In June, Costco memberships went up again. A $5 increase in the annual fee for gold star membership, from $55 to $60 a year; The annual fee for executive membership has increased by $10 from $110 to $120.
As we all know, membership is the main difference between Costco and supermarkets in form. According to data, Costco had 80 million members in 2015, and the annual renewal rate was over 90%. Each card user spent an average of about $1500 a year. In the fiscal year 2016, Costco's net profit was $2.376 billion, among which $2.646 billion came from membership fees.
Why are so many consumers willing to pay for Costco membership? There are no more than two reasons: high-quality, low-cost products; High value-added services.
It seems simple enough, but the question is, how does Costco make itself and its members better off? Is Digital marketing Costco's secret to membership growth?
Costco's business logic: Membership is the foundation
Whether it is to support the operation with membership fees, or to reduce the cost of large purchases, it needs a considerable size of members. A large number of members with high loyalty is the most solid barrier for Costco, and also the basis of all Costco's business logic.
When you look at the core of Costco's business and then look at its strategy, it becomes clearer: it's about getting customers, not making money. Costco tries every means to let its members buy the goods with the highest price ratio in Costco, so as to improve their shopping satisfaction. As a result, Costco has proactively reduced its net profit margin on products to almost zero, and has taken a series of measures such as minimizing operating expenses and ultra-low SKUs.
How does Costco meet consumer demand with ultra-low SKUs? Choose!
Costco has made a choice in both target demographic and service content: Costco does not do the same business to everyone, but does all the business to a group of similar people. Costco serves middle class consumers with household income of $80,000 to $100,000 and small and medium-sized business customers, offering them a full range of products. For example, a typical American middle class family can complete all the relevant purchases of family life at Costco: from food to household appliances, from clothes to gasoline, from computers to cars. Now Costco also provides pharmacy, optometry, health examination, travel services and so on.
This leads us to conclude that Costco really only needs to solve two problems: Who are its customers? What kind of service can satisfy these customers? These two problems are exactly the key to realize digital marketing in the new retail era.
New retail era: Digital marketing empowers member services
As for the new retail, Jack Ma once explained it as "consumer experience-centered and data-driven pan-retail", which includes two key points, one is "consumer experience-centered" and the other is "data-driven".
On July 10, Liu Qiangdong posted that "the retail industry will usher in the fourth retail revolution", and the factors to promote the fourth retail revolution is the arrival of consumer sovereignty and technology empowerment era, technology empowerment requires the integration and improvement of data sharing and intelligence level.
Both new retail titans have the same message: Users can be better served by deep data management, analysis and mining.
This includes two dimensions. On the one hand, businesses can learn the real needs of their users through data. For example, through the target users' past consumption data, the user group's age, occupation, preferences and other portrait analysis can be formed, so as to make better strategies at the commodity level and operation level, and provide personalized and diversified services. On the other hand, with more data, merchants can selectively carry out personalized recommendation and precision marketing with the help of the platform.
i In place digital marketing: Relying on technology and data to drive user growth
Where do enterprise customers get it? At present, most enterprises lack a complete digital brand marketing chain, and access to user information basically relies on "three axes" : information sharing on social media, large-scale online advertising and cooperation on distribution platforms. i in place integrates and applies marketing technologies to solve various marketing needs of enterprises, and provides service delivery and process and result management for each stage of the whole marketing life cycle of enterprises.
At the first level, it helps enterprises realize brand information layout and user consumption demand awakening. i in place digital marketing can provide the marketing "charge" system for the Marketing Department of enterprises, help enterprises quickly perceive the external market, obtain "intelligence" in real time, analyze the information, and then propose marketing solutions.
Digital marketing solves the overall matching problem of content, channel and crowd with three steps: first, fully integrates marketing, events and customer relationship management, and provides real-time insight into consumer demands through the platform supported by big data; Secondly, accurate matching is achieved through artificial intelligence technology, so that high-quality content can reach the right target audience through the right media channels; Third, through content marketing, event marketing, hot marketing and other marketing methods plus customer feedback and other links to deeply trigger consumer demand, generate consumer attention, and increase the transformation of sales opportunities.
The second level, traffic user realization and user "captive". In the traditional split mechanism of "marketing" and "marketing", it is a century problem to effectively transform the traffic brought by marketing into purchasing power, but in the digital marketing system, it becomes very simple. By relying on an integrated digital marketing platform and integrating mainstream programmatic advertising transaction mode (DMP data management platform, DSP demand-side platform, SEO search engine optimization, SMO social media optimization, ASO app store optimization, etc.), i reach a sales conversion rate increase of more than 10 times for brand customers. And the member management from project-type outsourcing operation to expert service type independent operation, so as to ensure the accumulation and growth of service users.
Take helping retail enterprises achieve precision marketing as an example:
1. Through China Telecom, China Unicom and China Mobile, i can obtain massive accurate data including mobile phone number, user gender, age, education background, income, current location, city code, historical track, work location and family location, etc.;
2. Identify customers and potential customers matching the products and judge the potential market;
3. After accurately locating the corresponding customer groups, i directly interact with users by pushing marketing information through i letter business or enterprise SMS in place, and lock key customer groups;
4. Use data technology to grasp consumers' actual purchasing power and help companies retain customers by analyzing purchasing information.
More importantly, all data and media traffic is fully visible and autonomous on the I-place platform, making the marketing process more controllable and trustworthy. In other words, the ultimate purpose of i in place is to help the Marketing Department of enterprises achieve "independent and controllable" marketing, and bring Chinese enterprises high efficiency, low investment and high return digital operation experience.
