A great business mission is one that applies to every aspect of your company. It’s the guiding principle that defines who you are, what you do, and why you do it. It manifests itself in both the big picture and the little details. Costco understands the power of an exceptional mission and its ability to spur growth, success, and happy customers.
When you walk through a Costco store, you won’t find any plush carpeting, fancy displays, or personal shoppers. Heck, you won’t even find aisle markers telling you what you’ll find down a given row. Instead, Costco stores are giant, basically barren warehouses with goods stacked in massive towers, yet the company inspires devotion like few other retailers. What’s at the root of that fierce loyalty and the chain’s steady growth? Costco’s mission and how it informs everything they do.
This is how the company defines their mission: “Costco’s mission is to continually provide our members with quality goods and services at the lowest possible prices.” Every word in this mission is considered, clear, and impactful. When you break it down, you realize just how much it affects the company’s business model.
If there’s one thing everyone knows about Costco, it’s that they are membership-based. You might think that would be counter-intuitive to growing your business, as it keeps people from simply walking in the door and buying goods. On the contrary, Costco’s membership model is integral to achieving the other components of their mission.
Membership offers many benefits, even though they’re not applicable to all companies. Costco customers are loyal — just ask Jimmy Kimmel. “I go to Costco every weekend,” he says. “It’s my favorite part of the week.” Because they are members rather than simply customers, Costco shoppers are part of a club. This feeling, in turn, promotes a brand loyalty that any company would kill for. Costco’s members are so enthusiastic that even their pizza has a cult following. Frequent member visits also create a large sales volume, which relates directly to another part of Costco’s message.
“The Lowest Possible Prices”
There’s no denying that loyalty plays a role in Costco’s success, but one of the things that loyalty is based on is incredible prices. Early in their history, Costco bet that if they lowered markup, they could make up for it in volume. Most supermarkets apply a 25 percent markup, and that number is even higher at other retail establishments. Costco, on the other hand, never marks up a product more than 15 percent.
Instead of relying on a high markup to create profits, Costco’s memberships generate roughly 80 percent of their profit. And while these members love the low prices they receive, there’s another piece of the puzzle that ensures that membership renewal figures routinely top 90 percent.
“Quality Goods And Services”
Junk is junk, no matter the price. Costco may offer rock-bottom prices, but they sell only quality goods. For a new product to make it onto the shelves at one of Costco’s stores, it goes through a thorough vetting process. Even in Costco’s enormous warehouse-style locations, space is at a premium. Putting a substandard product on the shelves doesn’t just mean a better alternative can’t go there — it also hurts the retailer’s reputation as a whole.
Most companies’ in-house brands are thought of as lesser alternatives to the big names. Not so with Costco’s Kirkland Signature products. Wary of customer skepticism, Kirkland occasionally co-brands its products. These days, though, nobody doubts that Kirkland stands for quality.
Costco’s emphasis on high standards also affects their services, and perhaps that’s most apparent in their print magazine, The Costco Connection. It is the third-highest circulated monthly publication in the country, mailing nearly 9 million pieces per month. Sure, that’s a lot of pages to print, but the company knows that direct mail drives business in a way that a digital version never could. In fact, 56 percent of readers end up buying something they come across in the magazine.
The final aspect of Costco’s mission is that they never rest on their laurels. If there’s a way they can improve the experience of their members, they do it. Now that’s what we call living your mission.
Can every business be as successful as Costco? Of course not. But taking their mission-driven approach and applying it to your company can reap huge rewards. If you want to grow, you need a road map. That’s exactly what a great business mission is.