The Costco upgrade from Star Trek
April 24th, 2006 | by mbhunter |I was checking out at Costco with a purchase of about $100. Right before I leave, a line manager comes over to chat with me.
LM: “Have you heard of our Executive Membership, John?”
MBH: “Huh?”
LM: “Well, you’ve spent $3,200 with us since you began your membership with us last August.”
MBH: “OK … and you know this how?”
LM: “Your account information comes up on my handheld display if you could save with an Executive Membership.”
This is a real-time, personalized sales pitch. A little scary, actually.
The Executive Membership is $100/year, while the Proletariat Membership (note: not actually what it’s called) is $45/year. With the Executive Membership, you get a 2% rebate off of everything except a handful of things, like cigarettes, gas, stamps, and gift cards.
The breakeven amount you need to spend on qualifying purchases to make your money back is $2,750 in one year. Since we had already spent $3,200, I missed out on $450 x 2% = $9 of rebate. We had several big-ticket items this year — a shed, two flat-screen monitors, and a safe got us almost halfway to our breakeven point.
Line Manager Scotty offered to upgrage me prorated for the rest of the year, meaning that I could get an Executive Membership until July 31st for $13.50. But to make this back, I’d need to spend almost $700 in the next three months to have the partial upgrade pay for itself, so I didn’t take it.
It was likely a very good wager for them to make by offering me the prorated membership. If I got a rebate, I might sign up again in August, which is an extra chance for them to make a little more off of me if I didn’t hit the breakeven.
