The One Thing Costco Won’t Do To Save Costs

When costs – especially postage expenses – began to rise for Costco and its Costco Connection magazine, the team naturally searched for ways to save expenses. But there was one action that was off the table, according to Michael Winkleman writing in Folio – reducing circulation from its current level of more than 13 million.

“The magazine is too important as a member benefit; too many regular Costco members up their membership spending to the Executive level (twice the cost of the Gold Star-level membership) just to get the magazine,” Winkleman writes, “and too many of Costco’s goods suppliers participate in the company’s co-op advertising programs to consider cutting back.”

They did attempt to get readers to switch to a digital version of the magazine, but it hasn’t been a huge success. According to publisher Sandy Torrey, not even 6% of the readers opted to get the magazine online – not surprising given the rather dismal uptake of digital magazines in general.

“Instead,” Winkleman notes, “the company routinely gets mail from members begging them to keep the print magazine going.”

It’s a testament to how powerful print is to the membership model, whether you’re dealing with B2Cs like Costco Connection or AARP’s wildly popular magazine, or B2B and association membership publications. 

Even in an industry like travel – which has been completely disrupted by digital publishing – print magazines remain critical. Take, for example, AAA’s print magazines AAA World and AAA Club.

“As with the Costco and AARP magazines, the AAA publications are more concerned with showcasing member benefits than they are with making sure that advertising pays the bills. The impact of that focus has been borne out by readership statistics,” Winkleman writes.

“According to a 2017 MRI study, the average reader spends 27 minutes with each printed issue—which is especially notable given that many AAA publications are only 20 pages long, with the largest books ranging from 64 to 96 pages,” he continues. “And there are, according to MRI, 2.1 readers per copy, which brings AAA’s total reach to nearly 122 million U.S. citizens—more than one-third of the nation’s total population.”

But what do these membership brands get from print to justify the cost of these massive print circulation numbers?

“For Costco,” Winkleman explains, “a key measurement of the success of its print magazine is direct product sales that are driven by ads and editorial coverage. With co-op ads and even editorial coverage timed to the release of products in the warehouses in a particular month, Torrey notes that at least 52 percent of members ‘bought something because they saw it in the Connection.’ The magazine, she says, is clearly driving ‘both shops and sales.’

For organizations that are driven by a membership model, the advantages of print publications make the investment worthwhile. In fact, judging from Costco’s refusal to cut its numbers, print magazines in the membership model can be indispensible.