Costco and RH (Restoration Hardware) have just made a move to take better care than ever of their most loyal customers. Both brands have improved the conditions of their premium memberships, aware that their business depends heavily on that type of customer who spends much more than average. And it is no coincidence: in the middle of economic uncertainty, brands that want to survive are choosing to pamper the high-income consumer, the one who not only buys a lot, but keeps coming back.
Costco has improved its Executive plan. RH has increased the discounts for its members. Both know that a loyal customer is worth gold, and they are not willing to let them go. We tell you what’s new in their strategies and why it could set a trend in the consumer world.
The value of memberships
It may seem strange to pay in order to shop, but the reality is that memberships are a huge source of income. Costco alone makes more than 4.8 billion dollars a year just from fees. And 73% of its global sales come from its Executive members, who pay $130 per year in exchange for a 2% refund on everything they buy.
RH is not far behind: 98% of its revenue comes from its members, who pay $200 annually and in return receive discounts and design advice. The message is clear: if most of your income depends on your members, you need to give them reasons to stay.
What has changed at Costco
Starting June 30, those who have the Executive card will be able to enter stores one hour earlier than the rest. This means shorter lines and more peaceful shopping. In addition, the annual refund limit goes up from $1,000 to $1,250, and there will be a $10 monthly credit to use on Instacart orders if at least $150 is spent.
With more than 37 million Executive members, any improvement can translate into hundreds of millions in extra revenue. And if more people are encouraged to upgrade their membership level, the business grows even more.
RH increases its discounts
RH, for its part, has raised the general discount for its members from 25% to 30%, and up to 35% on outdoor furniture. Added to that are other benefits such as additional discounts on promotional products and free interior design services.
The company is seeking to counteract the drop in sales they have experienced in recent months. Fewer people have joined their membership program, so increasing the discounts is a direct way to attract back that customer who is hesitating to renew or not.
Why it is so important to take care of the premium customer
During the pandemic, many high-income households saved like never before. And after the reopening, they began to spend heavily. But in recent months, the economic climate has changed and spending is no longer so cheerful. Now, even those with money are being more selective.
For Costco and RH, this is a clear sign: if they don’t take better care of their members than ever, someone else will. And losing that kind of customer can cost them much more than it seems.
It’s not just about discounts!! They are trying to make you feel comfortable and part of the family, that’s why they are implementing those changes, they want to make you feel special. It’s like you are a VIP customer, and this is the way to get it, something that you cannot find online, don’t you think so? It’s like they are giving us showing us shop’s soul or something similar, and, we love the way they make us feel!