Writing · Pricing / Revenue Management
Costco Carries 4,000 Items. Walmart Carries 100,000. Costco Is the One That Charges You to Shop.
Costco used to print that gap in its own annual report. Fewer choices, in writing, as the strategy.
I ran a red pen down a page of Codie Sanchez’s great new book, Own or Be Owned. Her argument: a different product doesnt win the comparison chart. It makes the chart useless. Different comes from four dull moves she calls the NERF gun.
Narrow. Pick one customer and go deeper than a generalist can afford to. In-N-Out sells burgers, fries and drinks. 400-plus stores, an estimated $1.8 billion in 2022 sales, and still no chicken sandwich.
Expand. Stay in that corner and pile on what that customer needs until leaving is a hassle. USAA started in 1922 as 25 Army officers insuring each others cars, and a century later it still takes only military members and their families but sells them home insurance, life insurance and a bank account. 14.3 million members, and USAA says 96% stay each year.
Remove. Rip out whatever isnt the point. Costco. Concrete floors, no bags, 4,000 items, and a membership fee before you can buy any.
Flip a default. Find what your industry does the same way and do the opposite. The typical car dealer haggles. CarMax posts one price and pays its sales consultants the same commission whichever car you pick, and it sold 780,684 used cars last fiscal year.
The idea is old. Michael Porter wrote in 1996 that the essence of strategy is choosing what not to do. Dan Kennedy had a ruder name for copying your competitors. Marketing incest.
So why does the sea of sameness keep filling back up? Look at what the moves cost. Narrow means turning away customers who would pay you. Remove means killing something a few of your customers like. Expand is the only one that adds, and it adds for one customer.
The page sells the upside. It skips a few questions we need to ask before spending a dollar. Does the customer care? Different on something no buyer will pay for is just odd.
Does the move stand alone? Costcos short shelf works because of the membership fee and a markup capped at 14 to 15%. Copy the shelf by itself and you have a small store.
What does it cost a competitor to copy you? A dealer who wants to match CarMax has to rewrite how the sales floor gets paid. That didnt stop Carvana, which never had a sales floor and sold 197,325 cars in the second quarter, a pace that passes CarMax.
I’ve done the copying. For a long time my marketing was whatever the others were running, and all it revealed was how little I knew. Sanchez ends the page with a test. What would you have to change so that comparing you to anyone else stops making sense?
Write your answer down. If it says better service, cross it out. Better isn’t enough for most customers alone.
Costco charges you a fee to walk in and buy mayonnaise by the gallon. About nine in ten members renew.