I’ve been speaking and writing about customer service since January 1980, and there is only a handful of companies that have been relentless and kept their focus on incredible customer service. The pandemic gave most firms an excuse to say, “To hell with the customer.”
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Costco is one of the few companies that have never lost sight of their focus on the customer experience. Its fiscal year sales, ending Sept. 1, 2024, totaled $249.6 billion—an increase of 5% from $237.7 billion in 2023. This is a $11.9 billion increase in sales.
Costco currently operates 890 warehouses, including 614 in the United States and Puerto Rico, 108 in Canada, 40 in Mexico, 35 in Japan, 29 in the United Kingdom, 19 in Korea, 15 in Australia, 14 in Taiwan, seven in China, four in Spain, two in France, and one each in Iceland, New Zealand, and Sweden. Costco also operates e-commerce sites in the U.S., Canada, U.K., Mexico, Korea, Taiwan, Japan, and Australia. It’s open seven days a week.
In May 1983, I invested $1,000 each in nine service leaders at the time to see what the results would be over time. As of Sept. 17, 2024—41 years later—the $1,000 I invested in Costco is worth $37,633, and I now have 42 shares. At Amazon, my $1,000 has grown to 640 shares and is worth $119,603. But JetBlue is only worth $414. Walmart, which owns Sam’s Club, a major competitor to Costco, is only worth $6,403. My $9,000 investment is now worth $196,185. But most firms lost their focus on delivering great customer service.
While Sam’s Club has one or two people at checkout counters with long lines, Costco has two people at each checkout counter. Regardless of the lines, it only takes a few minutes to check out. A huge cooked chicken is only $4.99. Costco has incredible prices and quality; almost all of its nonfood products have a lifetime guarantee (though computers are guaranteed for only six months). A vendor selling to Costco must have the highest standards of quality, and they have to stand behind their products.
When I started in 1980, Walmart, with its founder Sam Walton, was a service leader. But during the 1990s under Lee Scott as CEO, Walmart gave up on customer service and only focused on price. Notably, Walmart’s stock was worth less after his 10 years as CEO than when he started. Walmart’s and Sam’s Club’s poor customer service is why my initial $1,000 investment is worth six times more now, while my Costco investment multiplied by 37.
In my book Achieving Excellence Through Customer Service (Bestsellers Publishing, 2014), I tracked Walmart vs. Kmart. Walmart was killing Kmart because of its focus on customer service.
Meanwhile, Costco and Amazon give their employees some of the best pay in the U.S. Both firms value their employees and customers. Although almost every firm says it loves its customers and employees, Costco is among the few that make good on that boast.
Lessons to be learned:
• Never give up on customer service.
• Value customers (not hype).
• Value and pay employees well.
• Understand and master the service strategy.
Published Sept. 18, 2024, by Service Quality Institute.
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