From Blackbox to Brilliance: A Definitive Guide to the New Era of Rotating Subscription Clubs

Despite a turbulent market rife with competition, subscription businesses continue to outpace the S&P 500 with a 244% higher compound annual growth rate (CAGR) over the last 12 years.

It’s for good reason. The subscription brands driving this growth are the ones leveling up their subscription experience to cut through the noise and capture more spend from subscribers — even in an economic downtown — ultimately growing lifetime value (LTV), and offsetting business costs for profitable growth.

But as subscriptions become table stakes across categories, simple subscribe-and-save models are no longer enough. To succeed in this space today, brands must go beyond the basics to maintain a competitive edge, attract new subscribers, and retain them.

That’s where rotating subscription clubs come in as one of the defining subscription experiences shaping retail’s recurring revenue revolution based on a recent analysis of 205 subscription-first merchants.

Welcome to the new era of rotating club experiences

Compared to other market-leading subscription experiences like fixed kits and build your own bundles, rotating clubs offer the most novelty to subscribers by delivering a new merchant-selected rotation of items in each shipment.

New developments in the space are making rotating clubs even better. But first, let’s unpack how the novelty factor alone can pay off for merchants and subscribers alike.

Rotating clubs drive stronger retention — and LTV

Put simply, rotating clubs are the antidote to subscription fatigue. Making the experience more than just a transaction gives subscribers something to genuinely look forward to, keeping them engaged over time.

As a result, rotating clubs enhance retention with their novelty factor, growing subscriber LTV and offsetting CAC for profitable growth long-term.

For reasons to believe, look no further than Compass Coffee — their average revenue per subscriber is 21% higher for their rotating clubs experience, and their order retention rate for rotating club subscriptions is a whopping 49% better than non-club subscriptions.

Product discovery makes for a better experience with positive ripple effects

Rotating clubs give merchants endless opportunities to surprise and delight subscribers with novel product curation and build excitement about upcoming orders. It sounds simple, but according to a recent McKinsey report, 35% of subscribers stick with their subscriptions when they experience a good variety of items or experiences.

Even better, our earlier research shows that when customers enroll in a new subscription, they tend to increase their spend with that brand by 60% or more over the six months following enrollment. Even in lower-spending segments, customers who become subscribers eventually level up to the next segment and transform into ever more loyal customers.

Simply put, rotating clubs magnify the subscription halo effect by giving subscribers more opportunities to discover and fall in love with new products they’ll be likely to purchase once — or even subscribe to — in the future.

Merchants across industries can find sustainable success with rotating clubs — and there’s still time to be among the first to make this type of novel subscription experience into a brand-differentiating calling card.

According to Ordergroove’s recent analysis, rotating clubs can be seen across categories like food & beverage, gifts, wine, and apparel — and still, only 29% of merchants analyzed currently leverage this model.

Even with their many benefits and applications across eCommerce verticals, rotating clubs have historically come with heavy operational requirements that limited their overall impact and feasibility.

The good news is that the leading brands at the forefront of subscription innovation are shifting the paradigm. Today’s frontrunners are not only avoiding these operational pitfalls but boldly pioneering this new era of rotating clubs to unlock next-level personalization, better business intelligence, and improved performance.

Benefits like these come down to the ability to capture SKUs for every product included in rotating club orders.

Until recently, most subscription technology treated all rotating club orders as a single SKU with no easy way to capture the individual products included in a multi-item club order, leaving merchants with more ad hoc work — like manually telling their warehouse which items to fulfill in each order.

Perhaps even more detrimental is that with valuable product-level data trapped in a black box, merchants lack visibility into how the individual products in each order are performing to understand retention trends — or tailor their marketing to encourage club members to subscribe to specific products they love.

“Managing a rotating club is all manual and we are inconsistent. We have a tracker but it’s prone to error and ends up creating a lot of bad customer interactions when people are like, why did I get the same product three times?” – Joe Shetterly, eCommerce Manager, Compass Coffee.

This old black box paradigm still affords merchants to tap into the novelty and retention benefits of a rotating club experience. But without the ability to capture every SKU in an order, it’s nearly impossible for merchants to maximize their full revenue potential.

Comprehensive SKU data for every product in the order is the key to unlocking the full potential of rotating club experiences. Some brands have cracked the code, proving there’s no limit to the positive impact of rotating clubs when they’re done right.

Here’s what merchants can achieve in the new era of rotating club experiences marked by robust product-level data.

1. Better business decisions start with better data

Consider a merchant offering a “coffee of the month” club — with the old paradigm, that merchant would find themselves running into the kind of data challenges that stymy long-term growth.

Data would be limited to just the number of club subscribers. Information like whether a light or dark roast had been sent in recent orders would be lost. And there would be no ability to drill down into the performance of the club based on what products were sent.

But in the new era of rotating clubs, that merchant unlocks better inventory planning and forecasting. They can experiment with discounts, swag, product samples, and so on, and even track cohort retention relative to each initiative.

And with that level of data integrated directly into their eCommerce platform and the rest of their tech stack, they can leverage it to the fullest for things like marketing and customer support.

2. Turn rotating club experiences into infinite upsell opportunities

Without visibility into which products go into a rotating club order, upsell opportunities are almost nonexistent. How do you choose complementary products to feature without that important context?

For example, a merchant selling a discovery box of shampoo products for curly hair might want to upsell subscribers a selection of conditioners and hair masks that are also geared towards curly hair. But without that product-level data, that merchant would struggle to identify which products are relevant to feature in an upsell offer to make it more likely to convert.

