Starbucks Corporation (SBUX), American Express Company (AXP), Costco Wholesale Corporation (COST): Membership Rewards Drive Long-Term Growth

Toilet paper king

While Costco Wholesale Corporation (NASDAQ:COST) may sell everything and anything, can you guess the company’s number one selling product?

Based off the title you probably could have guess it, toilet paper. The company has gone as far as to set up a laboratory in an attempt to perfect the stuff. Back to the theme of the article, Costco Wholesale Corporation (NASDAQ:COST) offers its customers, or forces it customers, the ability to become a member and gain access to bulk-buying discounts on everything under the sun from Kirkland Bourbon to tubs of peanut butter. Over the last few years the company has been steadily growing its membership base despite increases in the cost of membership. During this time the company has kept a 93.9% renewal rate of current customers.

The company reported its third quarter results earlier this year where management announced a 19% year-over-year increase in the number of new member signups. The growth was fueled in large part to the company’s Asian expansion, a geographic segment with great potential ahead. Membership fees came in at $531 million, up 12%, or $56 million, from last year’s $475 million helped by increased executive membership sales. As with American Express Company (NYSE:AXP), the company has established a rewards structure in which customers pay to shop at the retailer creating two great revenue streams.

Conclusion

Starbucks Corporation (NASDAQ:SBUX) has developed a increasingly digital rewards program which has proven successful in increasing customer tickets and helping margins. American Express Company (NYSE:AXP) has consistently pulled the most credit worthy customer base as a result of its rewards program, thus helping to keep delinquencies low and profits high. Costco Wholesale Corporation (NASDAQ:COST) has consistently upped the cost of membership with little customer push back while increasingly the number of new members quarter after quarter.

The article Membership Rewards Drive Long-Term Growth originally appeared on Fool.com and is written by Nathaniel Matherson.

Nathaniel Matherson has a long position in Starbucks. The Motley Fool recommends American Express, Costco Wholesale (NASDAQ:COST), and Starbucks. The Motley Fool owns shares of Costco Wholesale and Starbucks.

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