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Word-of-mouth marketing (WOM) harnesses the power of natural conversations—both online and offline—to bring awareness to your products or brand. In contrast with other forms of marketing where you control the channels and messaging, word-of-mouth marketing is driven by regular people using their own words to talk with their personal networks about your business. 

These organic conversations drive business results that often outperform paid advertising, social media campaigns, and even SEO efforts. When customers become your advocates, their authentic recommendations carry weight that no amount of marketing spend can buy. Trust and authenticity fuel these peer recommendations, making them especially powerful for reaching millennials and Gen Z consumers who rely heavily on social proof.

This guide shows you how to build a systematic word-of-mouth strategy that transforms satisfied customers into active brand advocates. You’ll learn the psychology behind why people share recommendations, proven tactics to spark more brand conversations, and how to measure your WOM impact on revenue.

What is word-of-mouth marketing?

Word-of-mouth marketing is a strategy that encourages customers to share positive experiences through conversations with their personal networks. These conversations happen everywhere—from dinner tables and social media feeds to Yelp reviews and office water coolers.

Unlike traditional advertising, where you control the message, WOM puts your customers in the driver’s seat. They become voluntary brand ambassadors, sharing their genuine experiences with products or services they love. This authenticity makes WOM incredibly powerful—people trust recommendations from friends and family far more than any advertisement.

The continued rise of social media has amplified the reach of word-of-mouth marketing. A single customer’s Instagram story, TikTok video, or Google review can influence hundreds or thousands of purchase decisions. Smart businesses don’t leave these conversations to chance—they actively cultivate conditions that make customers want to talk about their brand.

Why word-of-mouth marketing matters in 2025

The marketing landscape has fundamentally shifted. Ad costs continue climbing while consumer trust in traditional advertising plummets. Meanwhile, 88% of consumers trust recommendations from people they know more than any other type of advertising.

This trust gap creates a massive opportunity for businesses that prioritize word-of-mouth marketing. While competitors pour budgets into ads that consumers increasingly ignore, WOM-focused brands build sustainable growth through customer advocacy. 

The economics make WOM even more compelling. Between 2023 and 2025, ecommerce businesses’ customer acquisition costs (CAC) through traditional marketing channels increased by 40%. Since word-of-mouth referrals cost nothing beyond delivering exceptional experiences, WOM can help you cut down on your overall CAC. Every satisfied customer who shares their experience becomes a free marketing channel with built-in credibility.

For ecommerce businesses, word-of-mouth marketing builds the brand trust that’s crucial in online shopping. Potential customers can’t touch your products or visit your store, but when someone they trust vouches for your brand, that social proof bridges the confidence gap and drives conversions.

Word-of-mouth marketing statistics and impact

The numbers paint a clear picture: Word-of-mouth isn’t just nice to have—it’s driving significant revenue across industries. Nearly 13% of all consumer sales are driven by word-of-mouth marketing, representing trillions in global economic impact.

Discovery patterns have also evolved. Thirty-six percent of US internet users said word-of-mouth marketing was their leading source of brand discovery, beating out social media ads (32%) and mobile app ads (21%). This means more than one-third of potential customers find new brands through recommendations before they ever see an ad.

The multiplier effect makes these statistics even more powerful. Each positive word-of-mouth impression doesn’t just influence one person—it creates a ripple effect. Happy customers tell an average of six or more people about their positive experience with a brand. Thanks to the reach of social media, that number can explode into hundreds or thousands through a single viral post.

Conversion and retention rates tell the final story. Word-of-mouth leads convert at higher rates, purchase more frequently, and demonstrate stronger brand loyalty than customers acquired through paid channels. They also become advocates themselves, perpetuating the cycle of organic growth, and they stick around longer: Customer lifetime value (CLV) for customers acquired through WOM is 16% higher than the CLV of those acquired through other marketing channels. 

The psychology behind word-of-mouth marketing

Social currency and triggers

People share experiences that make them look good to others—this is social currency in action. When customers discover an amazing product or have a remarkable brand experience, sharing it enhances their social status. They become the friend who always knows about the cool new brands or the colleague with the best recommendations.

Triggers work differently—they’re environmental cues that prompt people to think and talk about your brand. A coffee shop might trigger thoughts about your artisan coffee subscription. A rainy day might remind someone about your waterproof gear. Strategic brands build these triggers into their products and messaging, ensuring they stay top of mind when conversation opportunities arise.

The most shareable experiences combine both elements. They give people something remarkable to talk about (social currency) while building in natural reminders that keep the brand relevant in daily life (triggers). Think about how certain brands become part of cultural conversations—that’s strategic word-of-mouth psychology at work.

Building emotional connections

Emotion is the primary driver of social sharing. People don’t talk about average experiences or products that merely meet expectations. They share stories that made them feel something—joy, surprise, relief, or even righteous anger.

Creating these emotional peaks requires understanding what truly matters to your customers beyond the transaction. A skin care brand might tap into feelings of self-care and confidence. A sustainable fashion brand might connect with values around environmental responsibility. These emotional threads weave through every touchpoint, from product packaging to customer service interactions.

The strongest emotional connections often come from shared values and authentic brand storytelling. When customers see their own beliefs and aspirations reflected in your brand story, they don’t just buy products—they join a movement worth talking about.

Brand tactics to generate word-of-mouth marketing

Since customer conversations are so valuable for growing your business, here’s how to spark more of them naturally:

• Show your current customers how much you appreciate them with packaging inserts that fit your brand or product. Think handwritten thank you notes, surprise samples, small gifts, or loyalty perks.
• Develop a compelling story about your brand and products that will inspire your audience to retell it. Include key beats like why you started your business and why you believe in what you do. Make sure to share your brand story on your website’s About Us page and in strategic spots on social channels.
• Create shareable content that’s genuinely useful, funny, or thought-provoking enough to pass along.
• Implement referral programs that reward customers for sharing information or special deals with their friends, and give new customers who have been referred a little something extra to acknowledge how they found you.
• Turn shopping into an experience by scheduling special events for your customers and inviting them to bring a friend.
• Launch brand ambassador programs that recognize and empower your most passionate customers.
• Operationalize user-generated content (UGC) collection by making it easy for customers to share their experiences on social platforms and tag your brand in their posts.

Essential elements of a WOM strategy

Creating remarkable customer experiences

These tactics work only when you’ve built a business that gives people genuine reasons to talk about it. That goes beyond creating beloved products. It means creating moments of awe and delight that turn ordinary transactions into memorable experiences.

Start with the fundamentals that show customers they matter to your business:

• Remember names. The more you can make each customer feel special and valued, the more likely they will be to tell others about their experience. Train your team to recognize regulars and recall their preferences.
• Give more than expected. That might mean throwing in a little freebie with every purchase, upgrading a level of service “just because,” or sending over exclusive discount codes to loyal customers. Good surprises get people talking—and coming back.
• Add a special feature inside your store. If you run a brick-and-mortar store, think of creative, interactive, Instagram-worthy ways to stand out. For example, a water-sports store could add a wave pool for testing equipment, a shoe store could offer free snacks or beverages while customers try on shoes, or a bookstore could install a print-on-demand kiosk. 
• Include an activity. Host in-store workshops, live demonstrations, trunk shows, or celebrity events that customers are invited to attend. Get customers excited about coming to your store and give them something worth sharing on social media.

Every touchpoint in your customer experience strategy presents an opportunity to exceed your audience’s expectations. Map out your customer journey and identify moments where you can add unexpected value or customer delight strategies that make sense for your niche.

Turning customers into advocates

Customer advocacy doesn’t happen by accident—it requires intentional strategies that empower satisfied customers to spread the word. The most successful advocacy marketing programs make it easy and rewarding for customers to share their experiences.

Start by identifying your natural advocates. These are customers who already love your brand, engage with your content, and leave positive reviews. Reach out personally to thank them and invite them into a more formal advocacy relationship. This might include early access to new products, exclusive discounts to share with friends, or recognition on your social channels.

Make sharing effortless by providing the tools advocates need. Create shareable content templates, sample social media posts, and clear talking points about what makes your brand special. The easier you make it for advocates to spread the word, the more likely they’ll actually do it.

Recognition fuels continued advocacy. Feature customer stories on your website, repost user-generated content with credit, and celebrate advocates publicly. When customers see that their support matters to your brand, they become even more invested in your success.

Tools and platforms for amplifying WOM

Modern technology multiplies word-of-mouth marketing’s natural power. The right tools help you identify advocates, facilitate sharing, and track the impact of customer conversations on your business growth.

Social listening platforms like Mention and Brandwatch help you monitor when and where customers talk about your brand. These insights reveal which products generate the most buzz, what language customers use to describe your brand (which can influence your messaging strategy), and opportunities to join conversations organically.

Review management systems streamline the process of collecting and showcasing customer testimonials. Platforms like Yotpo and Stamped automate review requests, display social proof on product pages, and help you respond to feedback quickly—turning satisfied customers into vocal advocates.

Referral program software removes friction from customer sharing. Tools like ReferralCandy and Friendbuy create seamless experiences where customers can refer friends with one click, track their rewards, and see the impact of their advocacy. The automation ensures no referral goes unrewarded.

Word-of-mouth marketing examples and case study

Ecommerce word-of-mouth examples

The most successful ecommerce brands don’t just sell products—they create experiences worth talking about. These businesses understand that every package delivered, every customer service interaction, and every social media post is an opportunity to spark conversation.

Direct-to-consumer brands have particularly excelled at generating word-of-mouth interest through unexpected packaging experiences. Unboxing videos have become a trend precisely because brands recognized the shareability of a beautifully designed package opening. Including handwritten notes, surprise samples, or creative packaging inserts transforms a routine delivery into a moment customers want to capture and share.

Subscription box services master the art of monthly word-of-mouth generation. By curating surprises and exclusive products, they create built-in sharing moments. Customers naturally want to show off their discoveries, compare boxes with other subscribers, and recommend their favorites to friends.

Nano-influencer marketing represents another powerful approach. Rather than paying celebrities or big-name influencers, smart brands partner with everyday customers who have small but engaged followings. These micro-advocates generate authentic word-of-mouth marketing that feels like friend-to-friend recommendations rather than advertising. 

If your target audience is primarily Gen Z, investing in a nano- or micro-influencer strategy is especially useful—Gen Z shoppers are 3.2 times more likely to trust an authentic product recommendation from a micro-influencer than a celebrity, and they vastly prefer UGC to brand-produced content. 

Word-of-mouth lessons from top brands

It helps to study how established brands generate word-of-mouth marketing and see which tactics make sense for your business. 

Premium brands often generate word-of-mouth marketing through exclusivity and insider access. Limited drops, member-only sales, and early access programs make customers feel special—and that feeling is inherently shareable. People love being the first to know about something or having access others don’t.

Value-driven brands take a different approach, generating word-of-mouth interest through their mission and impact. When purchases support a cause customers care about, they’re more likely to share that decision with others. This approach works because it lets customers signal their values while recommending a product.

The most important lesson from top brands is consistency. One remarkable experience might generate a social media post, but consistent excellence creates lifelong advocates. Focus on customer retention strategies that turn single purchases into ongoing relationships worth talking about.

Word-of-mouth case study: Fireflyslime

When she was only 14 years old, founder Angelina Ly tapped into the Gen Z slime fidget toys trend with her business, Fireflyslime. Over the past several years, Angelina has been able to grow her business in large part due to her creative approach to organic social and word-of-mouth marketing. One way she does that is by building hype for limited-release product drops and telling her audience to “set their alarms” for launch day.

“I cater my products very heavily towards the launch day,” Angelina says on an episode of Shopify Masters. This hype and coordinated planning works: She’s seen 90% of her stock sell out in only 10 minutes when she releases a new slime. 

Since her target market is fellow Gen Z consumers, Angelina’s partnerships with brand-aligned influencers is a big reason why word-of-mouth hype around product drops is so effective for Fireflyslime. “If I only promote through my own platforms, there are only so many people that I can reach,” says Angelina. “If I reach out to other people that have a different audience than I do, I’ll get some more people that have never heard about me.”

How to measure word-of-mouth marketing

Word-of-mouth KPIs

Measuring the results of your word-of-mouth efforts requires looking beyond traditional marketing metrics to understand how customer conversations drive business results. The right KPIs help you quantify WOM’s impact and identify opportunities to amplify customer advocacy.

Start with these essential metrics to track your word-of-mouth performance:

• Net Promoter Score (NPS.: Measures how likely customers are to recommend your brand on a scale of 0 to 10. Scores above 50 indicate strong word-of-mouth potential.
• Customer referral rate. Track what percentage of new customers come from referrals versus other channels. Growing referral rates signal increasing word-of-mouth momentum.
• Social media mentions. Monitor both volume and sentiment of brand mentions across platforms. Look for spikes that correlate with campaigns or experiences.
• Review velocity. Measure how quickly customers leave reviews after purchase. Faster review rates often indicate stronger emotional responses worth analyzing.
• Share of voice. Compare how often customers mention your brand versus competitors in your category.
• Earned media value. Calculate the advertising equivalent cost of organic mentions and user-generated content.

These metrics work together to paint a complete picture. A high NPS with low referral rates might indicate you need better referral mechanisms. Lots of social mentions with neutral sentiment suggests you have opportunities to create more remarkable experiences.

Attribution and tracking methods

Tracking word-of-mouth marketing’s impact on revenue requires sophisticated marketing attribution methods that capture both online and offline conversations. Modern tools and techniques help connect customer advocacy to actual sales.

UTM parameters and referral codes provide direct attribution for digital word-of-mouth marketing. Create unique tracking links for advocates, influencers, and referral programs. This granular tracking reveals which types of word-of-mouth tactics drive the most valuable customers.

Post-purchase surveys capture offline word-of-mouth influence. Ask new customers how they heard about your brand, offering options like “friend or family recommendation” alongside traditional channels. These self-reported insights often reveal WOM’s true impact on purchase decisions.

Customer lifetime value analysis reveals WOM’s long-term impact. Compare the behavior of referred customers versus those from paid channels. Referred customers typically show higher retention rates and higher average orders value (AOV), and become advocates themselves—multiplying their value over time.

Multi-touch attribution models acknowledge that a word-of-mouth strategy rarely works alone. A customer might see an ad, ask friends for opinions, read reviews, then make a purchase. Advanced attribution gives appropriate credit to word-of-mouth marketing’s role in the complete journey.

Word-of-mouth marketing strategy template

Step-by-step implementation guide

Building a systematic word-of-mouth strategy requires careful planning and consistent execution. This framework helps you move from random advocacy to predictable, scalable word-of-mouth generation.

Follow these steps to implement your WOM strategy:

1. Audit your current word-of-mouth presence. Analyze existing reviews, social mentions, and referral data to understand your baseline and identify what already makes customers talk about your brand.
2. Define your remarkable difference. Clarify what makes your brand worth talking about. This could be exceptional service, unique products, or memorable experiences that competitors don’t offer.
3. Map advocacy touchpoints. Identify every moment in the customer journey where you could inspire word-of-mouth marketing. From unboxing to customer service, find opportunities to exceed expectations.
4. Create sharing mechanisms. Build systems that make it easy for customers to spread the word. This includes referral programs, social sharing buttons, and review requests at optimal moments.
5. Develop advocate relationships. Identify your most enthusiastic customers and nurture those relationships. Give them reasons and tools to amplify their natural advocacy.
6. Measure and optimize. Track your word-of-mouth metrics monthly. Test different tactics, amplify what works, and continuously refine your approach based on data.

