Costco

(Click the video above to see the video.  I wanted to embed it, but the embedded video autoplays upon loading.)

I am one of Costco’s biggest fans.  Sure, you pay $50 a year to be a member, but man, what a store!  The quality is top-notch.  You get the best food from all over, and most of the everyday prices are hard to beat.  Jim Sinegal definitely created a good business model.  He pays his people very well–Costco people make more money than people in similar positions atWalmart, Starbucks, and other places–AND the store treats customers well.

A good example of this is their customer satisfaction guarantee.

Two years ago, I bought a portable air conditioner.  It’s big piece of equipment–looks kind of like a refrigerator–and we mail ordered it from the Costco site.  The condensation was supposed to blow out the window with the heat, but for whatever reason, it didn’t work.  I blogged about it here.  The little receptacle would fill with water after two hours of use, and it would turn the unit off.  Since we only have a few days a year of unbearably hot weather, I only used it a few times.  For the times I had to use it, I constructed a water drainage system by opening the receptacle plug and attaching a rubber tube that led to a small water pail.  Check it out; my drainage system is wondrous piece of Chinese engineering:

My former AC

That little purple tube would drain into a water pail, which I would empty every five hours.  I had to wake up every five hours to make sure the water pail didn’t overflow, but it was so damn hot that I didn’t care.

Anyway, my daughter started crawling this year, and she loves to explore furniture.  My wife didn’t feel that it was safe to have an 80 pound box sitting on a small footstool that a one year old could easily pull down, so she asked me to return the AC.

“Return it?” I said.  “It’s been two years!  They’ll never take it back.  We probably should’ve done that two years ago.”

“It’s dangerous,” my wife said.  “AND it’s a pain for you to get up every five hours to change your little makeshift water pail.  Plus it’s loud and annoying.  I heard Costco has a satisfaction guarantee.”

I told her I thought it was only 90 days.  She made me check the receipt.  The receipt said that it was 90 days for cameras, software, computers, and electronics.  It didn’t say anything about air conditioners.

So I dragged the big box to my car, drove to Costco, and lugged it before the service counter.  When the customer service guy came, I gave him my receipt and told him the whole story.  I apologized for not returning it sooner, saying that I would have done it, but we only used it a total of less than 10 times and that I was hoping it would get better after the horrendously hot summer of 2007.  I told him that it was probably a good AC, but that maybe it wasn’t suited for Oregon weather.  I had pictures of my drainage system that I was prepared to show him, plus I was ready to tell him about my daughter and how safety was the primary concern.

The guy only asked two questions: “Do you have a receipt?” and “Could I see your card?”  I  didn’t get a chance to tell him my reasons for returning it–I only said that it didn’t work.  He just listened to my story, took my receipt, and refunded the whole thing.  Shipping included.

Now that’s customer service. I asked my friend Panther Head how that business model could possibly work, and he said that they know everything about you from the fact you’re a member, and they expect you to buy much more than you return.  And it works.  He said that he had tried returning defective products at other stores, and that even if they’re legally obligated to take defective stuff back, many of them will still give their customers a hard time.  I recently met a guy at a party who said that he would rather pay more at Costco than less at a different electronics store.  The satisfaction guarantee is that important to him.

It’s amazing how Costco has built such a loyal customer following.

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