Costco Comms About Increasing Membership Fees
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In a news release, Costco announced plans to increase membership fees in September but hasn’t yet notified customers directly. Writing an email to customers or posting information on the website would be a useful class activity or assignment.
The news came in a short release that includes June sales data and dividend plans. With investors as the primary audience, the message is straightforward:
The Company also announced that, effective September 1, 2024, it will increase annual membership fees by $5 for U.S. and Canada Gold Star (individual), Business, and Business add-on members. With this increase, all U.S. and Canada Gold Star, Business and Business add-on members will pay an annual fee of $65. Also effective September 1, annual fees for Executive Memberships in the U.S. and Canada will increase from $120 to $130 (Primary membership of $65, plus the Executive upgrade of $65), and the maximum annual 2% Reward associated with the Executive Membership will increase from $1,000 to $1,250. The fee increases will impact around 52 million memberships, a little over half of which are Executive.
A pre-recorded message with slides will be posted on July 17 for students to see another example of how the message is conveyed to investors. For investors, the news could be good (although the stock price still fell on the sales and membership fee news), but for customers, it’s certainly bad news.
Nothing is mentioned yet on the Costco membership page, and customers haven’t received direct notice. How would students announce the news to members? They might consider how other companies announce increased fees. In Chapter 8 of the textbook, students read how Netflix shared the news of increasing subscription prices with investors and customers. For customers, Netflix focused on more programming and other benefits. Students can find ways to take this same approach for the Costco message.
To guide their messaging for customers, students can read context from Yahoo! Finance and other general news outlets. They’ll read about rising inflation and membership fee increases by Sam’s Club and BJ’s in 2022. Costco waited a bit longer—seven years since its last price increase in 2017. But none of this likely matters to Costco customers. In addition, students might argue this is only $5, but of course, that’s significant to a lot of families, particularly on top of other increases.
Students can also consider message timing. We typically teach that customers should be informed first rather than find out bad news from the media.