Success in any marketing strategy requires commitment to long-term relationship building rather than quick wins. Focus on creating consistent experiences that naturally generate conversation, then amplify those organic moments through strategic programs and tools that aim to boost your word-of-mouth potential.

Common mistakes to avoid

Even well-intentioned word-of-mouth efforts can backfire when businesses make these common mistakes. Understanding these pitfalls helps you build a strategy that generates authentic, sustainable advocacy.

The biggest mistake is trying to manufacture word-of-mouth marketing without delivering exceptional experiences. No amount of referral incentives or social media campaigns can overcome mediocre products or poor service. Building brand trust through consistent quality must come before asking for advocacy.

Over-incentivizing referrals can also damage authenticity. When rewards become too generous, recommendations feel transactional rather than genuine. Friends recognize when someone’s pushing products for personal gain, undermining the trust that makes word-of-mouth marketing powerful. Keep incentives modest—enough to say thanks, not enough to be the primary motivation.

Ignoring negative word-of-mouth marketing represents another critical error. Unhappy customers tend to share bad experiences even more readily than positive ones. It’s important to address complaints quickly and publicly, so you have a chance at turning potential advocacy disasters into demonstrations of your commitment to customer satisfaction.

Finally, avoid the mistake of treating your word-of-mouth efforts as a marketing campaign rather than an ongoing strategy. Sustainable growth comes from embedding word-of-mouth thinking into every business decision, not from occasional pushes for reviews or referrals.

Word-of-mouth marketing comes down to delighting prospects and customers while giving them reasons—and sometimes incentives—to bring like-minded customers into your orbit. When you consistently exceed expectations, your customers become your most powerful marketing channel.

The business world has expanded its mission beyond profit. Today, many companies engage in corporate social responsibility activities like corporate volunteering initiatives, cash contributions to charitable organizations, and diversity, equity, and inclusion (DEI) efforts.

But what if solving a social issue isn’t just a side project—what if it’s your primary business goal? That’s exactly what defines social ventures. These businesses harness entrepreneurial skills and strategies to tackle some of the world’s most pressing social problems while still generating revenue.

This guide breaks down the different types of social ventures, how to start one, and the unique benefits they offer beyond traditional business models. You’ll discover how social entrepreneurs balance profit with purpose, secure funding, and measure their impact on communities worldwide.

What is a social venture?

A social venture is a business that addresses social, cultural, or environmental challenges while generating profit. These initiatives balance social objectives with business goals to drive meaningful change and improve quality of life for communities.

Traditional companies may participate in socially beneficial activities, but that doesn’t make them social ventures. Take a bicycle manufacturer that donates 20% of its profits to reforestation and maintains a robust environmental, social, and governance (ESG) strategy. If its primary goal is making and selling bikes, it’s still a traditional business—not a social venture.

A business like TOMS, however, which operates a “one for one” program, donating a pair of shoes for every pair purchased, is an example of a social venture. The company uses its sales to provide shoes to people in need worldwide, prioritizing the brand’s mission and social impact.

Social venture vs. traditional business

The fundamental difference between social ventures and traditional businesses lies in their North Star and success metrics. While traditional businesses measure success primarily through financial indicators like revenue growth and profit margins, social ventures track dual bottom lines—financial goals and social impact.

Traditional businesses may donate profits or volunteer time, but these activities support rather than define their operations. Social ventures flip this relationship. Their social mission isn’t a nice-to-have or marketing strategy—it’s the entire reason they exist. Every business decision, from product development to pricing strategy, flows from their commitment to solving a specific social problem.

The social enterprise ecosystem

The social enterprise landscape has exploded into a global economic force, generating $2 trillion in revenue across 10 million social enterprises. This ecosystem spans everything from tech startups building accessible education platforms to local cooperatives revitalizing underserved communities.

Major corporations increasingly recognize social ventures as partners in innovation rather than charity cases. For example, the insurance corporation AXA has adopted social innovation practices by developing affordable insurance products for 14 million people in low- and middle-income countries. This shift signals a fundamental change in how businesses approach social problems—not as PR opportunities but as legitimate markets that demand entrepreneurial solutions.

Types of social ventures: choosing your structure

Social ventures aren’t hobbies or volunteer projects—many earn substantial profits. They can be structured as nonprofits, for-profits, or hybrid business models that combine both approaches. Your choice of business structure shapes everything from funding options to tax implications, so understanding each model’s strengths and limitations is crucial for the long-term success of your social venture.

For-profit social ventures

A for-profit social venture solves a social problem while generating profit that gets distributed to its owners. Ventures that sell equity must protect shareholder value and pay dividends to investors. The for-profit classification opens doors—it allows social entrepreneurs to raise money from investors and provides flexibility in how they allocate profits.

An organization that works to increase educational opportunities for women and girls by making and distributing low-cost menstrual products, for example, can be a for-profit if they turn a profit on sales and distribute those funds to owners or investors.

Nonprofit social ventures

The fundamental difference between nonprofit and for-profit social ventures comes down to legal and financial structure. Unlike their for-profit counterparts, nonprofit social ventures have no obligation to provide a return on investment (ROI) to investors. They can’t raise money by selling equity or distributing profits to individuals, but they can still pay social entrepreneurs and employees salaries for their work.

Just like for-profit businesses, nonprofit social ventures must generate or raise enough money to fund continued operations. They accomplish this through selling goods or services, or by raising charitable donations. Nonprofit social ventures must channel profits back into their missions and often benefit from federal, state, and local tax exemptions.

Hybrid social ventures

Organizations that leverage aspects of both for-profit and nonprofit structures are known as hybrid social ventures. These ventures consist of at least two distinct legal entities—one for-profit and one nonprofit—linked through a parent-subsidiary relationship or operating independently. Picture a nonprofit committed to reducing food waste that owns and operates a for-profit business diverting overstocked goods to consumers—that’s a parent-subsidiary relationship in action.

Setting up a hybrid social venture is more complicated than establishing only a singular nonprofit or for-profit organization. But once established, this structure lets social entrepreneurs tap into the benefits of both entity types—accessing grants and donations while also attracting investors.

B Corps and benefit corporations

Certified B Corporations represent another powerful structure for social ventures. These for-profit companies meet rigorous standards of social and environmental performance, accountability, and transparency. Unlike traditional corporations legally bound to maximize shareholder value, B Corps balance profit and purpose by considering the impact of their decisions on workers, customers, suppliers, community, and the environment. 

Warby Parker is an example of a B Corp: it’s a for-profit, publicly traded company that is nevertheless driven by its mission of vision for all. This mission is highlighted through its Buy a Pair, Give a Pair program, which has donated millions of pairs of glasses to people in need.

Benefit corporations, on the other hand, take this concept further, through legal structure. Available in 37 U.S. states and several countries, benefit corporation status embeds social and environmental goals directly into a company’s legal DNA. This structure protects mission-driven leaders from shareholder lawsuits when they prioritize social impact over short-term profits, creating legal space for decisions that traditional corporate law might discourage.

How to start a social venture: 5 key steps

Starting a social venture requires the same entrepreneurial skills as launching any business, plus the added challenge of balancing social impact with financial sustainability. These five steps provide a road map for turning your passion for change into a viable social enterprise that creates lasting impact while maintaining operational stability.

1. Define your mission and theory of change

Your mission statement captures why your social venture exists, while your theory of change maps how you’ll create impact. 

Start by identifying the specific problem you’re solving and who benefits from your solution. Then articulate your approach: What activities will you undertake? What outputs will those activities produce? How will those outputs lead to your desired outcomes?

A clear theory of change helps you stay focused when opportunities arise that might dilute your mission. It also proves invaluable when communicating with stakeholders—from potential funders who need to understand your impact model to employees who need to connect their daily work to meaningful change.

2. Choose your legal structure

Your legal structure determines everything from tax obligations to funding options, so it’s important to understand the difference between a nonprofit, a not-for-profit, and a for-profit business structure. Nonprofits access grants and donations but can’t distribute profits. For-profits attract investors and retain operational flexibility but face different tax implications. Hybrid models combine both but require managing multiple entities.

Consider your funding needs, growth plans, and impact goals when choosing your structure. If you need venture capital to scale quickly, a for-profit or B Corp structure might work best. If your model depends on charitable donations and volunteer support, nonprofit status offers advantages. Consult legal and tax advisers familiar with social ventures to understand the implications of each choice.

3. Develop your business model

Social ventures need sustainable revenue streams just like any business. Your business model must generate enough income to cover operations while advancing your social mission. Common revenue models include selling products or services directly to beneficiaries, charging third parties who benefit from your social impact, or creating premium offerings that subsidize free or low-cost options for underserved populations.

Test your assumptions early and often. Run pilot programs to validate that customers will pay for your solution and that you can deliver it cost-effectively. Build financial projections that account for both startup costs and the longer timeline social ventures often need to reach profitability.

4. Secure funding and investment

Social ventures access unique funding sources beyond traditional business loans and investments. Impact investors specifically seek ventures creating measurable social returns alongside financial returns. Philanthropic foundations offer grants for mission-aligned initiatives. Government programs support social enterprises through contracts, grants, and tax incentives.

Keep in mind: Different funders expect different returns. For example, grant makers want maximum social impact, impact investors seek both financial returns and social outcomes, and traditional investors might fund social ventures but typically prioritize financial performance. Match your funding strategy to your structure and growth plans, and be prepared to report on both financial and social metrics.

5. Measure and communicate impact

Unlike traditional businesses that focus primarily on financial metrics, social ventures must track and communicate their social impact. Develop key performance indicators (KPIs) that capture both your activities (outputs) and their effects (outcomes). If you provide job training, track not just participants trained but also employment rates and wage increases six months later.

Data-driven decision-making helps you refine your model and prove your impact to stakeholders. Create systems to collect impact data from day one, since retrofitting measurement systems later can be difficult and expensive. Use this data to tell compelling stories about your impact, combining statistics with human narratives that bring your mission to life.

Benefits of starting a social venture

Social entrepreneurship delivers many of the same rewards as traditional entrepreneurship—independence, earning potential, and the satisfaction of building something from scratch. But social entrepreneurship goes further, offering unique advantages through its compassion-centered business model.

Making an impact

Starting a social venture transforms your passion for change into tangible results. Take Merit, a for-profit apparel company with a core mission of increasing educational access and opportunity for young people in Detroit with through its FATE program.

Merit channels 20% of each apparel sale into a college tuition fund for Detroit youth. The company’s key performance indicator (KPI) isn’t revenue or profit margins—it’s the number of students it helps successfully graduate from college. 

Earning money through work that matters

Social ventures use a business framework to address social problems. Many social entrepreneurs discover that socially responsible business practices actually boost revenue generation. These practices deliver reputational benefits that increase sales, attract investors, encourage environmentally friendly operations that reduce long-term energy costs, and minimize risks from unsustainable or harmful sourcing and labor practices.

Take the ecommerce brand Oceanfoam, for instance: The brand works with manufacturers to produce foam rollers that are more eco-friendly and sustainable than similar products on the market, due to their 15% algae content. “It’s really important to me that we have an impact, that it’s not just running a business to make money,” Oceanfoam founder Zachary Quinn shared on an episode of Shopify Masters. “I wanted Oceanfoam to be a sustainable brand, I wanted it to be tied to the ocean and our planet and make the world better.” Within a year of launching its Shopify store, Oceanfoam sold at least 4,000 foam rollers, thanks to this ingenuity and focus on environmental and social impact. 

Building community

Social ventures unite diverse groups of people around a shared commitment to change. Building community becomes both a method and an outcome—you need community support to succeed, and your success strengthens that community in return.

International Sanctuary, a nonprofit organization supporting survivors of human trafficking, demonstrates this power through its social venture, PURPOSE Jewelry. By providing survivors with a safe workplace, the venture helps them gain economic freedom, access to education, and quality health care. During the early days of the COVID-19 pandemic, PURPOSE Jewelry strengthened its community bonds by mobilizing its network to share messages of hope on social media through its Spark of Hope campaign while checking in on volunteers.

Raising awareness

The impact of a social enterprise extends far beyond dollars raised or houses built—social ventures amplify awareness of critical issues and inspire others to take action.

The North Lawndale Employment Network, a nonprofit serving residents of its small Westside Chicago community, shows how awareness spreads through its social venture, Sweet Beginnings. The venture sells raw honey and skin care products while providing employment opportunities to formerly incarcerated individuals.

“Sweet Beginnings’s ecommerce store has been instrumental for us to reach people with our message and our work, and continue to communicate with them around the impact of the work that we’re doing here in this particular community,” said Daphne Williams when she was chief growth officer, explaining the growth and purpose of a social enterprise. The company’s ecommerce presence has cultivated followings in Washington, DC, Los Angeles, New York, and the San Francisco Bay Area—spreading its message far beyond Chicago’s borders.

Attracting mission-aligned talent and investors

Social ventures possess a unique advantage in today’s purpose-driven economy: They attract people who want their work and investments to create meaningful change. Talented professionals increasingly seek employers whose values align with their own, particularly among younger generations who prioritize purpose alongside paychecks.

This mission alignment extends to investors. The impact investing market has grown substantially, with investors actively seeking ventures that deliver both financial returns and measurable social outcomes. These mission-aligned investors often provide more than capital—they bring networks, expertise, and patience for the longer timelines social ventures sometimes require to achieve profitability. Your social mission becomes a competitive advantage, helping you access talent and capital that purely profit-focused businesses might struggle to attract.

Common pitfalls of social enterprises

Social ventures face unique challenges beyond those confronting traditional startups. Understanding these pitfalls helps you navigate around them and build a more resilient organization.

Some common pitfalls of social ventures include the following: 

• Mission drift, whichthreatens social ventures when financial pressures mount. The temptation to chase revenue opportunities that compromise your social mission can derail your entire purpose. Successful social ventures build mission alignment into their governance structures, ensuring board members and investors share commitment to social impact alongside financial sustainability.
• Inadequate impact measurement, which undermines credibility and funding opportunities. Social ventures that can’t demonstrate measurable outcomes struggle to attract grants, impact investors, and customers who care about results. Invest in robust measurement systems early, even if they seem expensive relative to your budget.
• Underestimating operational complexity, which causes many social ventures to stumble. Balancing dual bottom lines, managing diverse stakeholder expectations, and operating with limited resources requires exceptional organizational skills. Build strong operational systems and consider bringing in experienced advisers who understand the unique challenges of mission-driven organizations.

Social venture examples and case studies

Social ventures span every industry and tackle challenges from education access to environmental protection. These examples demonstrate how different organizations structure themselves to create both impact and income.

Technology for good

Technology social ventures leverage digital tools to solve social problems at scale. These organizations often achieve rapid growth by eliminating geographical barriers and reducing delivery costs through automation and digital distribution.

Khan Academy exemplifies this model, providing free educational content to millions worldwide while funding operations through donations and partnerships. Its nonprofit structure allows it to prioritize universal access over revenue maximization, yet it maintains financial sustainability through diversified funding sources.

