Costco Taiwan has released its brand-new membership card – Executive Membership – and in doing so has entered into a strategic cooperation with multiple leading companies as it intends to expand it spectrum of service.
Costco has more than 700 stores and 95 million members worldwide.
But, according to the company’s annual report, membership fees only account for 2.2 percent of Costco’s revenue.
However, membership remains the key to launching Costco’s new business model.
On July 1st, Costco Taiwan officially issued its Executive Membership card, and in an unprecedented move, added its first new membership grade since Costco came to Taiwan 23 years ago.
Executive Membership application requires double the normal membership fee, amounting to NT$3,000 per year.
Yet, although offering a better rewards program to customers, many experts are still casting doubt on whether or not Taiwanese consumers will pay for it.
“The more you consume, the more you earn. Distinguishing higher-level consumers is giving way to promote consumer loyalty and increase purchasing power.” said Richard Chang, President of the Asia Pacific region at Costco.
In reaction to experts’ doubt, Costco is fully prepared to demonstrate its expertise as a retail giant.
Prior to issuing the card, Costco spent two years preparing to introduce Executive Membership.
At first, abandoning traditional service manners that saw workers simultaneously serving as sales clerks and customer service staff, Costco redesigned a reliable system and fostered a professional customer service team in response to problems identified, thereby enhancing consumer experiences, and collecting consumer data more efficiently.
In addition, Costco Taiwan has set out a series of strategic cooperation goals based on the observation of consumer preferences and demands, stimulating consumers’ willingness to upgrade their membership cards.
For instance, taking into account population aging in Taiwan, Costco is teaming up with insurance giant Cigna to provide Executive Members with complete health insurance up to NT$ 90 million, for consumers up to 80 years of age.
This strategic cooperation will also bring with it increased sales potential on related products such as dietary supplements.
Besides the cooperation with Cigna, Costco is targeting several leading brands, including Cathay Healthcare Management, Cathay Century Insurance, Lion Travel and National Golf Country Club, in its big to provide multiple services to satisfy its high end Executive Members.
Executive Membership is regarded as a connection between Costco Taiwan and different types of industries.
Being asked if Costco will accelerate its layout of sale channels such as E-commerce options, or will contract its package size to cater for nuclear families, Richard Chang immediately got to the point: “People who are good at playing basketball will not compete with people who are good at playing soccer. We know who the consumer is, and who we are speaking to.”