Discount Club Tactics

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Discount Club Tactics

AAA, BJs, and Costco offer different membership levels with different benefits and perks available at each level. AAA and BJs have experienced steady membership numbers in recent years, while Costco has felt the impact of Amazon Prime entering the market. None of these companies offer discounts for long-term members.

AAA Memberships

  • AAA has three types of membership, basic, plus, and premier. The common features of each membership type are four roadside assistance calls per year, coverage throughout the US and Canada, free tire change, jump start, battery service and lockout, minor mechanical first aid, and member prices on batteries and auto repairs. There are also a range of discounts available on cruises, rental cars, hotels, and shopping that are available to all members.
  • The main differences relate to towing services, coverage of motorcycles and RVs, fuel delivery, trip interruption coverage, locksmith services, vehicle return reimbursement, emergency rental car, bicycle assistance, and identify theft monitoring.
  • The cost of membership varies depending on where the member lives and the type of membership purchased. A basic membership costs between $38 and $74 annually. A plus membership costs between $60 and $124 per year, while a premier membership costs between $77 and $164 per year.

AAA Membership Numbers and Recent Changes

  • AAA has more than 58 million members in the US and Canada.
  • Millennials had lower rates of renewal compared to other generational groups, and the traditional channels were proving ineffective in reaching this population group. By partnering with Relay, providing text notifications, and simplifying the renewal process, AAA was able to increase the likelihood of renewal in the Millennial population by 17%.

Things AAA Does To Encourage Membership

  • One of the advantages of an AAA membership is that registrations can be renewed by AAA rather than a trip to the DMV.
  • The discounts offered for a range of different products and services are often cited as one of the primary benefits of membership.

BJs Memberships

  • Despite being smaller than other wholesale chains, BJs has established a loyal membership. BJs offers three different types of membership, BJs Perk Rewards, BJs Inner Circle, and BJs Online Access. BJs Perk Rewards costs $110, while BJs Inner Circle is $55.
  • BJs Online Access attempts to alleviate the lack of stores in some areas by offering online access, which typically costs around $10 annually. There are restrictions on this membership, meaning not all the items are available online.
  • The difference between BJs Perk Rewards and BJs Inner Circle relates to the services and products the consumer has can access. Both memberships include a second household card, same-day delivery, BJs and manufacturers coupons, low gas prices, mobile app, digital coupons, and Shop BJs Pick Up In-Club. Both memberships also give the member access to BJ's Optical, BJ's Tire Center, BJs Travel, and exclusive BJs Brands.
  • BJs also offer business memberships. However, the details are not available online, and all memberships of this nature need to be purchased instore.
  • Although, BJs does not explicitly offer any benefits of long term membership, for the savvy shopper they are available and the BJs coupon book typically offers membership renewals at $35 at various times over the year.
  • A range of online sites also offer BJs memberships for $25.
  • One of the disadvantages that BJs faces is they only have 215 stores in 16 states, focused predominantly on the east coast.

BJs Membership Numbers and Recent Changes

  • According to a report published by CNBC in 2018, BJs had 5 million members.
  • This increased to 5.5 million members in 2019.

Things BJs Does To Encourage Membership

  • BJs claim is that their products cost 25% less than traditional grocery store options.
  • The coupon policy is a big incentive to members. BJs allows members to use manufacturers coupons in their stores, unlike Costco and Uncle Sams.
  • BJs also offers a "Farm to Club" option for its members. They identify fruit and vegetable sourced locally (usually within the state) with a sticker so that members have the option of buying the freshest products. They have also committed to donating unsold, but wholesome and nutritious food to charitable groups.

Costco Memberships

  •  Costco offers a personal and business membership. Both have a standard and an executive membership level. The personal and business standard membership is $60, while the personal and business executive membership is $120.
  • The difference between the four membership types relates to the additional services offered. All memberships receive a free card that is valid at all Costco locations globally.
  • Features that are unique to both the personal and business executive membership are a 2% reward on annual Costco and Costco travel purchases and extra benefits on select Costco services.
  • The standard business and executive business memberships also include the ability to purchase for resale and the opportunity to add additional people to the membership for a fee of $60.
  • Costco also offers a student membership for $20. This opportunity is offered through UNiDAYS and requires membership to the UNiDAYS website to access. Upon signing up for the personal membership, students also receive a $20 Costco gift card and a Google Nest Mini.
  • A military membership that offers additional savings and free products to the value of $60 is also available to active duty, veteran, and retired military members. To sign up for this membership, a Costco Membership Activation Certificate is required. A military status needs to be obtained through to access this offer.

Costco Membership Numbers and Recent Changes

  • Costco has experienced a steady annual increase in the number of members globally over the last five years. In 2018 Costco had 94.3 million members globally. This was up from 76.4 million in 2014.
  •  Amazon Prime has recently surpassed Costco as the number one membership in the US. There are a number of households in the US that electing to buy a membership to only one of the discount clubs. Despite Costco having less expensive prices overall, Amazon Prime is starting to eat into Costco's membership numbers in the US.
  • Amazon Prime offers additional perks to its members, including free two-day shipping, a more extensive selection of brands and prices, and free access to books, television shows, and movies.
  • The percentage of houses that pay only for Amazon Prime membership was 16.2% in 2016, while the percentage that pays only for Costco membership was 9.8%.

Things Costco Does To Encourage Membership

  • Costco promotes brand familiarity by allowing non-members to shop at their stores using a prepaid card purchased by a member.
  • The "satisfaction guaranteed" return policy at Costco is an advantage. This means that most merchandise can be returned, no questions asked, even without a receipt and tags. They also allow the return of opened food items.
  • Costco offers a 100% refund of membership fees at any time should the consumer wish to cancel their membership.
  • They also price match any competitor for up to 30 days from the date of purchase.
  • Members have noted the up-market feel of the stores and regular free samples as incentives for remaining loyal to Costco.