Sustainable products and services

Product-based social ventures embed their mission directly into what they sell. Every purchase becomes an act of social impact, creating a virtuous cycle where business growth directly correlates with positive change.

Patagonia operates as a for-profit company that donates profits to environmental causes and actively encourages customers to buy less through repair programs and used gear sales. Their commitment to environmental protection shapes every business decision, from supply chain choices to political advocacy, proving that mission-driven companies can compete with traditional businesses on quality and price.

Community development initiatives

Community-focused social ventures address local challenges through place-based solutions. These organizations often combine multiple revenue streams—from product sales to service delivery—to support comprehensive community development.

Greyston Bakery in New York practices “open hiring,” offering jobs to anyone who wants to work, regardless of background, including those with criminal records or histories of homelessness. The for-profit bakery supplies major brands like Ben & Jerry’s while providing employment, training, and support services that help employees build stable lives.

Funding your social venture

Social ventures access diverse funding sources unavailable to traditional businesses. Understanding this funding landscape helps you identify the right capital for your stage and structure.

Impact investing landscape

Impact investors specifically target ventures creating measurable social and environmental benefits alongside financial returns. This market has matured significantly, with dedicated impact funds managing billions in assets and established metrics for evaluating both financial and social performance.

The US remains the global leader in venture capital, accounting for 57% of the total worldwide deal value, with US VC firms closing 14,320 deals worth $215.4 billion in 2024. While not all venture capital targets social ventures, the growing emphasis on environmental, social, and governance (ESG) criteria means more traditional investors now consider social impact in their decisions.

Grants and philanthropic funding

Foundations and government agencies offer grants specifically for social ventures, particularly those structured as nonprofits or addressing priority social issues. These non-dilutive funds don’t require giving up equity or paying interest, making them attractive for early-stage ventures.

Competition for grants remains fierce, and the application process demands significant time and expertise. Successful grant seekers align their missions closely with funder priorities, demonstrate clear theories of change, and provide robust impact measurement. Consider hiring grant writers or consultants if this funding source aligns with your model.

Traditional venture capital

Some social ventures attract traditional venture capital, particularly those with scalable technology platforms or innovative business models. Total global venture capital investment for 2025 is forecast to be around $400 billion, and social ventures increasingly compete for this capital.

However, with $307.8 billion in capital ready to be deployed, investors have been holding off due to market uncertainty, geopolitical instability, and valuation concerns. Social ventures seeking traditional VC must demonstrate clear paths to significant financial returns while maintaining their social missions—a balance that requires careful structuring and governance.

   

In the 70 years since its humble beginnings as a post-Thanksgiving, Main Street sales event, Black Friday has evolved into a multi-week, global retail blitz. Black Friday Cyber Monday (BFCM) has become a season in its own right, starting around early November, peaking on the Friday after Thanksgiving, and gradually tapering off right up until Christmas Eve. Pre-sale invitations, heavy discounts, huge brand engagements on social media, and festive traditional ads—it’s all part and parcel of the modern holiday shopping season.

According to Shopify data, 2024 BFCM sales were up 24% over 2023, totaling $11.5 billion in global sales from Shopify merchants alone. More than 67,000 merchants had their highest-selling day ever on Shopify over that weekend, which makes sense given that the past two years saw the highest-ever number of BFCM shoppers, according to a 2024 survey from the National Retail Federation.

With consumers almost universally in a spending mindset, the BFCM season is a can’t-miss opportunity for businesses large and small—which means planning often takes place year-round. Below, brands share their BFCM preparation strategies to boost revenue, brand awareness, and customer loyalty. Borrow from their playbooks to make this and future holiday sales seasons the best yet.

Start customer acquisition efforts early

For Jones Road Beauty, BFCM efforts start in the summer, with customer-facing strategies kicking off in September. “Generally, from the beginning of September through the end of October, we have about three launches that go on, each catering toward different demographics,” says Payal Plofker, senior director of brand marketing at Jones Road Beauty. “We’re trying to get as many people interested in our brand during that time by casting as wide of a net as possible.”

Once those new leads and customers are in the brand ecosystem, Jones Road Beauty is primed for its BFCM sale, which focuses on promoting its customers’ favorite product, mini Miracle Balms, in a custom set. “We basically took our most recognizable product, the product everybody comes to us for, and made it into a more digestible form, something that people could feel pretty comfortable acquiring, as their first purchase,” Payal says.

The team at skin care brand Beekman 1802 also starts planning early. “We always choose a theme for the holiday, and we start building that story really by the end of the summer,” says cofounder Dr. Brent Ridge. “We try to lead with the storytelling and get people engaged throughout the holiday season, so that when it comes time for Black Friday and Cyber Monday, they’re really primed for a deal because we’ve gotten them excited with the storytelling for several months.”

Choose the right discount

Historically, major retailers have used Black Friday as an opportunity to clear out excessive inventory, slashing prices during years when products are heavily overstocked, and minimizing discounts when inventory levels are moderate. Recent research shows that brands may not need to significantly slash prices to entice shoppers. According to email platform Klaviyo, “Discounts in the 10–15% and 20–25% ranges performed better than steep price cuts, underscoring a shift toward value-driven purchasing.”

Another factor in the discount puzzle is brand image: Setting discounts too high may offend loyalists who’ve been spending full price all year, or dilute customer perception of your brand’s value. To strike the right balance, brands calculate an appropriate discount level supported by their brand messaging and sales creative.

For example, luxury hair care brand Crown Affair’s strategy for threading this needle is offering bundled, rather than sitewide, discounts. While its “Build your ritual” bundle is discounted by 15% year-round, during BFCM, it doubles the discount to 30%. This approach allows it to focus on strategic storytelling about the product bundle while also driving sales with promotional pricing.

At the same time, the brand ensures that every part of the sales messaging is as tasteful and stunning as the rest of the brand aesthetic, says Jordyn Casaus, Crown Affair’s director of marketing. “You won’t find prices slashed by 50% and flashing red across the site,” she says.

Time sales to support brand goals

Brands see success with varying approaches to sale timing and duration. What’s important is aligning the sale’s narrative with your brand ethos and goals. Olive oil brand Graza opts for a month-long Friendsgiving sale in October instead of a traditional BFCM sale. “It’s a really impactful strategy for us to have a sale that’s outside of a standard sale period where there are tons of brands kind of fighting for attention in your inbox,” says Kali Shulklapper, director of brand marketing at Graza. “This will be our third year doing it.”

Cookware brand Our Place takes a different approach, choosing to keep its BFCM sale more limited in time to preserve the integrity of its pricing strategy. “[We] keep it limited because it is intended to be a special offer for a moment in time,” says cofounder and co-CEO Shiza Shahid. “If it drags on too long, then it can undermine your overall pricing as well.”

When apparel brand Set Active plans its sales, it focuses on standing out against its competitors by offering an additional sale after BFCM. “We made our own Black Friday in December, and we call it Setmas,” says founder Lindsey Carter. “We’re just trying little creative things here and there that get people wanting to come back to us rather than go to a different deal or sale that goes on during that time.”

Plan for the demand

The BFCM shopping spree can be unpredictable, which makes inventory management critical. Identifying seasonal trends in past sales data can help businesses predict how big a sales boost they can reasonably expect. Every year, Jordyn and her product and operations teams at Crown Affair ask, “What did we do last year? What was the demand? What was the product sell-through based off of all of our SKUs? We essentially take that, apply it to this year’s revenue goals that we need to hit, and buy and plan based on that,” she says.

Sales projections are half the battle. Businesses also need contingency plans to handle unforeseen shifts in demand. Purchase safety stock, set up low-stock alerts, and configure automated reorder points for popular products. Tools like the Stocky app for Shopify POS allow you to set minimum stock levels based on supplier lead times and anticipated demand; they then automatically generate a purchase order for the relevant supplier when supply falls below the threshold.

In addition to increasing its inventory, protein snack brand Elavi is also ensuring its website can meet BFCM demand. “We’re testing everything on the site,” says cofounder Michelle Razavi. “We’re going to be updating our website, updating our pop-ups, and when you do that, you want to make sure that you’re running through everything to make sure you’re not breaking anything. So we do a lot of testing behind the scenes to make sure, ‘OK, does this work?’ especially for new products and bundles.”

Keep people engaged after the sale

A good BFCM strategy doesn’t end once the weekend comes to a close. This is an opportunity to nurture new customers and reward those who’ve purchased from your brand year-round.

Crown Affair tackles this in two ways. First, the brand rewards loyal customers with extra deals after the main BFCM sales event. They’re typically short, single-day deals that target single products. And the deals aren’t widely advertised. “It depends every year based on behavior,” Jordyn says, “but we extend that offer to our VIP and our loyal customers via email and SMS to offer an additional thank you so much for being with us. Thank you for loving us. Here’s something extra for you.” That way, if their loyal fans wanted to stock up on a product that wasn’t on sale during BFCM, they’ll get the chance through a direct message.

Second, the team plans new product launches and tailored marketing moments in January through March to nurture and engage new customers who came in from the sale. “When bringing in new customers at a discount, you’ll need a strategy for keeping them engaged post-discount,” Jordyn says.

Generate insights year-round

For Our Place, BFCM success is all about testing new strategies early in the year so they have a handle on what will resonate best with their customers by the time November rolls around. “January is a time of experimentation,” Shiza says. “We can try new things. We can launch new channels. We can A/B test.” She says they focus on taking “those big swings early in the year so that we can then implement and build them and reap the benefits of that in Q4. It really is a full-year process.”

The team at Beekman 1802 echoes the importance of generating insights year-round. “We also really take in feedback from our consumers throughout the year of what they really want to see,” says David Baker, the brand’s chief digital officer.

Consider sale alternatives

While BFCM most often is associated with sales, brands also use the season to promote other business goals. REI famously gained brand attention with its antithetical Opt Outside campaign, which debuted for Black Friday in 2015. Every year since, REI closes its stores for the day to reinforce the organization’s belief that a “life outdoors is a life well lived.” The event was an earned media home run for the brand and led to partnerships with hundreds of other brands and nonprofits. 

Since then, more sustainability-minded brands have found ways to leverage BFCM to support their missions. Tentree, an environmentally conscious apparel company, launched a Green Friday initiative to offer discounts on sustainable products and, ultimately, help the brand reach its tree-planting goals while building buy-in and brand loyalty. For each item sold, the brand plants 10 trees. Members gained perks like a map showing where their trees were planted and double rewards points on orders.

You can also tie your BFCM sale to a fundraising goal. Sustainable fashion brand and certified B Corp Poppy Barley pledged 100% of its net BFCM profits (up to $15,000) in 2024 to KidSport Canada, an organization that covers sports registration fees for youth athletes.

Bringing a new product to market is a high-stakes moment. If it disappoints customers, its chance of succeeding in the market drops to about 5%, according to a finding from a NIQ BASES analysis of over 21,000 launches.

Product testing is the final rehearsal before the big show. Whether it’s a new lip stain or a new kind of chocolate chip cookie, proper testing guarantees your new product is ready to hit the market in its best form. 

Ahead, you’ll learn about different product testing methods and tips to ensure your products meet the highest quality standards.

What is product testing?

Product testing helps retailers evaluate a product’s performance with target markets. It lets you find the best products for consumers, identify cost savings, and meet regulations, ultimately allowing you to launch the best products.

Product testing also helps you reduce returns—as well as the many other expenses you’ll incur if you discover flaws after the untested product has launched.

The importance of product testing 

Retailers that want to launch new products quickly tend to overlook product testing. But skipping it means missing out on key benefits like:

Developing new products

If you’re taking a new product to market, you need to know if it will resonate with potential customers. Product testing helps you launch products people will actually buy. 

You’ll learn what customers think of your product, what they like or dislike about it, how they use it, and which packaging options influence their decisions.

Meeting regulations

Extensive testing can help you ensure a product complies with government standards and protects your company from lawsuits. 

For example, if you sell candles, you must ensure they meet the ASTM F2417 fire-safety standards for candles and their accessories, such as maximum allowable flame heights, stability, and secondary ignitions. 

Identifying cost savings

To avoid up-front costs, some small businesses opt out of product testing—however, this decision can result in missed long-term benefits and increased risk for their company. 

The American Society for Quality suggests that the cost of quality is around 15% to 20% of sales, but can run as high as 40% in some companies. 

Testing products can reduce the chance of defects and product failures, as well as fewer repairs, returns, and warranty payouts.

Improving existing products

Creating a product people love is hard. Sometimes, you need to make continuous improvements to meet new expectations and market trends. 

Regular product testing gives you valuable qualitative data to update existing products faster and uncover hidden use cases from the customer’s point of view. 

Discover new use cases

Businesses develop products to solve specific problems, but customers often find new ways to use them. 

The success of a product depends on its ability to meet its promises and fulfill its purpose. Rigorous testing ensures a product satisfies customer needs and builds brand trust before it hits store shelves. 

Types of product testing

Concept testing

Concept testing takes place once you start creating your product. It helps you test an idea and try different product concepts on potential customers before you invest in a prototype. The goal is to understand if there’s real purchase intent. 

Prototype and usability testing

A product prototype is the first model of your product. It acts as a minimum viable product (MVP) to test with people and use as a sample for production. 

You can create a prototype on your own if you’re skilled in a particular discipline—like pottery if you’re a home interiors brand. If you own a fashion label, you may want to work with a seamstress or pattern maker to develop an MVP.

Beta-testing or user-testing phases are vital for understanding how real users interact with the product. For instance, users might struggle with an interface that seemed intuitive to the designers, revealing a need for a redesign. 

Perhaps the printed insert with instructions for assembling a children’s furniture set is too complicated, so you create a short video to demonstrate the process instead.

Quality testing

Quality testing helps identify any defects, issues, or areas for improvement. It typically involves testing product features, which ensures the item works as intended, and performance testing, which checks how well it performs under certain conditions.

You can see this in action with a clothing retailer testing a new line of denim jeans. They might:

• Test the fit on different body types
• Run a shrinkage test to see how the material changes after being washed
• Test the fabric for color retention after it’s ironed

Durability testing

This test shows how well your product holds up over time. It pushes your product to the limit to see how it withstands real-world use. The goal is to find weak spots and confirm the product’s lifecycle before customers do. 

If you’re selling non-stick pans, for example, you might:

• Use a machine to simulate scraping the surface thousands of times
• Run the pans through 500+ dishwasher cycles to check for damage
• Repeatedly heat and cool the handle to prevent it from loosening

Product safety and compliance testing

Most products have to run through safety and compliance testing by law. It verifies that your product is safe for people to use and meets all official government regulations and industry standards. 

A brand selling a portable charger has to undergo various tests, like meeting the UL 2056 standards for electrical and physical safety, or passing the UN 38.3 transportation tests for vibration, shock, and altitude simulation. Knowing your product class can help you understand the standards you’ll have to meet. 

Packaging testing

Product packaging has two jobs. The first is to protect your product from damage, and the second is to represent your brand with excellent product presentation. Packaging tests the strength of shipping materials and the quality of your customer’s unboxing experience. 

