Welcome to The Retention Newsie by The Email Marketers, the retention building experts for 8-& 9-figure e-commerce brand.

Every week we bring you the best case studies, strategies, and tips around keeping more customers, turning them into raving fans, and increasing revenue.

Up this week:

• 🏬 Costco's Secret to Membership Retention Power

• 📧 Custom Emails for Stronger Retention

• 📊 Rerouting “Pro” Users, SMS Marketing Campaigns & More!

Reading time: 3 minutes 45 seconds

Ever walked into a Costco and felt like you've entered a magical land of bulk-sized everything?

That's no accident. Costco's entire business model is built around creating an experience that keeps members coming back for more – and paying for the privilege.

Founded in 1983 by James Sinegal and Jeffrey Brotman, Costco has grown from a single warehouse in Seattle to a global retail giant with over 800 locations worldwide. But what sets Costco apart isn't just its size – it's the company's laser focus on member retention.

Costco's success story is intrinsically tied to its unique membership model, which has become the cornerstone of its retention strategy. As Jim Sinegal once said, "We're in the business of making customers happy. If we do that well, everything else will take care of itself."

Costco’s membership model creates a powerful retention cycle. Customers pay an annual fee for access to low prices, which encourages frequent, bulk shopping. This increased shopping reinforces the value of their membership, making renewals a no-brainer.

Costco offers two membership tiers: Gold Star (for individuals) and Executive (which includes additional benefits). The Executive membership, priced at twice the cost of the standard tier, offers 2% cashback on most Costco purchases.

This tiered system encourages members to spend more to maximize their rewards, further solidifying their loyalty.

The company's retention strategy extends beyond just low prices. Costco has mastered the art of creating a treasure hunt shopping experience. By constantly rotating a limited selection of products, they keep members coming back to discover new deals.

This strategy, combined with their famous free samples, turns each Costco visit into an event.

Costco’s dedication to quality and service drives retention. Their in-house brand, Kirkland Signature, delivers top-notch products at lower prices, while a generous return policy and happy, knowledgeable staff elevate the member experience.

The numbers speak for themselves:

• Costco boasts an impressive 90% membership renewal rate in the U.S. and Canada.

• The company's membership base grew from 47 million in 2014 to over 100 million in 2022.

• Membership fees accounted for $3.9 billion in revenue in 2022, a significant portion of Costco's net income.

• Membership as a Retention Powerhouse: A paid membership drives repeat purchases, pushing customers to get the most from their investment.

• More Than Just Low Prices: While discounts matter, a standout shopping experience and top-tier products keep customers hooked.

• Tiered Memberships: Premium tiers with extra perks boost spending and lock in loyalty.

• Consistency That Counts: Costco’s unwavering commitment to its values has built unshakable customer trust.

We help 8-& 9-figure e-commerce brands increase revenue and build strong customer relationships through retention marketing: Email, SMS, direct mail, subscriptions, memberships, loyalty programs, and more.

Unlock the Power of Email Segmentation

Break down your email list into targeted groups, delivering content that truly connects with each subscriber, driving higher engagement and loyalty.

Here's a simple yet effective segmentation strategy to get you started:

Analyze Subscriber Engagement Metrics

Dive into your subscribers' engagement data from the past 3-6 months.

Key metrics to examine include:

• Open rate

• Click-through rate

• Conversion rate

• Purchase frequency

• Average order value

This analysis will help you identify patterns and define your most engaged, least engaged, and highest-value subscribers.

Define Engagement Thresholds

Based on your analysis, establish clear criteria for each subscriber group. For example:

• Active: Opened 50%+ of emails, clicked 25%+ of emails

• Inactive: No activity in the past 3 months

• VIP: 5+ purchases, $100+ average order value

Utilize your email service provider’s segmentation tools to divide your list based on these thresholds. Create dynamic segments that automatically adjust as subscriber behavior evolves.

Develop Targeted Campaigns

Now comes the fun part - crafting personalized campaigns for each segment:

• Active: Reward their engagement with exclusive content, special offers, and sneak peeks.

• Inactive: Reignite their interest with a compelling re-engagement campaign and irresistible incentive.

• VIP: Show your appreciation with VIP perks, early access, and recognition for their loyalty.

Monitor, Test, Refine

Email segmentation is an ongoing process. Regularly monitor your campaigns, test different approaches, and refine your thresholds as needed.

Subscriber behavior evolves over time, so aim to audit your segments every 6 months to ensure they remain accurate and effective.

Implementing even a basic segmentation strategy can have a profound impact on your email marketing results.

So what are you waiting for? Start segmenting your list today and watch your retention rates soar!

• New research shows 73% of consumers feel more emotionally connected to brands offering exclusive deals.

• A comprehensive guide to creating winning email welcome sequences that drive both engagement and sales.

• Discover how rerouting "pro" users to a streamlined modal can increase subscriptions by 18%.

• A new study finds SMS marketing campaigns can deliver click rates twice as high as email during peak sales events.

• A laundry list of 20 strategies to step up your customer retention game.