Why has Costco been so successful with their membership program?  I think there are four main ingredients that have contributed to their success. 

1.     Market Size – One advantage that Costco has over most membership organizations is the enormous market potential that they enjoy.  They are a global brand and there are a lot of consumers.  But there is also fierce competition for the dollars of these consumers. 

2.     Product Value – Membership’s high renewal rate demonstrates that consumers are receiving value for their membership dollar.  The price and quality of goods are excellent. 

3.     Promotion – Membership allows Costco to focus its marketing efforts on a core group of customers instead of having to broadcast messages to the general public.  This targeting is much more economical. 

4.     Economics – Membership allows Costco to deliver goods almost at cost to its members and instead make its profits from membership fees. Those fees make up only 2% of its total sales revenue, but 77% of its operating income [2].  

Costco is only one example of both for-profit and non-profit organizations that have built successful enterprises around membership programs.  So if you are in doubt of the benefits of a membership program, don’t raise the white flag.  There is hope.

I will be sharing some of this hope on August 4th at the ASAE Annual Meeting in Atlanta, where I will present a session titled, Diagnose and Solve Your Membership Marketing Challenges.  If you are at the meeting, I hope you can attend the session and then stop by and say “hello.”

[1] Costco's New Membership Growth Keeps Sales Humming,
June 4 2013. 
[2] 3 Reasons to Buy Costco, Isaac Pino, CPA and Blake Bos, The Motley Fool Jan 17th 2013

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