Say you’re selling glass bottles of sauce. You’d likely perform tests like:

• Run drop tests from various heights to see if the packaging prevents breaks
• Use a vibration table that mimics a bumpy delivery truck ride
• Ask people to open the package to ensure it’s not frustrating to unbox

Price testing

Price testing helps uncover your target market’s willingness to pay for the product. Instead of relying solely on competitor research or predetermined profit margins, price testing takes the product’s unique features, use cases, and opinions from the target market to determine the optimal retail price.

Product testing strategy

Without a well-defined product strategy, teams can become reactive rather than proactive, addressing issues haphazardly as they arise rather than systematically. 

1. Define your goals and metrics
2. Find and recruit your testers
3. Choose your testing method: CLT vs. IHUT
4. Execute the test and gather data
5. Plan a soft launch
6. Analyze feedback and iterate

1. Define your goals and metrics

First, you need to decide on your target audience and market needs. Understanding buyer preferences and interests allows you to validate and refine product concepts before investing in development. It all starts with a clear product vision. 

Business owners often hire market research firms or consultants, but given their love of spending time with customers, many retailers conduct their own market research. 

2. Find and recruit your testers

A focus group is the testing team interacting with your new product. This should be as diverse as possible—each member should bring varied perspectives that can catch issues others might miss. 

For example, cultural differences can affect how a product is perceived, and what might be acceptable in one culture could be problematic in another.

A product-testing website offers a broader audience and structured feedback opportunities. They give you access to testers who may otherwise be out of reach. Be sure to vet these sites and understand their tester pool, data handling, and privacy policies.

Some of the best product testing websites include:

Before giving your product away for free, ensure everyone understands the testing protocols, assessment criteria, and ways to score the tested attributes. Considering hosting a pre-test session to address any questions or concerns.

3. Choose your testing method: CLT vs. IHUT

Researchers use two product testing methods to assess a product: the central location test (CLT) and in-home use tests (IHUT). Both have their pros and cons.

Central location test (CLT)

A central location test is typically used to conduct qualitative research. Tests take place in a controlled environment, like a room in a shopping mall. The goal of CLT is to get feedback on products in a face-to-face environment with reduced bias. 

There are a few ways to carry out your central location test:

• Monadic: Everyone focuses on one product and assesses how it would work if taken to market.
• Pair comparison: People compare two products and choose which one they like best. 
• Sequential monadic: People assess one product using the monadic model. Then, they assess a second product and compare the two. 

The main advantage of CLT is that testers monitor everyone in the same environment, eliminating outside influences and presenting material in the same way. You can also monitor and observe body language and reactions. 

People may ask questions in person that they might not have answered online. This works both ways: A researcher can ask questions based on a participant’s actions in real time. As a result, researchers can test tangibles and intangibles together. Taking notes on participants’ sensory impressions is easy for testers.

Plus, CLT is a cost-effective method of testing. Market researchers can book a location and test many people in the same place, saving time, money, and resources.

In-home usage test (IHUT)

In-home usage tests are another popular market research methodology. As part of testing, you ship products to participants so that they can use them at home in a natural environment. IHUTs are common when the product is designed for home use, like a Dirt Devil vacuum cleaner or Annie’s organic soup. 

The goal of IHUT is to understand the impression, appeal, and purchase intent of a product. It’s ideal for one-off or multi-usage products that require long feedback periods.

IHUTs let consumers fully test a packaged product before launching it to the public. This lets you work out any kinks and improve based on real-world feedback. Because IHUTs happen in a consumer’s home, the results are more realistic regarding product satisfaction, usage, and improvement areas. 

You can collect feedback over the phone, through customer surveys, video calls, or in person. Or, with IHUT market-research software, you can collect in-the-moment feedback remotely and ask consumers questions while they use the product. 

4. Execute the test and gather data

Once you have a product prototype in place, it’s time to test it on real people. 

Be crystal clear on what you’re testing. Excellent tests start with a strong question, like, “Does our target audience find our product innovative?” Be as specific as possible.

Common metrics retailers test include:

• Purchase intent: Will people buy your product?
• Innovation: Do people find your product innovative? 
• Value: Is your product valuable to users?
• Relevance: Does your product meet users’ needs?
• Uniqueness: Is your product different from others in the market? 

Use a Likert scale to assess the opinions and attitudes of product testers. Then, turn these insights into actions to guide development and inform improvement. 

The easiest way to gather this data is through customer feedback surveys. You can use a free tool like Typeform to collect product concept feedback before shipping a prototype for testing. Be sure to ask no more than 30 questions per product concept test, or you’ll risk people dropping out of your survey. 

5. Plan a soft launch

A soft launch refers to releasing a product with little or no marketing push. Think of it as a rehearsal for the full product launch—a good time to get feedback from early adopters. 

Soft launches are an opportunity to deepen customer relationships. Invite VIP customers, or those participating in your loyalty program, to be early testers of the new product. 

These VIP testers get insider access and an opportunity to influence your product assortment, which builds a sense of ownership. It can turn VIP customers into brand ambassadors—even if the product you’re testing hasn’t yet been perfected.

Tip: Use a product launch checklist to make sure you hit all the right steps. 

6. Analyze feedback and iterate

Whatever method you choose to test products, remember that testing is key to every part of the product lifecycle. You want to continuously collect customer feedback and use it to make product enhancements. 

This process of continuous improvement is how sustainable electric toothbrush brand SURI operates. Cofounder Gyve Safavi explains that for his team, testing is an ongoing cycle, not a one-time, pre-launch event. Their goal was to move beyond a merely functional product to create something customers would genuinely enjoy.

“We did quite a few iterations, probably like 20 iterations before we launched. We conducted testing with dentists and sustainability experts early on, and as we’ve launched, we’re constantly iterating the design of the brush. The main thing for us was that we needed to achieve minimal lovable product,” Gyve says. 

How long does product testing take?

Product testing should take place as early as possible. When product teams wait to test products, they miss out on discovering flaws and uncovering new insights. Delays—whether to save money or refine features—often result in launching products that miss the mark.

How long it takes to run the test depends on factors like the focus group size, the test method, and whether you need to retest after iterating on the product based on your initial round of feedback. 

If speed is a priority, run a central location test. It brings your testers together in a single location, often giving you feedback within a day or two. But speed can come at the cost of accuracy. In-home usage tests, where the focus group has the product in their usual environment, can highlight usability or quality issues that weren’t present in a simulated test environment.

Product testing tips for retailers

Product testing is prone to mistakes that can alter results and waste your time. Follow these tips to deliver a high-quality product that meets user expectations and works properly:

1. Document the procedure: Document every step of your product development process clearly. That way, you can easily replicate it. Consistency is key to generating reliable, comparable results.
2. Keep an open mind: Expect unexpected feedback, and don’t dismiss it if it doesn’t match your expectations. The best insights come from surprising feedback.
3. Encourage real-time feedback: Encourage testers to provide feedback while they’re using the product. This yields more accurate and authentic insights than delayed recollections.
4. Prepare for variability: Be OK with variability in your results, especially when working with human testers. Differences in perceptions, preferences, or habits can lead to variation. Plan to include a wide range of testers to ensure diverse perspectives are represented.
5. Have a data-management strategy: Collecting data is only half the battle. Managing it is equally important. Put systems in place for storing, analyzing, and interpreting the data you collect during testing. Tools like Qualtrics can help manage the process effectively. 
6. Communicate your results: Data is only as good as your ability to communicate insights. Translate your product-testing results into actionable, understandable reports for your team. Whenever possible, use visual aids like charts or graphs to illustrate key points.

Can your store benefit from product testing? 

A product testing process is a critical part of your company’s success. Research, plan and test continuously. It’s the best way to understand what works and what doesn’t—and stay competitive.

More than just a point-of-sale (POS) system, Shopify has many features that help retailers run product tests. Use built-in analytics tools to conduct market testing, collect customer feedback, and unify your data into a centralized repository for a single source of truth when refining new ideas.

Business goal	Giveaway type	Example
Increase followers	Social media engagement contest	“Follow our Instagram, like this post, and tag two friends to enter.”
Collect user-generated content	Video or photo submission contest	“Post a photo styling your favorite outfit from our boutique using our branded hashtag.”
Grow email list	Email signup giveaway	“Sign up for our newsletter to enter to win a $50 gift card.”
Drive foot traffic	In-store giveaway	“Visit our boutique and spin the wheel to win a prize.”
Increase product awareness or brand recognition	Product-naming or video submission contest	“Help us name our new sweater and win a free one.”
Support a cause	Charitable giveaway	“For every entry, we’ll donate $1 to a local women’s shelter.”
Drive sales	Gamified giveaway	“Earn one entry for every $10 you spend in-store.”

Owning a retail business can be rewarding. But wearing a thousand hats a day can lead to overwhelm and burnout. 

On the days when you need a reminder about why you started your business in the first place, reading inspirational retail quotes can reignite the passion to grow your retail business. 

At Shopify, we want to help inspire you. That’s why we’ve created a list of 50 uplifting retail quotes from successful retailers and leaders to help motivate you and your team. 

Happy reading. 

Inspirational retail quotes for entrepreneurs

On mission

“People don’t buy what you do, they buy why you do it.” ―Simon Sinek

Author of Start With Why: How Great Leaders Inspire Everyone to Take Action and Leaders Eat Last: Why Some Teams Pull Together and Others Don’t

Key takeaway: The products or services you sell aren’t the reason you start a business, but a means of reaching a larger goal. Lead with your why—and your team, suppliers, collaborators, and customers will buy into that goal, too.

On vision

“Whatever you’re thinking, think bigger.” ―Tony Hsieh

Former CEO of Zappos and author of Delivering Happiness: A Path to Profits, Passion, and Purpose

Key takeaway: Imagine a world where you have no constraints. How big would you build, and what could you achieve?

On problem solving

“Everything is figureoutable.” ―Marie Forleo

Motivational speaker, life coach, and author

Key takeaway: No matter how big a problem seems, there’s always a solution. Don’t sweat the small stuff, and always stay focused on your options and next steps.

On grit

“The most difficult thing is the decision to act, the rest is merely tenacity.” ― Amelia Earhart

Aviation pioneer and author

Key takeaway: Retail entrepreneurship allows you the freedom to be your own boss and make your own choices. But it takes tenacity and grit to keep going, stay innovative, and grow your business.

On giving back

“If you want to lift yourself up, lift up someone else.” ―Booker T. Washington

American educator, author, orator, and adviser to presidents of the United States

Key takeaway: Ninety-one percent of consumers are more likely to buy from a company that supports social or environmental issues. As well as being good for your brand, giving back can energize you and your team to reach your goals.

On passion

“The only way to do great work is to love what you do.” ―Steve Jobs

Cofounder of Apple

Key takeaway: Building a retail business requires more than a desire to be successful—you need true passion for the work you are doing.

On happiness

“Instead of wondering when your next vacation is, maybe you should set up a life you don’t need to escape from.” ―Seth Godin

Bestselling author of 18 books, marketer, public speaker, and entrepreneur

Key takeaway: It can be hard to take a break when you’re building a retail business—but if you really love your work, you’re less likely to feel like you need one.

On mindset

“Whether you think you can or you think you can’t, you’re right.” ―Henry Ford

Founder, Ford Motor Company

Key takeaway: Our thoughts can become a self-fulfilling prophecy. If you start by believing you can achieve what you want to achieve, you’ll keep pushing until you do. 

On self-reflection

“Every action is an opportunity to improve.” ―Mark Graban

Author of The Mistakes That Make Us: Cultivating a Culture of Learning and Innovation, consultant, speaker, podcaster, and entrepreneur

Key takeaway: No matter how good you think you are or how well you think you’re doing, there’s always space to do even better. Reflect, appreciate the great work, and look for an opportunity to improve.

On first steps

“The only thing worse than starting something and failing is not starting something.” ―Seth Godin

Bestselling author of 18 books, marketer, public speaker, and entrepreneur

Key takeaway: All the planning in the world isn’t enough to be certain of success—but if you never start, you’ll never be successful. People regret the things they didn’t do far more than the things they did.

On consistency

“People like consistency. Whether it’s a store or a restaurant, they want to come in and see what you are famous for.” ―Mickey Drexler

Former CEO and chairman, J. Crew Group

Key takeaway: Building customer trust and loyalty takes time. If you’re thoughtful and consistent in your offerings, your customer base will grow.

On taking risks

“Be brave. Take risks. Nothing can substitute experience.” ―Paulo Coelho

Author of 30 books

Key takeaway: If you never try to do something, you’ll never gain the experience of knowing what works and what doesn’t. It’s good to calculate the risk-versus-reward ratio, but taking a chance usually delivers better results than retreating.

On innovation

“I learned to push the envelope when it comes to asking questions or making requests. And if you hear ‘that’s not possible,’ then ask ‘what is possible,’ instead of just saying thank you and leaving.” ―Emily Weiss

Founder, Glossier

Key takeaway: People often say things aren’t possible because they’ve never managed to succeed in making them work. If you see a way to do something differently, try it.

📚Read: 27 Retail News Sites & Newsletters to Follow

On curiosity

“Like most retailers, we don’t know exactly where we will land at the end of it, but our curiosity and willingness to create will be a guide for us.” ―Jesper Brodin 

CEO, IKEA

Key takeaway: Sometimes you have an idea of what you want to achieve, but you’re not sure how to get there. Curiosity takes you to a place you didn’t even know you wanted to go.

On simplicity

“We have a very complex business where we make our own products that we manufacture, distribute, and sell across multiple channels in different markets across the globe. We need to introduce simplicity into our systems where we can.” ―Paul Stephens

Head of data and technology, Neal’s Yard Remedies

Key takeaway: Business and retail can be complicated. Where there are opportunities to make processes and other tasks simpler, take them.

On setting goals

“Setting goals is the first step in turning the invisible into the visible.” ―Tony Robbins

Life and success coach, author of self-help books like Unlimited Power, Unleash the Power Within, and Awaken the Giant Within

Key takeaway: Seeing the place you want to get to can make you push harder to get there. 

On action

“You can’t build a reputation on what you are going to do.” ―Henry Ford

Founder, Ford Motor Company

Key takeaway: Planning and setting goals is important, but it’s not worth anything to anyone if they can’t see you do it. Instead of just thinking about it, go out there and get results.

On fundraising

“I approached fundraising as an opportunity to align myself with partners who have more varied experience and diverse backgrounds than I do to help bring Glossier to life.” ―Emily Weiss

Founder, Glossier

Key takeaway: While investment can be a purely financial transaction, it also creates opportunities to bring in expertise from people who can support your business in other ways. 

On partnerships

“The biggest sources of opportunity are collaboration and partnership. And today, with digital communication, there is more of that everywhere. We need to expose ourselves to that as a matter of doing business.” ―Mark Parker

Executive chairman, Nike

Key takeaway: There are valid reasons to be wary of social media and other forms of digital communication. But when you use them wisely, you create opportunities to collaborate with the brightest minds in every corner of the world.

On opportunity

“It has been my observation that most people get ahead during the time that others waste.” ―Henry Ford

Founder, Ford Motor Co.

Key takeaway: Staying motivated and focused when your competitors are not using their time wisely can open up opportunities to get ahead.

On store design

“My company is an extension of me, so when I designed my stores, I wanted people to feel that they were in my home.” ―Tory Burch

Founder and creative director, Tory Burch

Key takeaway: A brick-and-mortar store is much more than a location to sell. It’s a chance for brand marketing, to show the world your personality, and to build strong customer relationships.