In the new era of rotating club experiences, those missed upsell opportunities are a thing of the past as merchants can now make strategic decisions on what to offer to each subscriber.

With SKU data stored for each club order, merchants can tailor their upsell offers to max out average order value — and with the right subscription technology, they can even give customers the flexibility to add those upsell items onto their upcoming club shipment as a one-time purchase or brand new subscription, unlocking even more recurring revenue.

3. Laser-focused retargeting and remarketing for club subscribers

We can all agree that good data is required for retargeting and remarketing campaigns, but the old paradigm — where rotating club SKUs need to be recorded manually — made it difficult to deploy campaigns encouraging customers to buy or subscribe to the products they’ve already sampled.

In the new era of rotating clubs where product-level data is at merchants’ fingertips, they can swiftly identify the products to feature in remarketing campaigns for the highest chance of conversion and see stronger ROI on their marketing spend.

4. Even more ways to prevent subscriber churn

Without product-level data for rotating club experiences, merchants run the risk of sending subscribers the same product twice — defeating the purpose of this type of subscription experience in the first place: retention-boosting novelty.

With rich SKU data available, merchants can offer the kind of smart customizations to the subscriber experience that retain them for longer.

Ensuring subscribers get a novel experience every single time is just the beginning. In the new era of rotating clubs, merchants can also monitor which items lead to higher churn so they can avoid sending them in the future. And with flexible subscription technology, they can even allow “partial curation” to give subscribers more control over their orders — think: a beauty brand might curate a certain set of lipsticks, but allow the subscriber to choose the shade.

Now that we’ve covered what’s possible in theory, let’s see what it can look like in practice.

Ordergroove customer Shinesty is one of trailblazers leading the charge into the new era of rotating club experiences.

Known for their humorous underwear, crazy party clothing, and irreverent brand voice, Shinesty also boasts one of the most customizable subscription experiences in eCommerce today with over 40,000 possible product combinations.

When subscribing, shoppers can select recurring orders for men’s, women’s, or couple’s underwear — along with their preferred underwear style, print, number of pairs they want to receive each month, with the option to prepay for a whole year.

But what really makes Shinesty subscription unique is that subscribers are guaranteed never to receive the same design twice.

“People love our subscriptions because no one really wants 12 pairs of underwear with an eagle on them. They want 12 different pairs,” said Jens Nicolaysen, CMO and co-founder of Shinesty.

That degree of hyper-customization requires SKU data for every product sent, as well as the ability to match it with individual subscriber data — which wouldn’t be possible in the old paradigm.

Ushering in the new era of rotating clubs has paid off in dividends for Shinesty with 100% greater LTV for prepaid subscribers who participate in their underwear of the month club.

Now, let’s dive into how you can join the ranks of leading brands getting more out of their rotating club experience, too.

Today, there are two primary ways merchants can go about offering powerful rotating club subscriptions, complete with 360 degree SKU data and zero missed opportunities.

Option one is to manually build a custom solution to capture product-level data for club orders, and option two is to choose subscription technology that offers granular product tracking out-of-the-box.

The first option isn’t feasible for most companies without significant development or agency resources — but the second route is far more accessible, allowing brands to innovate faster, streamline operations, and start seeing results right out of the gate.

Enhanced product data sets a new bar for rotating club best practices

For better business intelligence

• ✓ Monitor individual product performance to inform which products to curate to increase subscriber satisfaction and retention, and minimize excess stock and unsold inventory
• ✓ Use individual product data to keep track of exactly which items have been sent to each customer to ensure to prevent sending the same items twice
• ✓ Experiment with discounts and track program performance to optimize enrollment and retention
• ✓ Send samples and track product conversion to optimize product discovery and increase AOV

For stronger upsell campaigns

• ✓ Set up custom upsell campaigns based on previous box items to encourage subscribers to purchase items from previous boxes, whether as a one-time or subscription purchase
• ✓ Configure dynamic data flows to upsell complementary products — e.g., a rotating pasta club might upsell customers different types of sauces
• ✓ Send samples and free swag to give rotating club subscribers a true VIP experience and take the opportunity to offload extra inventory — and even keep track of the extra items that were sent for future upsell campaigns

For high-impact retargeting and remarketing

• ✓ Send satisfaction surveys asking subscribers to rate specific products from their shipment
• ✓ Use Klaviyo, Attentive, and other marketing tools to allow easy one-click purchases, enabling customers to buy even more of what they liked from their box
• ✓ Track reasons why subscribers cancel so they can be retargeted down the line with prompts to subscribe to the rotating club products they liked

For powerful churn prevention

• ✓ Use a subscription platform that supports maximum flexibility for the rotating club experience
• ✓ Leverage individual product data for in winback campaigns targeted at lapsed subscribers
• ✓ Allow customers to partially curate what goes into their box when it’s relevant to the products — for example, a skin care brand might feature a tinted moisturizer of the month, but allow customers to choose their own shade

The future of eCommerce waits for no one — and it belongs to the brands that lead the charge on every opportunity to evolve in tandem with consumer expectations, carve out their own place in the market, and ensure their recurring revenue engine is operating at its full potential.

To that end, Ordergroove is here to help you get in on the ground floor of exceptional rotating club experiences with complete support for multi-SKU shipments. Reach out for more information to break your rotating club data from the black box today.