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Johnnie Moore is a marketing consultant and facilitator based in London. As well as 20 years of marketing experience he's trained in psychotherapy, NLP and Improv. Find out more at his blog.

Andrew Lark's more than 18 years experience of all facets of marketing, branding, sales and communications spans technology, Internet, telecommunications and consumer sectors. There he has led award-winning programs and teams for brands such as Dell, Sony, SBC, IDSoftware, Nortel, Microsoft and Sun. He is a thought leader and innovator on the convergence of brands, communications and social networking technologies. Find out more at his blog.

Jennifer Rice is a strategist and evangelist for relationship-centric brands. She brings 15 years experience in brand strategy, customer insight and marketing communications, and has worked with companies such as Microsoft, Verizon, Alcatel and Corning. Her current passion is exploring how brands are being impacted by blogs and other social technologies. Her company blog is What's Your Brand Mantra?

John Winsor is the author of Beyond the Brand: Why Listening to the Right Customers is Essential to Winning in Business and the Founder/CEO of Radar Communications, a consumer-centric consultancy. You can find out more about him at Beyond the Brand.

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July 20, 2005

Costco - costs less, pays more

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Posted by Johnnie Moore

Like David Burn at AdPulp, I agree with Michelle Miller's line on Costco:

According to an article in yesterday's New York Times, Costco puts Wal-Mart to shame in the arena of low pricing. They steadfastly hold to the rule that nothing shall be marked up more than 15% (compared with competitor's markup of 25% and more). They pay their employees an average of $17 per hour... 42% higher than Sam's Club... and have one of the best health plans in the industry.

Costco's stock has risen more than 10% in the last year. Employee turnover rate is nearly non-existent. Sales revenue for June of 2005 is up 9% from the same period last year.

What does Wall Street have to say about this? If you can get their thumbs out of their mouths long enough to tell you, they wail that Joe is too generous. He just isn't shaving enough off the top for them to get their greedy little hands on. An analyst from Deutsche Bank whines, "it's better to be an employee or a customer than a shareholder." "They could probably get more money for a lot of items they sell," complains another analyst at ThinkEquity...

My God. A business that puts its employees and customers before the Almighty Profit does exist. Isn't it amazing that a simple thing like that would create cult-like customer loyalty and $40 billion in revenue... with almost no advertising?

(Michelle also hits the spot in her thoughts on Delta's Memo to employees.)

Comments (3) + TrackBacks (0) | Category: Brand Practice


1. cindy on July 25, 2005 02:56 PM writes...

again ... short term focus .. I mean the Wall street folks.

Imagine the cost of hiring, firing, and training of employees. Just the fact that Costco employees are happy and not wanting to move would have save the company so much more money.

Happy employees 'keep' happy customers.

Need to say more?


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2. Jack Yan on July 28, 2005 03:05 AM writes...

Not to mention the benefits to the brand, saving money in marketing, too. Which begs the question: how dumb are these Wall Street types? And in their world, what colour is their sky?

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3. SLAPPAman on July 31, 2005 02:58 AM writes...

I started a company about 2 years ago, and it's our own branded line of gear. Over the past 14 months we've been using independant sales reps to help us try to get our line placed in the US major retailers and I can tell you, the way they (major USA retailers) see the world would make your head spin. I'm not talking about how they treat potential (and new) suppliers (which is bad enough), but I mean the way they interpret branding/marketing/ employee training and what is valuable to customers (IE we were in Circuit City for a few months and tried to work with them to train their employees (whether at their sites or via online), we offered to run radio ads, supply their sales people with incentives, tried to get proper in store placement for our gear....ANYTHING to promote the brand and educate their people ON OUR DIME and we were always told "this is not the way we do things...we're a self service store". Many of the major retailers have painted themselves into the position they are in today but if you try to point that out to them they think you're out of your mind. We have not dealt with COSTCO so I don't know first hand if they fit into this profile, but most (if not all) of the majors we have talked with are all the same...they try to screw the vendors they know are small, they sell only on price and they couldn't care less if their employees are properly trained to help customers. It's a shame really....but luckily there still are a few retailers who really care about customer service (which IMO means they have to care about their employees since it's those employees who service the customers)

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