I love Costco. If you open this, you probably do too (lol)
But why? Brand. That's why.
Why do I always buy everything from Costco? Why is Costco the single largest merchant on my annual credit card recaps? I love it. I also hate it. But I do it every year. Rinse and repeat.
If you sell stuff, your market is probably saturated. Unless you’re inventing something super absolutely novel like Ozempic, you have stiff competition.
So why does anyone ever buy anything that has near-perfect substitutes? Brand. That’s why I spend thousands a year at Costco and maybe a few hundred at Target and Walmart. But what is brand anyway?
The way I view it, we humans relate to businesses just like we do with other individual humans. We ascribe personalities, traits, and trustworthiness scores to them in the back of our heads. This all culminates in a brand and a reputation.
So how do you build a brand? A catchy logo or a clever tagline alone ain’t it, chief. The key to truly standing out and making a lasting impression on your customers is consistency. This goes in any direction too. You can be consistently XYZ and your brand will become known as XYZ. Best to be consistently accountable, reliable, and whatever your brand promises are.
So how does a brand like Costco thrive in a saturated space where almost every competitor is pushing the same items?
Trust and Consistency
Costco is great value. People don’t just shop there because it’s cheaper. Otherwise I’d be up to my eyeballs in Dollar General. They go because they trust that when they walk through those doors, they’ll get quality at a lower price, consistently. There are no surprises, no bait-and-switch tactics. It’s better goods, in bulk, at great value. And that’s what builds loyalty. And we’re all trained to expect this from Costco. So much so that when they fail to deliver on this, people get mad.
They don’t overcomplicate things. Customers know they’re getting a great deal on the essentials, and that simplicity is powerful.
If your customers don’t know what to expect from you, trust erodes fast.
Emotional Connection
The subject line is “I LOVE Costco”. I really mean it. I get their $6 chicken caesar salads plus a hot dog probably once a week.
When people feel something about your brand, they’ll stick with you through thick and thin. Costco has tapped into something beyond price: it’s about the feeling of getting a good deal without the stress of flashy sales or confusing discount structures and gotchas with strings attached.
They’ve created an experience where saving money feels effortless. I’m always extremely happy to do business with Costco and I push my cart around the store like with a smile on my face because I appreciate that Costco’s buyers picked a category leader for every category in their store and then ground their suppliers down to the bone at the negotiation table.
I couldn’t do that. I don’t have the purchasing power or the brain cells to know enough about the supply chains to stand a chance. But Costco does. For $50 a year they do all that for me. I love it.
What emotion would you guess your customers have about you?
Customer Experience
And then there’s the customer experience. Costco’s membership model isn’t just a transactional tool; it creates a sense of exclusivity, almost like joining a club. If you’re the only one in your group that has a Costco membership, you know what I’m talking about.
Most importantly people want to shop there because it’s easy, reliable, and safe. Their return policy is legendary. It’s totally your call if you want to keep anything you bought. If you ever feel like you got a raw deal - you can return it! No questions asked! There are limits to this (abusers rightly get banned) but if you’re operating in good faith, you’re totally safe. The transaction only happens and persists if you want it.
Recap
So how do you build a brand like Costco that thrives in 2024’s competitive landscape?
Here’s the blueprint:
Define your core values and stick to them – make sure everyone knows what you stand for, and don’t waver
Deliver consistent value – your customers should know exactly what they’re getting every time they interact with you
Create an emotional connection – speak to their needs, their wants, and their values—make them feel something
Optimize the customer experience – make it smooth, enjoyable, and aligned with what your brand promises
There are substitutes everywhere - it’s not enough to just compete on product. If you want to win, you need to build a brand that people trust, love, and want to champion.
What’s your brand?
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