Rejecting anonymity – Goodbye Costco!

CostcoFor the last decade, I have been a Costco customer – the sheer convenience of going to one trusted retailer for most of my house hold needs is unbeatable. The generous return policy (especially on consumer electronics) is just cherry on top. I can hardly think of another offline retailer who comes close in our household – in terms of loyalty.

But there are chinks in this relationship. 100% of customers who walk in to Costco (just like most other retailers) are anonymous to Costco. Why is that they even ask to see your membership proof as you walk in – because there is simply no way to purchase anything without handing the same over at the point-of-sale. Coupled with how it checks receipts as you walk out – these are just unnecessary friction for customers in the name of reducing theft and shoving customers towards an acquisitions funnel. If there was ever a case for balancing customer experience with one’s risk requirements – these two cases will stand out. For a retailer that thrives on membership fees, Costco seems to celebrate anonymity and lack of context.

On top of this are additional loops Costco throws at the customer – such as using one’s own membership card (not even your Spouse’s will do). It is understandable why Costco enforces this policy – considering the bulk of their profits come from its membership fees and therefore it has an incentive to push guests to become members.

But where it falls flat is when context and loyalty goes out of the window – in the name of enforcing these rules. Costco’s point-of-sale registers are bound to be product centric rather than customer centric, and there in lies the problem. When a card is scanned – no customer context is really loaded in to view for the register clerk’s benefit. And therefore when the clerk looks at the card and finds the “ridiculously grainy” image to be that of your spouse – they have very little incentive other than to bring down the boot. This is what happened to me.

I was on one of my milk runs with my 4 year old this Saturday afternoon. It was uncharacteristically busy, the lines were deep and I waited several minutes before getting to the front of the line, my credit and membership cards ready in hand.

She looks at my wife’s card and goes “The cards are not transferable“. Her voice was stern as if she is scolding me for cheating Costco out of a membership.

It’s no big deal. I am still the primary on the account and this is just a gallon of milk, not a diamond ring. I explain to her that this is an exception and I forgot to bring mine. Nope.

Can I just buy this gallon of milk?” *I sensed a rising desperation in my own voice*

The cards are not transferable.” *Pure unadulterated apathy coupled with a blank stare*

At this point, there are uncomfortable stares from the back of the line. My 4 year old has fallen silent by this time.

Please?” I am grasping at straws now, looking for an iota of recognition, and context – towards a decades long customer who has spent a total of 15k over the last 10 years. I don’t want to go home without milk and face a disappointed spouse.

The cards are not transferable.” *Nothing. A blank stare and the same monotonous response.*

I remember leaving the milk on the counter and walking out positively livid.

A Costco employee who I had never met before in the 10 years I have shopped at this Richmond store, had managed to completely shred any sense of loyalty that I had felt for this retailer. When apathy instead of informed empathy steps in its place, an opportunity to connect and increase loyalty is irrevocably lost.

This unfortunate experience is instantly recognizable to those who hear it – because it is indeed common. Costco can be swapped out by any other name – because at each retailer, existing siloes of customer information is never threaded together to create a complete picture that allows an informed decision to be made.

As retailer mobile initiatives sprout everywhere, whether to simplify in-store product discovery, ordering or payments – it may be apt to remember that – customers first priority is receiving a better in-store experience. For that to be realized, they must first aggregate decades old systems that contain islands of customer data to drive that insight across every inch of that store – including at the point of sale. Till then – friction abounds.

Board of Advisors at SimplyTapp - creators of Host Card Emulation & a LightSpeed Ventures Co, delivering HCE enabled mobile payment distribution & authorization solutions for enterprises. A strategic adviser w/ over 16 years of international tech & strategy consulting experience, to firms seeking clarity & insight in to the myriad business models around payments & commerce. Founded DROP Labs, a mobile payments/commerce strategy & advisory practice focused on banking & retail. Tweets here. I'm on LinkedIn here.
Cherian Abraham
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  • http://genehughson.wordpress.com/ Gene Hughson

    Nice to know that Costco believes in empowering their employees (in this case, empowering them to drive away customers). Ignorance of the law of Unintended Consequences is no excuse.

  • http://twitter.com/mordyk Mordy Kaplinsky

    When I read about the challenges such as showrooming that retailers face, I say they’re complaining about the symptoms. You hit the problem on the head in that retailers largely have a flawed approach to store as a product experience.