On emotion

“Your customer doesn’t care how much you know until they know how much you care.” —Damon Richards-Evangelista

Fictional character, played by Ryan Jamaal Swain, in the FX television series Pose, written by Steven Canals, Ryan Murphy, Brad Falchuck, Janet Mock, Our Lady J

Key takeaway: Sales is all about building relationships. Customers remember how you made them feel more than any specific product or sales pitch.

On connection

“Nobody in my shop’s allowed to stand behind the counter unless they’re actually ringing somebody up. It’s greeting, it’s listening. It’s a very traditional customer service approach.” —Cricket Newman

Owner, Cricket Newman Designs

Key takeaway: Connect with your customers and give them your full attention. Give them space but be ready the moment they need you.

On trust

“Our brands—Nike, Converse, Jordan Brand, and Hurley—are loved by customers all over the world. But we never take that for granted. We know that every day we have to earn their trust—by serving them completely and adding real value to their lives through products and experiences.” —Mark Parker

Executive chairman, Nike

Key takeaway: In business, the consequences of losing trust can be devastating. Make sure you are working to consistently earn and retain your customers’ trust.

On staying customer-centric

“Retail is a customer business. You’re trying to take care of the customer, solve something for the customer. And there’s no way to learn that in the classroom or in the corner office or away from the customer. You’ve got to be in front of the customer.” —Erik Nordstrom

CEO, Nordstrom Direct

Key takeaway: Customers are at the heart of everything you do, so keep them at the center of every decision you make. You can support your customers and you can learn from them too.

Retail quotes on customer experience and delight 

On crafting great experiences

“People are always going to go shopping. A lot of our effort is just ‘How do we make the retail experience a great one?’” —Phillip Green

Chairman, Arcadia Group

Key takeaway: The retail landscape is changing. But whether you’re selling products in person or online, your number one priority should be to create a positive shopping experience for your customers.

💡 PRO TIP: Offering in-store pickup as a delivery method at checkout is a great way to get more online shoppers to visit your store. To get started, enable in-store pickup availability in Shopify admin to show online shoppers whether a product is available for pickup at one of your stores.

On service mindset

“The customer’s perception is your reality.” ―Kate Zabriskie

Founder and president, Business Training Works

Key takeaway: Your internal retail metrics mean nothing if a customer feels let down. A customer’s perception is the only reality you must manage, making every touchpoint an opportunity to shape their understanding.

On relationships over transactions

“Make a customer, not a sale.” ―Katherine Barchetti

Pittsburgh specialty retailer, K. Barchetti Shops

Key takeaway: Shift your focus from closing a single transaction to opening a long-term relationship. Securing a loyal customer for life generates far more value than simply completing one sale.

On micro-moments

“Make every interaction count, even the small ones. They are all relevant.” ―Shep Hyken

Customer experience advisor and author

Key takeaway: Customers notice the little things. Nailing the small, everyday moments is the key to creating a great overall customer experience.

On “moments of truth”

“Any time a customer comes into contact with any aspect of a business, however remote, is an opportunity to form an impression.” ―Jan Carlzon

Former CEO, Scandinavian Airlines; author of Moments of Truth

Key takeaway: Treat every point of contact with your customer as a test, because that’s how they see it. From the way you answer the phone to the clarity of your instructions, each detail is an opportunity to either earn their trust or lose it.

On experiences that drive loyalty

“Physical stores are no longer merely a distribution channel for products but more importantly a key channel for experiences… It’s no longer simply about sales per square foot but rather experiences per square foot.” ―Doug Stephens

Retail futurist and founder of The Retail Prophet

Key takeaway: Give people a reason to show up that isn’t just about buying something. If you make the shopping experience itself interesting and enjoyable, sales will naturally follow.

On customer happiness

“A thrilled customer is the most potent marketing asset your organization can leverage.” ―John Jantsch

Small-business marketing author, Duct Tape Marketing

Key takeaway: Why pay for ads when your customers could do your marketing for free? A recommendation from a happy customer is more trusted and effective than any ad campaign you can buy.

On learning from complaints

“Your most unhappy customers are your greatest source of learning.” ―Bill Gates

Cofounder, Microsoft; philanthropist

Key takeaway: Customers who complain are a gift, as most unhappy people leave without a word. Treat each piece of feedback as a window into why customers are walking away and what you can improve.

📚Read: 18 Retail Blogs Every Small Business Owner Should Be Reading

Motivational retail quotes on sales and growth 

On removing roadblocks

“Every sale has five basic obstacles: no need, no money, no hurry, no desire, no trust.” ―Zig Ziglar

Sales trainer and author

Key takeaway: Instead of trying to force a sale, identify the roadblock that’s keeping it from happening and work to remove it. 

On sales as the starting line

“Nothing happens until a sale is made.” ―Thomas J. Watson Sr.

Former chairman and CEO, IBM

Key takeaway: At its core, your business relies on sales more than anything else. Every other decision you might make depends on whether customers are buying, so make that your number one priority.

On persistence and momentum

“The difference between successful people and others is how long they spend time feeling sorry for themselves.” ―Barbara Corcoran

Founder, The Corcoran Group

Key takeaway: Failure and setbacks are an inevitable part of growing a business. Instead of dwelling on them, view them as a learning opportunity and keep moving forward. 

On focusing your effort

“Sales cure all.” ―Daymond John

Founder, FUBU

Key takeaway: When you’re overwhelmed with problems, focus on the one activity that brings in cash. More sales mean more money, and more money can make most business problems disappear.

On learning your way to quota

“Sales is an experiment—there’s no right or wrong, just varying degrees of effectiveness.” ―Jill Konrath

Sales strategist and author of Agile Selling

Key takeaway: The most effective salespeople are relentless tinkerers, constantly testing their approach and adapting to what actually works. Treat every interaction with your customers as an experiment, and move forward with what works. 

On making growth predictable

“Defining the sales methodology enables the sales training formula to be scalable and predictable.” ―Mark Roberge

Former CRO, HubSpot and author of The Sales Acceleration Formula

Key takeaway: Create a standard approach for how you and your team sell products. Consistency helps you forecast sales and helps you grow your business without sacrificing quality. 

On connecting the dots

“Growth is never by mere chance; it is the result of forces working together.” ―James Cash Penney

Founder, JCPenney

Key takeaway: No single factor drives growth—it’s the result of every aspect of your business working together. 

Retail quotes for leading and motivating employees

On culture

“Businesses often forget about the culture, and ultimately, they suffer for it because you can’t deliver good service from unhappy employees.” —Tony Hsieh

CEO, Zappos

Key takeaway: A bad company culture doesn’t just affect employees, but everyone else who interacts with your business. Keep employee satisfaction high for a better chance at keeping customer satisfaction high too.

On employee happiness

“Too many businesses today are based on driving prices lower by screwing over somebody: pounding suppliers or squeezing employees. We’re the opposite. We put our employees first. If you take care of them, they will take care of your customers better than anybody else.” —Kip Tindell

Cofounder, The Container Store

Key takeaway: Your internal company culture ultimately shapes your customer experience. Stick to your values and treat everybody in every corner of your business with respect and integrity.

On employee loyalty

“I believe that if they’re feeling good about the company, then they’re going to stay with me a long time. I’ve been in business 10 years, and I have staff who’ve been with me eight years. So that’s really important to me, because then they build up a clientele as well.” —Janet Wright

Owner, FloorPlay Socks

Key takeaway: Employee retention is a critical part of your business strategy. If you treat your employees well so they want to stay and do their best work every day, you can concentrate on making your wider business strategy a success. 

📚Further reading: 8 Proven Employee Retention Strategies

On leadership

“When you look at the reasons people leave companies, it’s usually because their boss is a jerk or because they aren’t learning and growing. So we spend a lot of time developing leaders internally and creating learning opportunities.” —Neil Blumenthal

Co-CEO, Warby Parker

Key takeaway: Good leaders are able to quickly assess needs and support their retail associates in improving or reaching goals. 

Retail quotes on innovation and change

On standing out

“You walk into a retail store, whatever it is, and if there’s a sense of entertainment and excitement and electricity, you wanna be there.” —Howard Schultz

Former CEO, Starbucks

Key takeaway: What keeps customers coming back? It’s not just your products, but the energetic and positive environment you create with your retail location.

On memory

“You cannot run a successful retail business from memory.” —Josh Hartford

Key takeaway: There are too many moving parts in business to rely on memory alone. Get the right tools to manage inventory and purchases, making it easier to manage retail operations from day to day.

💡 PRO TIP:Shopify POS comes with tools to help you control and manage your inventory across multiple store locations, your online store, and your warehouse. Forecast demand, set low-stock alerts, create purchase orders, know which items are selling or sitting on shelves, count inventory, and more.

On efficiency

“One order management system, one database, one inventory. Without these you will never seem seamless to your customer.” —Andy Laudato

COO of The Vitamin Shoppe

Key takeaway: Having too many complicated back-end systems can impact the customer experience. Streamline those systems and processes wherever possible to make your business run smoothly.

On productivity and focus

“If it isn’t a clear yes, then it’s a clear no.” ―Greg McKeown

Author, Essentialism: The Disciplined Pursuit of Less

Key takeaway: Stay focused on your priorities and don’t leave room for second-guessing. If you aren’t clearly enthused about something, it’s not worth your time.

On change and agility

“Change almost never fails because it’s too early. It almost always fails because it’s too late.” ―Seth Godin 

Bestselling author of 18 books, marketer, public speaker, and entrepreneur

Key takeaway: When you spot an opportunity to adapt or improve, move quickly. Waiting until change becomes necessary usually means you’ve fallen behind.

On challenging the status quo

“If you do what you’ve always done, you’ll get what you’ve always gotten.” ―Tony Robbins

Life and success coach, author of self-help books like Unlimited Power, Unleash the Power Within, and Awaken the Giant Within

Key takeaway: If you stick to the same formula, you’re unlikely to see any improvement in your results. Keep your finger on the pulse of your industry and stay in tune with changing trends and the competition.

Take away the retail quotes that inspire you

There are many powerful retail quotes above and you can’t absorb them all. So take away the words of wisdom that inspire you the most. Look back at them when you need to lead, delight, save time, or simply make the most of every day. 

Whether your dream is a boutique on Main Street or running an online clothing store from your laptop, the same foundation applies: Validate your idea, align with market trends, design and produce pieces people will buy, and choose the right mix of channels to sell them.

This is your guide to how to start a clothing store: from developing your niche and brand to finances, production, permits, store design, staffing, marketing, and day-to-day operations. 

And because most modern retailers sell through more than one channel, we’ll also cover what it means to open a clothing store online while connecting it to your brick-and-mortar operations. 

This approach, called unified commerce, ensures that your inventory, orders, and customer data all sync in one place, so you can focus on growing your business instead of wrestling with spreadsheets.

How to start a clothing line and store

Much like opening any other retail store, launching a clothing store involves a mixture of legal compliance, financing, marketing, and operations.

From choosing a business model to design, manufacturing, financing options, and how to set up both a physical location and an ecommerce shop, consider this your opening-a-clothing-store checklist so you can get your new business up and running.

1. Develop your niche and business plan
2. Define your brand identity
3. Figure out your finances and startup costs
4. Legally establish your clothing business
5. Design your collection and source materials
6. Find a manufacturer or production method
7. Choose your sales channels (online vs. retail)
8. Acquire permits, licenses, and insurance
9. Design your store’s layout and experience
10. Choose your point-of-sale (POS) system
11. Develop a marketing plan
12. Hire and train your staff
13. Streamline your store operations
14. Network and build community partnerships

1. Develop your niche and business plan

Every successful small clothing store needs a clear focus. Think about what type of clothing store you want to open, who will be your target customers, and what problems you’ll solve for them.

It helps to match what you love with what your community (and target audience) needs. For example, a recent Business of Fashion report found that older shoppers (age 57 and above) now drive 37% of spending within the clothing industry. They are expected to contribute nearly half of its growth in the near future, so you might target underserved niches within this growing demographic.

Your fashion retail store needs something that makes it unique. This could be:

• Selling clothes no one else in town offers
• Using eco-friendly or sustainable materials
• Having the best customer service
• Offering unique sizes other stores don’t carry
• Offering an affordable alternative to fast fashion

For example, Mizzen+Main created dress shirts with performance fabrics that look professional but feel like athletic wear, solving the problem of uncomfortable business attire. 

2. Define your brand identity

Part of how to start a clothing store and develop a business plan is crafting your brand identity. Think of your brand identity like the operating system for your business decisions. It influences everything from your logo to what fabrics you choose to how a product page reads. 

You can build a compact brand identity for your own clothing line in five straightforward steps:

• Draft a one-sentence positioning statement. This should bring your mission into focus—both to your customers and you as you grow and market the new clothing business. Your brand identity might hinge on, “We provide affordable workout clothes for everyday people,” or, “We sell high-quality children’s clothes that last.” Use this template to get started: “For [audience], our [product category] delivers [unique value] because [proof].”
• Define your target audience and what they need. What moments are you dressing (daily commute, gym-to-office, special events)? Which frustrations do you eliminate (fit, breathability, care, price)?
• Set voice and tone guardrails. Decide on three adjectives for your brand voice (for example: unfussy, expert, warm) and some rules for how you’ll communicate with your audience, like do’s and don’ts for headlines, product detail page (PDP) copy, and transactional emails.
• Design a visual system. Include both primary and secondary logos, a defined color palette with accessibility contrast in mind, and a set of typeface pairings that will be used consistently across your store and marketing. You should also establish usage rules for product photography—for example, how often to use on-model versus flat-lay images, and what background colors to standardize on—so that everything looks cohesive.
• Define your photography language. Decide which image types you’ll always include, such as on-model shots (full body, mid-length, and detail), flat-lay arrangements, close-up fabric images, and lifestyle photos that show your products in context.

💡 Pro tip: Create a one-page brand brief to have on hand when you write marketing materials and brief photographers and manufacturers. Consistency will speed up production, lower return rates, and build your brand faster.

3. Figure out your finances and startup costs

Your rent, labor, and inventory strategy are going to be unique to your business, so resist the urge to Google “average boutique costs.” Instead, create your own plan with the actual math you’ll run when you launch.

List your startup costs and separate them by category. These may include:

• Business setup: Formation fees, seller’s permits, professional services
• Design and production: Sampling, pattern/grade, tech packs, initial minimum order quantity (MOQ) deposit, labels, packaging
• Store build and fixtures: Lease deposit, buildout, paint, flooring, lighting, racks, signage, tables, mirrors, inventory storage
• Ecommerce and POS: Domain, theme, apps, hardware (barcode scanner, label printer)
• Operating runway: Employee training budget, opening inventory cost, marketing for launch, initial payroll, business insurance premiums
• Contingency: Plan for a 10%–15% buffer on estimated costs

Next, create a 12-month financial forecast. Begin by setting unit sales targets by month and assigning an average unit retail price for each product. Then estimate your cost of goods sold (COGS) to calculate your gross margin. 

One of the most important metrics to track is gross margin return on inventory (GMROI), which shows how much profit you are generating relative to your inventory investment. The formula is simple: 

GMROI = Gross Profit ÷ Average Inventory Cost

A GMROI above 1 means your inventory is working for you, while anything below 1 signals that you are tying up cash in products that aren’t generating enough return.

