5 Reasons Costco Shoppers Almost Never Cancel Their Membership

Since first opening its first store in 1976, Costco has become the third-largest retailer in the world. It was also the first company to go from zero to $6 billion in revenue in six years. A big part of Costco's success is its membership fees. Costco charges $60 for its basic annual membership and $120 for its executive membership. At the end of 2022, Costco's member renewal rate was 93% in the U.S. and Canada and 90% worldwide, with the majority of members renewing their membership within six months following their renewal date. Here are five reasons why so many Costco members choose to renew their membership.

1. Loyalty

Many people stay loyal to Costco because they see the value in their membership. Costco's membership format "is designed to reinforce member loyalty and provide continuing fee revenue," according to Costco's 2022 Annual Report. Belonging to Costco goes beyond just shopping -- it's like being part of an exclusive club. Only members can buy the warehouse club's exclusive Kirkland Signature products.

Part of it is also psychological. Since members pay a fee, they feel a sense of obligation to make the most of their membership and shop at Costco. No one wants to waste their hard-earned money. This creates a deep sense of loyalty that keeps members coming back for more. Under the right circumstances, the cost of a Costco membership can easily pay for itself.

2. Great deals on high-quality products

One of the main reasons why Costco shoppers stay loyal is because of the amazing deals and discounts offered. You can find a wide variety of items, such as expensive furniture and electronics to great buys under $20. Who can beat the Costco rotisserie chicken at $4.99, or popular food-court items such as the $1.50 hot dog and soda combo?

Costco also offers regular promotions, deals, and discounts that attract shoppers both in-store and online. For example, every month Costco releases its coupon book filled with low prices on its high-quality products. One of the reasons Costco can offer such great deals is because the company purchases items in large quantities, passing on the savings to its members. Not many customers are aware that many of Costco's products are top brand name companies in disguise.

3. Excellent customer service

Costco takes customer service very seriously, and staff go above and beyond to ensure their customers are happy. Costco guarantees customer satisfaction and offers a no-questions-asked refund policy. If you don't love what you purchased or it just doesn't work out, you can return it up to 90 days after purchase and Costco generally doesn't require a receipt.

In addition to its generous return policy, Costco offers easy returns and exchanges, and if a customer has a complaint or concern, it can be quickly and easily addressed with a customer service representative. For Costco shoppers, they get peace of mind knowing they can get their money back quickly and hassle free.

4. One-stop-shop convenience

Another reason Costco shoppers stay loyal is because of the convenience it offers. Costco has a wide variety of items in a single location, making it easy for shoppers to find everything they need in one place. From fresh produce and meat to electronics and appliances, Costco stocks high quality popular bulk products at affordable prices.

Costco also sells insurance products such as homeowners insurance and travel insurance. In addition to also selling cheap car insurance and life insurance, Costco also sells travel packages, prescription drugs, gas, and home improvement services. Members can even find some of the latest clothing fashion trends. Not many people know that Costco sells more clothes than Old Navy or Neiman Marcus. For many, it truly is a one-stop shop.

5. Costco rewards

The more you shop, the more rewards you earn. Executive members receive an annual 2% reward, up to $1,000 on qualified Costco purchases. Like many other rewards credit cards, Costco also offers its own cobranded credit card with Visa, the Costco Anywhere Visa® Card by Citi. The card doubles as a membership card and allows cardholders to earn Costco cash rewards anywhere Visa is accepted.

Costco members can receive 4% rewards on eligible gas (on the first $7,000 per year and then 1% after), 3% on restaurants and eligible travel, 2% on all other purchases from Costco and Costco.com, and 1% for all other purchases. In addition to its rewards, Costco's card also offers certain advantages, such as complimentary purchase protection, travel insurance, no foreign transaction fees, and extended warranty coverage.

The reasons why Costco shoppers seldom cancel their membership may vary from person to person, but most of them boil down to getting great deals on high-quality products, convenience, excellent customer service, and the value of the membership. Both membership numbers and membership fee revenue grew by about 10% from the previous year. Costco currently has 123 million members. Membership fee revenue was $4.2 billion, making up almost 75% of its 2022 profit. Many customers find that their Costco membership pays for itself, as the benefits continue to far outweigh the cost of membership.