Caring about customers is generally a good practice for retailers. But it’s especially important when you’re a retailer like Costco that charges people money to get in the door.
Costco raised its membership fees last year, bringing the annual cost of a basic Gold Star membership to $65 and the cost of an Executive membership to $130.
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Even though Costco was overdue for a fee hike, it took a risk implementing one at a time when consumers were still reeling from inflation and being choosier with their spending. The recent fee increase also drove Costco’s membership costs to a point where a Sam’s Club membership is now considerably cheaper.
Related: Costco makes major investment to fix member problem
But Costco doesn’t have to worry so much about losing members, despite its higher fees. That’s because the company goes out of its way to offer outstanding customer service.
Not only does Costco keep its prices competitive, but it also keeps close tabs on its inventory to make sure it’s introducing fresh, new products on a regular basis.
Costco also has an extremely flexible return policy. With very limited exceptions, members can get a refund for unwanted items at any time, even if there’s nothing wrong with them.
Costco brings back a huge perk members have missed.Â
Image source: Brooks Kraft LLC/Corbis via Getty Images
Costco’s Executive membership is a big draw
You’d think Costco’s Executive membership wouldn’t be so popular, given that it costs twice as much as a Gold Star membership. But roughly half of Costco members pay for the Executive tier. And it’s because the Executive membership comes with a major perk that frequent Costco shoppers don’t want to pass up.
Purchases made with an Executive membership are eligible for a 2% cash back reward. That reward isn’t dependent on having a certain credit card. Rather, it’s a feature of the Executive membership itself.
Related: Costco plans new checkout option members should love
To see if the Executive membership makes sense, all members need to do is calculate their break-even point, which means figuring out how much annual spending it takes to recoup the upgraded membership costs.
Based on Costco’s current fee structure, the break-even point on the Executive membership is $3,250, meaning it takes $3,250 in eligible Costco purchases each year to earn $65 based on a 2% reward rate.
Shoppers who visit Costco on a regular basis and know that their annual spending typically exceeds that threshold can feel confident sticking with an Executive membership, knowing they’ll make up the higher fee with the rewards they rack up.
A major Executive membership perk is coming back
For a good number of years, Costco’s Executive membership didn’t just offer the benefit of cash back on purchases. It also allowed Executive members to get in the door earlier than regular members.
Costco did away with that perk in recent years, much to the disappointment of Executive members, who liked being able to shop while the store was less crowded.
Related: Costco brings back food court favorite, but members aren’t happy
But now, Costco is bringing back early shopping hours for Executive members at select locations. If your local Costco is offering this perk, your Executive membership might soon get you in the door 30 to 60 minutes early.
That’s a big deal for people who love Costco but can’t stand battling crowds, or who need the early store access to be able to complete a shopping trip before heading to work.
Given that Costco is constantly looking for ways to improve the member experience, this decision isn’t surprising. And early shopping access for Executive members may be the first of many positive changes the company’s management team introduces in the near term.
During the company’s most recent earnings call, Costco CEO Ron Vachris said the management team would take a closer look at warehouse club store hours following the success of expanding gas station hours on a national scale.
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If Costco is able to expand its hours, members might enjoy not just more flexibility, but fewer crowds when they shop. And that’s a great way for Costco’s management team to address a major pain point among customers.
Maurie Backman owns shares of Costco.
Related: Costco CEO admits warehouse club may change its hours