As you forecast, pressure-test your cash flow assumptions. Consider how payment terms with your manufacturer will align with when you plan to sell through inventory. For example, if you’re required to pay a 50% deposit up front and the balance before goods ship, make sure your launch timeline allows you to generate sales quickly enough to cover those payments.

💡Budget tip: When comparing point-of-sale (POS) providers, remember total cost of ownership—not just subscription line items. Independent research showed that retailers using Shopify POS see 22% lower total cost of ownership (TCO) on average versus competitors, with significantly lower ongoing support costs. That savings can be reallocated to opening inventory or staff.

4. Legally establish your clothing business

As a small business owner, you must legally establish your business entity in the state where you primarily operate. You’ll likely choose one of these two business structures for your clothing store: 

1. Sole proprietorship, where there’s no legal distinction between yourself and the clothing store. It’s quicker to get up and running, but you’re personally liable for every aspect of the business. 
2. Limited liability company (LLC), where you and your business are treated as two separate entities. This can protect your personal assets from debt, but any profits and losses are reported on your personal tax return. 

You’ll have to obtain an employer identification number (EIN) from the IRS to use for tax reporting. Obtaining an EIN is simple and free—you can apply online or submit form SS-4 to the IRS. Many banks also require an EIN when you open a business bank account. 

Shopify provides state-specific startup guides that acquaint you with business registration requirements in most of the US.

5. Design your collection and source materials

Your clothing line is the heart of your apparel business. Before you commit to full production, start with a small, focused collection that represents your brand identity and gives customers a reason to buy from you. 

Start by choosing one or two hero styles that clearly express your niche (for example, a wrinkle-resistant shirt that actually breathes, or a size-inclusive everyday dress that hangs correctly on more body types). Define each style’s role in the line, target price, target margin, and core customer use cases so you can judge whether it earns its keep.

Once you have chosen your first products, translate your ideas into clear specifications that a manufacturer can follow. This is done through a document called a tech pack—the blueprint for your garments. A complete tech pack includes: 

• Technical drawings (called “flats”)
• Graded measurement tables with tolerances
• A bill of materials listing fabrics, trims, labels, and packaging
• Detailed construction notes that specify seams, stitches, and finishes

Your tech pack should also set out the care and labeling requirements you plan to use in production, because US apparel must carry labels that disclose fiber content, country of origin, and the manufacturer or marketer. It must also include regular care instructions under the FTC’s Textile Fiber Rule and Care Labeling Rule.

By providing this level of detail, you reduce the risk of miscommunication, speed up sampling, and keep sizing consistent across runs.

Source your materials strategically by ordering samples first. Request sample fabric and trim cards from multiple suppliers, then test them before cutting any samples: Wash and dry the fabric to check for shrinkage, assess whether colors bleed or fade, and inspect how it feels and recovers after stretching. Confirm lead times, dye/finish minimums, and reorder timelines to ensure your launch and replenishment plans are realistic.

Calculate the cost of each style before you cut fabric. Add up materials, production labor, trims, and overhead to estimate your total cost. Compare that cost to your planned retail price to verify your gross margin targets. Then run the style through your inventory model using GMROI to make sure the economics work based on how much you plan to buy and how quickly you expect it to sell. If GMROI falls below 1 in your model, adjust your price, product mix, or order quantities before you proceed.

Once your design and sourcing feels ready, you can prepare what your manufacturer will need next: final tech packs, approved material swatches, your fit model specs, and a short list of compliance requirements (for example, the exact care-labeling statements you intend to use). Sampling and production decisions happen with your manufacturing partner in the next step.

6. Find a manufacturer or production method

Choose a production path that matches your cash flow, lead-time tolerance, and quality goals.

Most first-time fashion brand founders choose from five options:

• Cut-and-sew with a domestic factory: You provide the design, patterns, and materials, and a factory in your home country produces the garments. This option typically has higher labor costs but shorter lead times, easier communication, and lower shipping expenses.
• Cut-and-sew with an overseas factory: Similar to domestic cut-and-sew, but production takes place abroad—often in countries with large-scale garment industries. This usually offers lower per-unit costs and more capacity, but requires larger minimum orders and longer lead times due to shipping and customs.
• Private label using existing blocks: You customize preexisting garment designs (known as “blocks”) from a manufacturer by adding your own branding, labels, and sometimes small design tweaks. It’s faster and less expensive than creating entirely new patterns, but limits your collection’s uniqueness.
• Print-on-demand for graphic/apparel basics: A supplier prints your designs—such as logos, graphics, or text—onto blank apparel items only after an order is placed. This eliminates up-front inventory costs, but restricts your control over fabric, fit, and garment quality.
• Dropshipping: A third-party supplier handles production, storage, and shipping of apparel directly to your customers under your brand. You don’t hold inventory or handle fulfillment, but profit margins are lower and you have little oversight of product quality or shipping speed.

Once you’ve picked a path, evaluate factories carefully. Ask for comparable style references, current capacity, typical MOQs, and standard payment terms. Share your tech packs and request a quote and a timeline showing patterning, sampling, production, and ship dates. 

If you plan to sell wholesale or make sustainability claims, ask about facility certifications and audit history. Certifications such as WRAP (Worldwide Responsible Accredited Production) verify lawful, humane, and ethical manufacturing practices, while OEKO-TEX and GOTS address material safety and organic-fiber processing. Choose certifications that align with your brand values and meet retailer requirements.

Then, it’s time to sample production. Start with a fit sample to test the silhouette and key measurements on your fit model. Note specific pass/fail decisions by each point of measure, not just whether it “looks good.”

Next, approve a pre-production (PP) sample made with final fabrics, trims, labels, and packaging. Only after a PP pass should you greenlight production, issue your purchase order, and confirm the carton-marking and quality assurance plan. Make sure to verify your US labeling is correct and complete.

7. Choose your sales channels (online vs. retail)

Now that you know what you’re making and who’s making it, decide where you’ll sell first and how those channels will work together. 

Many founders launch online to validate demand quickly, then add a popup or small storefront to capture local traffic. Others start with a boutique and add ecommerce to extend reach beyond their neighborhood.

Whichever route you choose, aim for a unified setup that keeps inventory, orders, and customer profiles in one system; this will reduce manual reconciliation, prevent oversells, and make it easier to offer omnichannel conveniences like buy online, pick up in-store (BOPIS).

Find a physical store location

Opening a physical store means having a place to sell products directly to customers face to face. Unlike other commercial spaces (like offices or warehouses), retail spaces attract shoppers and showcase your merchandise.

Choosing the right location for your clothing store is one of the most critical decisions you’ll make. A great product and a compelling brand can fall flat if your store is hidden in a low-traffic corner, while a prime location can give you built-in visibility and a steady stream of shoppers.

When evaluating spaces, look at more than just the square footage. Consider factors such as:

• Foot traffic and visibility: Spend time in the area at different times of day and on different days of the week to get a real sense of how many people pass by. Choose places where your target customers already shop or spend time. A storefront that’s easy to see from a main street or intersection will naturally attract more walk-in customers.
• Complementary neighbors: Being near businesses that draw a similar customer base (like coffee shops, fitness studios, or other fashion retailers in your price range) can create natural cross-traffic.
• Accessibility and parking: Make sure your store is easy to reach by car, public transit, or on foot. Parking or convenient transit stops can make the difference between someone stopping in or skipping your store.
• Costs other than rent: Ask about utilities, common area maintenance (CAM) fees, insurance requirements, and buildout costs. A low advertised rent may be offset by high extras.

You can find spaces from a commercial real estate website, network with other business owners, or simply explore neighborhoods and look for “For rent” or “For lease” signs. Hire a retail-specialist broker to surface better options and negotiate lease terms on your behalf.

Set up your online store

Even if you plan to run a brick-and-mortar boutique, having an online clothing business is essential today. It expands your reach beyond your immediate neighborhood, gives you a sales channel that operates 24/7, and creates a hub for digital marketing like social media, email, and search.

To set up your ecommerce store:

• Choose a platform that scales: Shopify, for example, is built specifically for retailers who want to unify their in-store and online operations. Choose a plan you can operate today and upgrade only when specific needs arise.
• Secure your domain name: Ideally, this should match your brand name as closely as possible and be easy for customers to remember. Create a brand email (like support@[your domain] or info@[your domain]) and route order confirmations and support tickets to it.
• Set up back-end essentials: Configure sales tax settings, connect a payment processor so you can accept credit cards and digital wallets, and choose shipping options. For shipping, decide whether you’ll handle fulfillment yourself, use a third-party logistics provider (3PL), or combine both approaches.
• Install apps or plugins: You may need inventory tracking tools, preorder systems for new collections, and integrations with marketplaces or social channels. Setting these up now ensures your catalog can sync seamlessly across channels later.
• Test before launch: Place a few trial orders to make sure payments process correctly, taxes are calculated accurately, and confirmation emails are sent as expected. This small step prevents customer frustration on opening day and helps you catch errors while the stakes are low.

By handling the foundational setup now, you free yourself to focus on design and merchandising later. The stronger your back-end systems are, the easier it will be to scale when your store gains traction.

8. Acquire permits, licenses, and insurance

Before you sell your first item, you’ll need to make sure your business is legally compliant. The exact requirements vary by state and municipality, but there are three main areas to cover: permits, licenses, and insurance.

Permits and licenses

Most states require retail businesses to obtain a general business license and a seller’s permit (sometimes called a resale certificate or sales tax license). A seller’s permit allows you to collect sales tax from customers and to buy inventory tax-free from wholesalers. 

For example, in California, clothing retailers must apply for a seller’s permit through the California Department of Tax and Fee Administration, while in states like Delaware or Montana (which have no state sales tax), the requirements are different. 

Always check with your state’s business authority or local city clerk’s office for local requirements.

For online commerce: Note that in addition to a permit for the state from which you run your business, you may need additional seller’s permits for other states where you have a significant sales presence (known as an “economic nexus”).

Insurance

Even small boutiques need insurance to protect against risks like customer injuries, theft, or property damage. The most common types of insurance for clothing retailers include:

• General liability insurance: Thiscovers customer injuries, property damage, and lawsuits. Insureon estimates that general liability insurance costs an average of $42 per month. 
• Commercial property insurance: Thisprotects your store’s physical space, fixtures, and inventory against risks like fire or vandalism.
• Workers’ compensation insurance: This isrequired in most states if you have employees. It covers medical costs and lost wages for staff injured on the job.

Get at least three quotes and compare coverage limits, deductibles, and exclusions, not just premiums. Some insurers offer business owner’s policies (BOPs) that bundle liability and property insurance at a lower cost.

9. Design your store’s layout and experience

The way you design both your physical and online store will shape how potential customers perceive your brand and how easily they can shop.

For brick-and-mortar stores, you’ll need to decide how much space to devote to customer areas versus storage, how wide to make aisles, and where to position fitting rooms, displays, and checkout. These choices influence sales, customer experience, and inventory loss.

For online stores, layout translates to navigation, product page design, and the way you present sizing and photography. Just as a cramped physical store can frustrate shoppers, a confusing website can cause visitors to bounce before they buy.

For brick-and-mortar stores

How you arrange your clothing store affects both shoppers’ experience and your daily operations. A good store layout can boost sales, reduce theft, and make your own clothing line memorable.

Here are the zones you’ll need to keep in mind when arranging your clothing store’s layout: 

• Customer areas: Dedicate at least 70% of your floor space to customer areas. Ensure your aisles are at least four feet wide to prevent a cramped feeling and create clear pathways that guide shoppers through your store in a logical way—usually counterclockwise.
• Display space: Put new or seasonal items near the entrance, place your most profitable items at eye level, and create attention-grabbing displays with mannequins. Try grouping items in threes for visual appeal.
• Fitting rooms: Make sure these areas have good lighting, flattering mirrors, enough hooks for clothes, and some seating. Shoppers often decide to buy based on their fitting room experience, so ensure privacy, cleanliness, and sufficient space.
• Storage: You need organized space to manage inventory. Install shelves, hanging racks, and a system that helps staff find items quickly. Think about where you’ll store seasonal items and how staff can restock without getting in customers’ way.
• Staff area: Set aside space where your employees can take breaks, store personal items, handle paperwork, and receive training. Include basics like a desk, computer for tracking inventory, and maybe a small fridge and microwave.
• Checkout counter: Put your cash register where staff can see it throughout the store while being easy for customers to find. Make sure there’s enough counter space for bagging purchases and displaying small impulse-buy items.

Try to use movable fixtures when possible so you can change your layout for different seasons, or just to keep things fresh for returning customers. 

For online stores

When it comes to arranging your online store, many of the same principles apply—you want a digital shop that feels reliable, polished, and easy to navigate. You also have to account for the fact that customers can’t physically see, touch, or try on your products, and account for that with detailed photos, descriptions, and accurate product details.

Some steps to take:

• Organize your navigation: Make it easy for shoppers to browse by category, such as “Tops,” “Dresses,” or “Accessories.” Include size, color, and price filters so customers can quickly find what they’re looking for.
• Create a sizing guide: Sizing confusion is one of the top reasons for ecommerce returns. Publish a detailed sizing chart, ideally with photos or videos showing how garments fit.
• Invest in product photography: Clear, high-quality clothing photos are non-negotiable. Include a mix of on-model shots, flat lays, and detail images. Consider short product videos or 360-degree spins to show fit and fabric movement.
• Write compelling product descriptions: Go beyond basic details. Explain how a garment fits into a customer’s lifestyle, highlight fabric or sustainability features, and add care instructions to build trust.

Your online store is often the first impression customers have of your brand. Treat it with the same care and attention you’d give to your physical storefront—because for many shoppers, it is your storefront.

10. Choose your POS system

Your point-of-sale (POS) system is the technology that powers every aspect of your clothing store. More than just a tool to ring up customer orders, cashiers in your boutique can use the POS system to retrieve inventory data, reference customer data, and process payments—sometimes from anywhere in the store. 

Look for a clothing store POS that offers seamless unification with your online store. Shopify is the only platform to do this natively. Both POS and ecommerce are built on the same platform so your data feeds back to one central operating system. Inventory, customer, and order data is consistent everywhere you sell. 

This approach helps you build brand awareness and offer seamless omnichannel experiences modern customers demand, whether that’s:

• Displaying inventory levels at a customer’s nearest store on a product page
• Letting customers buy products online to pick up in-store 
• Using ship-to-home to take payment for in-store orders and passing the details onto a warehouse for fulfillment

The benefits of unified commerce are proven. Unified commerce simply means that all your sales channels—your physical store, your website, your social media shops—are connected and run from a single system. This prevents data headaches and creates a seamless experience for your customers.

According to a recent study, retailers using Shopify POS benefit from 7% lower third-party support costs and operational improvements that contribute a benefit equivalent up to a 5% uplift in sales.

It’s no wonder that 62% of Shopify POS customers in the apparel and accessories industry have recommended the platform to someone else.*

11. Develop a marketing plan

A clothing store—whether online, physical, or hybrid—needs a smart, realistic marketing strategy to drive awareness, traffic, and conversions. Without one, even the best products won’t sell.

