One Big Reason Costco Has Better Customer Service Than Other Stores

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Costco has a reputation for excellent customer service. Keep reading to discover one thing that gives the retail giant a leg up. 

If you’re a Costco member who has dealt with the store’s customer service, chances are you’ve experienced a positive exchange. And that may be because Costco employees are happier overall. Of course, there’s no way to know for sure how another person feels, but everything — from providing customer service to helping members find what they’re looking for — seems to come easier to Costco employees.

Is it possible that the primary reason Costco customer service enjoys such a strong reputation lies in its ability to bounce back from pandemic-related job losses?

The power of adequate staffing

While staffing levels have never returned to pre-pandemic numbers across much of the retail sector, Costco has managed to increase its headcount by more than 32%. And yet, more than three years after the COVID-19 pandemic began, many retailers are working shorthanded. Between a lack of employees on the floor and the introduction of more self-checkout systems, customers have far less access to help when needed. For some companies, that’s never going to change. They’ve moved ahead with plans to add more self-checkout lanes and closed large stores in favor of smaller locations that require less “live” help.

No one appears happy with the outcome. Consumers find in-person shopping frustrating, and store employees are overwhelmed with extra duties they are expected to perform. For businesses that have come to count on online sales to make up for lost revenue, employees are torn between providing in-store assistance and fulfilling online orders.

It’s not only small businesses that have been hurt. Some of the biggest names in retail continue to struggle with low employment numbers, not to mention low employee morale. Here’s a sample of retailers that continue to operate with fewer employees:

More at play

Other potential factors may also play a role in Costco’s customer service performance. For example:

The average hourly pay for Costco customer service representatives is 17% higher than the average pay for customer service representatives at Costco’s major competitor, Sam’s Club. Nearly 16,000 Costco employees rate their work experience 3.9 out of 5, higher than the typical anonymous employee review.According to Comparably, 57% of Costco employees say they would not leave their job if they were offered another job for more money, and 69% say they’re excited to go to work each day. That puts Costco in the top 10% of similar sized companies in its ability to retain employees.

These statistics raise the question: Is Costco customer service better because fair wages allow representatives to put more money into their bank accounts, or because they’re not forced to wear more than one hat as often as other retail employees?

In short, a greater number of Costco employees report being content with their jobs. And no matter what a person does in life, the happier they are, the more likely they are to spread that satisfaction.

How this benefits you

Consider it the “butterfly effect” of retail business. It may begin with employees, but it’s ultimately the customer who benefits when a retailer is able to keep its employees happy. Here are a few ways that can happen:

When you’re not surrounded by stress as you shop, you’re more likely to continue using your Costco membership.With more Costco employees available, you’re more likely to find the items you need.Costco’s generous return policy and great customer service means you don’t have to waste money by keeping products that didn’t work out for you.

What Costco has going for it that so many retailers do not is a large enough workforce to be customer-centric.

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The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.Dana George has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Best Buy and Costco Wholesale. The Motley Fool has a disclosure policy.

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