Think of your marketing strategy as a continuous loop: Attract → Engage → Convert → Retain → Amplify. Each stage builds on the one before it:

• Attract: Before you even open your store, focus on building awareness and collecting leads. Run campaigns to grow your email and SMS lists, tease your launch on social media, and send products to creators or influencers to get your brand in front of the right audience.
• Engage: Once people know about your brand, keep them interested. Share behind-the-scenes content, founder stories, or style guides that highlight your unique point of view. Content marketing and user-generated content (UGC) are especially powerful here, because they show customers how your products fit into their lives.
• Convert: When it’s time to buy, make the process irresistible. Launch with targeted offers, turn on retargeting, and create PDPs that answer fit, fabric, and care questions. Paid acquisition channels like Facebook, Instagram, TikTok, and Google Shopping are effective for finding buyers at this stage.
• Retain: After the first sale, build customer loyalty. Send care guides, offer reordering prompts, and create loyalty rewards to encourage repeat purchases. This is where you’ll improve margins—returning customers typically spend more and cost less to reach than new ones.
• Amplify: Finally, turn happy customers into advocates. Run referral programs, create affiliate partnerships, and highlight customer reviews or UGC. During peak sales periods, affiliates and influencers can drive a significant share of revenue.

If you have a brick-and-mortar store, drive foot traffic with a targeted local marketing strategy. Start by establishing a strong online presence through local search engine optimization, social media platforms, and a Google Business Profile to appear in nearby searches. Engage with community members through local social media groups and geotargeting to reach potential customers within your store’s vicinity.

Other effective local marketing strategies you can use to drive foot traffic toward your clothing store include:

• Hosting in-store events or workshops
• Partnering with complementary local businesses
• Creating eye-catching storefront signage
• Securing local media coverage
• Collecting customer emails at checkout
• Using geotags on social media posts
• Sponsoring community events

For example, lingerie retailer LIVELY offers bra fitting sessions. Online shoppers can schedule their session through the brand’s ecommerce website, then turn up at their nearby store to receive personalized sizing details and product recommendations from their fitting specialist. 

LIVELY found something interesting about the shoppers who booked one of these fitting sessions: Not only do they account for 30% of all in-store revenue, but they also spend between 60%–80% more during their visit. 

12. Hire and train your staff

It’s difficult to start a clothing business singlehandedly. But retail is notorious for turnover and talent gaps; the Bureau of Labor Statistics (BLS) reports the annual turnover rate for the retail trade sector consistently hovers at around 60%. You need systems—not hope—to build a dependable team.

Start by defining roles you absolutely need at launch: sales floor staff, fulfillment/back-room staff, a store manager, etc. Write clear job descriptions with responsibilities, hours, compensation, and training requirements. When interviewing, look for alignment with your brand in addition to skills and experience. 

After hiring, use a 30-60-90 training plan with frequent check-ins to get employees up to speed:

• First 30 days: Basic product knowledge, systems access, store policies, safety
• Days 31-60: Customer service best practices, basic merchandising, POS workflows, returns
• Days 61-90: Advanced selling techniques, conversion metrics, personal upsell goals, store rhythm ownership

Install a scheduling app that integrates with your POS and staff to peak hours first, like EasyTeam for Shopify POS.

13. Streamline your store operations

Solid retail operations are the daily activities that keep your business running efficiently. A beautifully merchandised store or slick website won’t grow itself; you need processes, systems, and metrics that keep things running smoothly, reduce friction, and enable scale. 

Operations covers components such as:

• Customer service that feels consistent across all channels through unified customer profiles
• Clothing inventory management that prevents costly stockouts or overstocking
• Streamlined checkout processes that reduce abandoned purchases
• Easy returns and exchanges turn potential disappointments into new sales
• Staff management with proper training and scheduling

In addition to processing payments from your POS system, centralize accounting, inventory management, customer relationship management (CRM), and sales tax remittance in your back office so POS updates flow automatically. Shopify POS handles all of these tasks and more, thanks to its robust features suite.

For instance, when a customer makes a purchase, Shopify POS can automatically calculate the required sales tax, add the transaction to your sales ledger, update your inventory stock, and add the customer to your CRM database. 

14. Network and build community partnerships

You can gain market share and goodwill by partnering with local businesses in your area. This might mean sharing expenses, like two retail neighbors splitting an internet subscription. It could also mean referring customers to your business neighbors with the expectation that those businesses would do the same for you. 

Alternatively, strengthen relationships with joint marketing campaigns. A clothing retailer could partner with a nearby jewelry store to give customers a 10% discount on each other’s products. Position this as a great way for customers to complete their outfits while benefiting from a stream of new customers who’ve been recommended by your partner. 

*Methodology: Online survey among 1,000 Shopify POS customers, conducted in November 2023 by the Shopify Research Team.

Walk into any retail store, and you’ll find a silent salesperson working tirelessly: the signage. From the logo above your door to in-store displays, your retail signage greets, informs, and persuades customers. It shapes how they move through your space and influences how much they spend.

The best signage makes your brand visible, shortens purchase decisions, and creates a seamless shopping experience. In contrast, poor signage confuses shoppers and costs you sales. 

Ultimately, custom signage serves both marketing and retail operations—it drives awareness while making your store fundamentally easier to shop.

What is retail signage and why is it crucial for sales?

Retail signage is any type of graphic display in and around your store that communicates a message to a target audience. It is the first and most persistent way your store communicates with customers. Signage includes outdoor signs, window displays, informational signage, digital signage, and more. 

From the moment someone spots your storefront to the signs that guide them to checkout, signage shapes how shoppers move, what they notice, and whether they buy. In other words, it’s a critical sales and operations tool that can include:

• Exterior signage: Storefront logos, window vinyl, pole signs, or A-boards
• Interior signage: Aisle markers, wayfinding graphics, or category headers
• Persuasive signage: Promotional end caps, shelf talkers, or floor decals
• Digital signage: Video walls, menu boards, or QR-enabled displays

Each type plays a distinct role in creating a cohesive retail design that helps shoppers feel oriented and confident navigating your store and making purchases.

Research clearly shows that signage impacts sales. A recent Mood Media/MyTotalRetail survey showed that 58% of shoppers actively notice in-store displays, and that nearly half of those say their purchase decisions were influenced by those displays.

Signage also makes your store easier to navigate. If customers can’t find what they came for, they’re far less likely to return. That’s why signage and store layout should work together to create a natural flow.

Finally, signage supports conversions and brand-building. Persuasive signs at decision points highlight promotions or cross-sells. Consistent typography and color palettes reinforce brand trust. Digital signage adds flexibility, letting you adapt messaging instantly to match inventory, events, or seasonal promotions.

Key types of signage for your retail store

Every sign in your store serves a distinct purpose, and the most effective signage strategy matches the format with its function. Broadly, you can think about signage by location and objective—what it needs to do for your customers and where it works best in your space. 

There are four key types of retail signage for brick-and-mortar stores:

1. Exterior signage
2. Interior wayfinding and informational signage
3. Persuasive and point-of-purchase (POP) signage
4. Digital and interactive signage

Exterior signage

Outdoor signage is arguably the most important type of signage in physical retail, because it’s what brings customers in the door—the largest hurdle to beginning a relationship with a potential customer. Exterior signage makes your storefront’s first impression. It’s what tells passersby who you are, what you offer, and whether they should come inside. The most common formats include:

• Fascia or storefront signs, mounted above entrances to clearly display your brand name
• Projecting or blade signs, fixed perpendicular to the building so they’re visible from down the street
• Window vinyl graphics, which can showcase promotions, opening hours, or your brand identity
• A-boards (sandwich boards), placed on sidewalks to advertise daily specials or draw attention

These signs need to do more than simply announce who you are—they should draw in customers and make them want something from you. Effective signage may encourage people who have passed your store many times before to finally give it a chance. 

Choosing durable materials is key for outdoor signs. Weather-resistant substrates like aluminum composite panels, UV-coated vinyl, or exterior-rated acrylic withstand rain and sun exposure. If you’re in an area with evening or early morning traffic, illuminated options—such as halo-lit channel letters—help you stay visible. 

Interior wayfinding and informational signage

Informational signage may also be known as departmental, directional, organizational, or wayfinding signage. Once shoppers are inside, wayfinding signs help them feel oriented and confident. If customers can’t easily find what they came for, they’re far less likely to buy or return. Interior signage often includes:

• Aisle markers that hang overhead or at aisle ends to identify product categories
• Department headers labeling major sections like “Men’s Apparel” or “Home & Kitchen”
• Store maps or directories in larger footprints, to help customers plan their route
• Category and subcategory signs at shelf or rack level to make browsing intuitive

Consistency is what makes these signs effective. Use the same fonts, colors, and iconography across all informational signage so customers don’t have to “relearn” the system as they shop.

All types of informational signage need to be concise and legible so clients can understand the message with just a split-second glance. Large, bold fonts in highly visible color schemes best accomplish this goal.

Many retailers use an assortment of informational signage, including acrylic, tabletop, window-mounted, and shelving signage to share product information. If you don’t have much shelving or counter space, you can use retail sign holders to guide shoppers through your store.

Once you start putting up informational signage, it becomes clear to you if your store is arranged in an orderly fashion with some rhyme or reason. Not only does this systematically benefit your customers, it also makes your internal structure more organized. 

Persuasive and point-of-purchase (POP) signage

While wayfinding reduces friction, POP signage is designed to influence buying decisions through convincing language or attractive imagery. These signs usually advertise a particular product or promotion. Persuasive signs or displays can influence customer flow and improve interactivity with otherwise unnoticed products. 

Signs that showcase a particular type of product offer an opportunity for retailers to communicate specific details of new, seasonal, or featured items. These signs are typically placed near products, promotions, or checkout areas and include:

• End-cap displays with bold headers that spotlight seasonal or promotional products
• Shelf talkers or shelf strips that call out discounts, features, or cross-sells right where customers are making comparisons
• Floor decals that catch the eye where shoppers naturally look down, guiding them toward a display or promotion
• Checkout prompts, like signage for impulse-buy items or service add-ons

Using persuasive signage allows brands to communicate with customers more effectively. These retail displays can turn an otherwise ordinary product into a popular hidden gem. Effective persuasive messaging can also enhance perceived value for products, increase brand awareness, and improve retail sales.

The power of POP signage is its ability to influence customers at the right moment, often increasing average purchase value. In other words, persuasive signage doesn’t just decorate—it helps customers commit. The key is to keep messages short, benefits clear, and placement aligned with the natural flow of your in-store marketing.

Remember: While persuasive sales signs should be eye-catching and witty, they are not the main attraction. The most effective signs draw the customers directly to the product.

Digital and interactive signage

Digital signage is an installation that displays video or multimedia content for advertising or informational purposes. It is powered by a media player that sends content to the display. 

Digital signage brings flexibility that static signs can’t. Screens, kiosks, and QR-enabled signs allow you to adapt messaging in real time and measure engagement directly. Formats often include:

• Digital menu boards or video screens, which can cycle through offers and promotions
• Interactive kiosks or touchscreens that give customers access to your full catalog, tutorials, or styling ideas
• Static signs with QR codes, bridging physical browsing with mobile experiences

For small retailers, this trend means digital solutions are becoming more affordable and practical. Beyond visibility, digital signage creates a measurement advantage: QR scans and landing-page traffic give you direct data on customer engagement, something static signs can’t offer. That makes digital signage not just a branding tool but a performance channel you can learn from and optimize over time.

Tech-savvy shoppers are always looking for exciting new ways to improve their shopping experience. That’s why Australian-based design firm Prendi created the Adventure Station, an interactive touchscreen experience for retail outlets to promote products and make sales easier. 

The touchscreen displays a range of content, including infographics, videos, 3D models, animations, and more. You can customize it to include product wayfinding, social media integrations, and mobile integrations. Many digital screen systems have a home base that controls all the screens in your store. 

Essential principles of effective signage design

Signage isn’t art—it’s communication. However, design is still an important part of making sure the right message gets across. Master these foundational principles to design effective signs.

Clarity and the five-second rule

Your sign’s message must land in seconds. If it takes a shopper more than five seconds to grasp your sign’s meaning, it’s too complex.

• Use one main idea: Don’t try to cram product details, directions, promotions, and branding all into one sign. Pick the single most important message.
• Keep the text tight: Use short phrases, omit filler words, and rely on context.
• Add a call to action (CTA): Once you’ve clarified what the sign is about, tell the shopper what to do next (for example, “See size chart,” or “Scan for video”).
• Use narrowcasting when possible: Design signage that speaks to the specific context or location (e.g., “Tops, left wall” or “Clearance: Sizes XX–XX”) to reduce mental friction.

Overcomplicated signage is ignored. One of the classic rules in signage design is that simple, immediate readability is a virtue. As you draft content, test it: Can someone understand it while walking slowly past the sign? If not, simplify further.

Color psychology and brand consistency

Color is about more than aesthetics—it influences emotion, perceived value, and brand recall. But its power comes from consistency and contrast.

• Stick to your brand palette, but use high-contrast combinations for signage (dark text on light backgrounds or vice versa).
• Use color intentionally, not decoratively: Red often signals urgency or discounts; green can suggest calm or a “go” sign; blue conveys trust. According to a recent study, color plays a central role in emotional responses and consumer perceptions in branding and design contexts. 
• Consistency matters. Align signage colors with your store’s visual identity so that every sign feels part of the same system. That builds trust and readability.
• Be aware of environmental interaction. Ambient lighting or adjacent colors can shift perceptions of your sign’s color, so be sure to test signage visibility under your store’s real lighting.

Color strategy is only effective when it’s legible and fits into your overall branding. Don’t pick an eye-catching hue if it makes your text unreadable.

Typography and legibility

Your copy can be great, but it won’t make an impact if no one can read it. Typography, spacing, contrast, and size are important tools in signage design.

• Avoid decorative, overly stylized fonts for body or directional text—they slow readers down. Stick to clean sans-serif or legible serif faces.
• Follow a hierarchy: headline (largest), explanatory text (smaller), and CTA (bolded or otherwise accented).
• Use mixed case, not all-caps, for anything longer than 3–4 characters—it’s more readable at a glance.
• Respect minimal stroke width and letter spacing so letters don’t collapse when viewed from distance.
• Consider illumination for readability in low light. LED-backlit or halo-lit signs often help signs stand out without harsh glare.

Retail signage design checklist

Use this checklist when designing or reviewing your signage:

• Single focus: Does the sign communicate exactly one main message?
• Five-second readability: Can someone understand it walking past in about five seconds?
• CTA: Is there a clear, directive next step?
• Contrast and color: Does the color combination maximize readability?
• Hierarchy and typography: Are headline, body, and CTA visually distinct and legible?
• Illumination and finish: Will lighting or glare affect readability?
• Brand alignment: Do colors and fonts match your store’s overall signage system?

Strategic signage placement inside and outside your store

Signage only works if shoppers see it in the right place at the right time. A strategic approach to positioning signs with intent—from curbside to checkout—ensures they grab attention, support navigation, and influence buying decisions.

Creating a visual hierarchy

Your signage system should align with the natural flow of the shopping journey, from curb appeal to store entry to focal walls to checkout. Each stage has a role:

• Curb appeal: Exterior fascia, blade signs, and window vinyl communicate who you are and why customers should step inside.
• Decompression zone or entryway: In the first steps after entering, customers reset. Use simple welcome or directional signage here—avoid promotional clutter that can overwhelm or confuse them.
• Focal walls and power zones: End caps, feature displays, or seasonal promotions should have persuasive signage that pulls customers deeper into the store.
• Checkout: Signs at registers or service counters prompt add-on sales, reinforce loyalty programs, or highlight services like gift-wrapping.

Designing and following this hierarchy helps your signage complement visual merchandising best practices instead of competing with them. The right message in the right zone creates momentum rather than distraction.

Considering sightlines and foot traffic

Great signage fails if it’s hidden, too small, or placed outside shoppers’ line of sight. Focus on eye-level positioning, decision-point placement, and roadside visibility to maximize impact.

• Eye-level placement: Signs between 30 and 60 inches from the floor are easiest to read. Avoid placing key information above natural sightlines or below knee level, where it gets missed.
• POP signage at decision points: End caps, cross-aisles, and checkout counters are the best places for persuasive and point-of-purchase signs. These placements align with decision points—places where shoppers pause and make micro-decisions—helping you increase sales.
• Roadside readability: For exterior signs, follow the general rule of one inch of letter height per 30–50 feet of viewing distance. If you expect drivers to see your storefront from 150 feet away, your letters should be at least 3–5 inches tall.

One other best practice: Don’t forget about alternative surfaces. For example, floor graphics and mats can reinforce wayfinding, add branding, or call out promotions in places where overhead signage isn’t practical. Mats serve a dual purpose: They improve safety and comfort while carrying directional or promotional messages.

When signage is placed deliberately, it not only drives sales but also improves the overall shopping experience. Measuring traffic patterns and sales lift with retail productivity tools can help you refine where signs work best in your store.

ADA (Americans with Disabilities Act) compliance for signage

Making customers feel welcome includes all customers. Offering accessibility by way of parking, entrances/exits, restrooms, cashier stations, fitting rooms, and elevators will make the experience more comfortable and enjoyable for shoppers with disabilities. If your location offers accessible features but doesn’t make them known, you’re doing your customers a serious disservice.

Not every sign in your store must meet ADA standards—but the ones that do have very specific requirements. Below, you’ll see which signs need to be ADA compliant; the tactile/braille, height, and character rules; and how to apply these in your store.

What signage must be ADA-compliant

ADA doesn’t require every sign to be tactile or braille. In general:

• Permanent interior signs that identify rooms, spaces, or convey directions (e.g., restrooms, exits, fitting rooms, elevators) must include tactile characters and braille.
• Directional signs to accessible entrances, routes, or exits and emergency exit signs must also comply.
• Raised characters and braille must be mounted 48–60 inches from the floor and have a clear floor space of 18 by 18 inches centered on the tactile characters free of doors, mats, or obstructions.
• Marketing or promotional signs do not require tactile/braille—but they should still be legible, using high contrast, readable fonts, and proper sizing.
• Always review local and state codes. Some jurisdictions may impose additional requirements beyond federal ADA rules.

If your accessible entrance is not your main entrance, your main door should include a sign directing customers to the accessible path or entrance. And if you use a portable ramp, you must include signage to indicate that customers can request it.

Measuring the impact of your retail signage

If you’re not measuring how well your signs are working, you’re leaving money (and insight) on the table. Treat signage like any other marketing channel: Assign key performance indicators (KPIs), test variations, and track return on investment (ROI).

Set clear KPIs by signage type

Different signs serve different jobs, so you need different metrics. For example:

• For exterior signage: Measure foot traffic lift by comparing daily visits before vs. after sign changes.
• For wayfinding and informational signage: Measure time saved navigating to products or customer satisfaction scores about ease of shopping.
• For point-of-purchase (POP) signage: Measure sales lift for featured stock keeping units (SKUs) or attach rate of advertised add-on items.
• For digital signage: Measure QR scans, landing page visits, or scan-to-purchase conversion rates.

The key is alignment. Don’t measure a wayfinding sign by how much product it sells—measure whether it makes shopping smoother and faster.

Use tools you already have

You don’t need enterprise analytics software to get started. Start with the basics:

• Point-of-sale (POS) sales reports can show whether promoted SKUs spike when signage is added.
• QR codes with UTM links turn any sign into a measurable channel by tracking scans, page visits, and conversions. In fact, QR adoption has gone mainstream—64% of shoppers scanned a QR code in-store in 2024.
• Customer surveys can capture qualitative data like, “Was it easy to find what you were looking for?” or “Which displays caught your attention?”

You can also use some basic testing methods. There are three that work for most SMB retailers, regardless of what kind of technology you have at your disposal:

• Pre/post testing: Capture baseline traffic or sales for a set period, add signage, then measure again. Keep timeframes and conditions as consistent as possible.
• A/B location testing: If you have multiple stores or zones, place signage in one and leave the other as a control. Rotate weekly to avoid bias and see what’s working.
• Rotation testing: Swap alternate versions of a sign (like a red vs. blue headline or different CTAs) in the same location, rotating every few days, and compare changes.

The goal is to isolate the effect of signage from external noise like promotions, weather, or seasonality.

Retail signage is too valuable to be left unmeasured. By tying each sign to a KPI, capturing data with simple tools, and running structured tests, you can treat signage like a performance channel—not an expense. The result isn’t just better signage—it’s a smarter store.

Video once killed the radio star, but today, video marketing can turn your brand into a global star. Ninety-one percent of customers say video impacts their trust in a brand, and 87% have been convinced to buy something after watching a video. That could be why 89% of businesses leverage video marketing, with 93% of marketers reporting a strong return on investment (ROI).

You, too, can wield the power of video marketing on social media platforms like TikTok, Instagram, Facebook, and LinkedIn, as well as on your own website to rank higher on search engine results pages (SERPs). Here are 10 successful video marketing examples to learn from.

Types of marketing videos

Whether you’re crafting your first video marketing strategy or looking to expand or retool your current one, here are seven versatile video types to consider for your next campaign:

1. Launch videos. Producing a video to debut your new product or service can build brand awareness and excitement, and give you the chance to share the story behind your latest release.

2. Explainer videos. If your offerings require training or guidance, create short how-to videos to help new customers orient themselves.

3. Brand collaboration videos. Videos featuring complementary brands can extend your reach to new audiences and offer viewers creative pairing ideas.

4. Behind-the-scenes videos. Whether it’s “how we made it” footage or clips of a light-hearted moment in your team’s day-to-day operations, behind-the-scenes videos can lend authenticity to your brand.

5. User-generated content (UGC). UGC involves real-world people making their own videos while using a product, offering a peer-to-peer review experience that 40% of shoppers say is important to their purchase decision.

6. Short-form videos. Short videos make an emotional appeal in just several seconds, instantly capturing users’ attention, providing entertainment for short attention spans.

7. Influencer videos. Influencer marketing works by leveraging the influencer’s established trust and direct engagement with niche communities who are likely to connect with your brand.

10 video marketing examples and why they work

1. The Honey Bed
2. KM Tools
3. Fishwife
4. Island Creek Oysters
5. Wild Brush
6. Dog Friendly Co.
7. Transformer Table
8. Dollar Shave Club
9. Diaspora Co.
10. SURI

Browse these video marketing examples to see different video content types and the creative touches that make each one stand out in the feed:

1. The Honey Bed

This straightforward, 45-second product launch video for dog bed brand The Honey Bed introduces the company, the product, and the founders—husband-and-wife team Gabe and Sydney Bollinger. In addition to sharing his experience in the industry, Gabe discusses the Honey Bed’s washability, classic aesthetic, and comfortable design.

• Key creative elements. A muted color palette, centered open captions, and clips that demonstrate a “day in the life” of the dog bed.
• What makes it memorable. The video showcases the founders (and their dog) in their own home, with Gabe speaking directly to the viewer to communicate The Honey Bed’s brand values.

2. KM Tools

In this in-depth explainer video, Jonathan Katz-Moses, founder of KM Tools, teaches viewers tips and tricks for crafting dovetail joints while showcasing his brand’s woodworking tools. Jonathan invites viewers to apply what they learn and encourages them to participate in a contest and tool giveaway that his brand is hosting on Instagram. This creates an opportunity for a cross-platform conversion, like an Instagram follow or an email newsletter sign-up.

• Key creative elements. High-quality editing, energetic music, closeups, and a woodworking studio setting.
• What makes it memorable. The small-business owner comes across as authentic, experienced, and excited to share his knowledge and tools.

3. Fishwife

This video introduces an easy, seasonal recipe for an appetizer featuring Fishwife tinned mussels and Firehook crackers as complementary “hero” ingredients using an informal voice-over script and jump cuts. This brand collaboration introduces both Fishwife and Firehook, showcasing their products as flavorful ingredients in a low-effort appetizer recipe while also demonstrating how easily both brands could fit into viewers’ own entertaining plans.

• Key creative elements. Warm, colorful close-ups and the narrator’s playful narration.
• What makes it memorable. The video’s casual tone and simple steps make viewers feel like they could effortlessly re-create the same dish.

4. Island Creek Oysters

In this TikTok video, Island Creek Oysters takes viewers behind the scenes of packing its caviar tins. The video shows employees sorting, weighing, and sealing the tins, while captions tell viewers how its methods set the company apart from competitors. The brand demonstrates transparency with its core audience, revealing how it goes the extra mile to deliver a quality product.

• Key creative elements. Takes viewers into an unfamiliar environment, and includes informative captions, and quick cuts.
• What makes it memorable. The viewer feels as though they’re being granted exclusive access to the information and scenes that follow.

5. Wild Brush

In this behind-the-scenes video, outdoor gear brand Wild Brush offers a window into its workshop, highlighting the craftsmanship behind its products. Close-up shots of the artisan handcrafting the hip packs, followed by scenes of someone using one on the trail, convey the company’s brand values: a love of nature and an appreciation for handcrafted items.

• Key creative elements. Varied shot angles and multiple locations to reflect the different crafting stages.
• What makes it memorable. In the final frame, someone pulls a seltzer from the finished pack while sitting outdoors, highlighting the product’s purpose: helping you enjoy time outside.

6. Dog Friendly Co.

In this user-generated video, Alize and her dog, Roux, show how to use a Dog Friendly Co. leash and harness. This video plays on UGC strengths like narrator relatability, sincerity, and enthusiasm. Without over-the-top editing or a hard sales pitch, this no-frills video comes off as an honest recommendation, keeping the product—and the happy dog model—center stage.

• Key creative elements. Relatability and enthusiastic spokesperson, credible product endorsement.
• What makes it memorable. UGC expert Alize (@alizetheceo) demonstrates the harness and leash on her dog, Roux, with the video ending as they head out for a walk together.

7. Transformer Table

In 2022, Instagram influencer Racha Abdel Reda (@mynameisrasha) posted this video ad about the modular furniture from Transformer Table. It soon went viral, racking up tens of millions of views worldwide, increasing brand awareness in new markets. On an episode of the Shopify Masters podcast, the brand’s co-founder, Artem Kuzmichev, emphasized how important it was to find the right content creator. “She was a luxury influencer, she had a family, and her audience wasn’t from the US or Canada, where we [already] sold a lot,” he says.

• Key creative elements. Skillful use of time-lapse video to highlight the product’s versatility.
• What makes it memorable. The music’s fast beat and the sped-up video underscore how quickly a person can set up or stow away the brand’s modular furniture.

8. Dollar Shave Club

Personal grooming brand Dollar Shave Club is known for its viral videos that harness edgy humor and communicate a clear value proposition: shaving razors at a competitive cost per razor, sent straight to your home.

• Key creative elements. A noir palette and Wes Anderson–esque concierge character.
• What makes it memorable. The video ad spoofs the concept of a secret club and ends with humor.

9. Diaspora Co.

This upbeat video from spice brand Diaspora Co. features Ciara’s energetic “Level Up” over shots of chai bubbling on stoves and street vendors pouring it into cups. With no time for a traditional narrative, short-form video is all about vibes.

• Key creative elements. Percussive music and clips that seek to instantly transport viewers to the bustle and bliss of an urban chai stand.
• What makes it memorable. In the final frame, the founders radiate joy as they hold up a tin of their chai masala spice mix.

10. SURI

Follow influencer Yanin Taylor (@idressmyselff) through her relaxed morning routine. This video embeds the SURI brand in an implied lifestyle of elegance and luxury. From reading in bed to bathing, washing her hair, brushing her teeth, and flashing a smile before heading out, the edit subtly prioritizes the toothbrushing moment over outfit selection. By going this route, SURI also distinguishes itself from a well-worn tradition of toothpaste ads that tend to feature bright lighting, close-ups of teeth, and dentists’ recommendations.

• Key creative elements. Luxury aesthetic and a simple caption (“slow mornings”).
• What makes it memorable. The video places SURI toothpaste in the context of an indulgent daily routine of self-care and relaxation.

Qualities of a successful video marketing campaign

Successful video marketing campaigns tend to share some key qualities. Here’s what to focus on to leave a positive impression on viewers:

A clear point of view

Tell a story from your distinct point of view. Whether you’re putting together a product demo in a home studio or working with a professional video production team, ask yourself: Is it clear who is telling this story? And who are we speaking to?

For instance, Mike Alfaro, founder of the card game Millennial Loteria, unlocked unexpected viral success with a recap video on TikTok that followed his journey from a young immigrant Latinx creator to seeing his game available in US Target stores. He says his first-person account of why he made the game for his fellow Latinx makers and TikTokers was key to the product’s success.

“It was a very endearing video for a lot of people who saw it,” Mike says on the Shopify Masters podcast. “I think it caught the eye of a lot of people saying this is good for our community.” He says small-business owners may have a leg up on global brands in this way. “Brands pay millions of dollars to advertising agencies to make their brands feel more human online,” he says. “I think that for small business owners, it is just easy to just be human.”

But crafting your point of view and knowing your audience also requires market research. “Seeing what different trends are going on with Gen Z culture, what’s going on with Gen Xers, … there’s a lot of research I do, and that helps out with our strategy and direction,” Mike explains.

Consistent production quality

Ensure lighting, sound, and production quality are consistent to signal to viewers that your brand is trustworthy and worth their time.

If you’re creating a recipe video, for instance, use the same light source throughout. Or, if you’re running an influencer or UGC video ad campaign, share with each content creator a brand kit outlining what aspects of your brand to emphasize on social media, which tags they should use, what platforms and audiences you hope to reach, and what specifications you would like to see in their video content.

Engaging editing

The fact that your target audience is already on the channels where your video marketing takes place has a flip side: Everyone else is there, too. That means your video ads need to stand out from the crowd so they aren’t passed by. Whether it’s great background music, a comedic jump-cut, or creative use of time-lapse video, editing choices keep viewers engaged and inspire shares and conversions.

Good use of time (and timing)

In today’s attention economy, any 15 or 90 seconds a viewer gives your brand is highly valuable. Maximize viewing time by ensuring that each video tells a clear, compelling story and that your invitation is geared to your audience and channel. In other words, make sure your videos are a good use of both the time allotted by the format—and a good use of your viewers’ time.

Showing that your brand understands the culture and rules of a given channel can boost credibility and trust with your potential customers. And making editing choices that optimize your video’s progress bar will show viewers that you value their time and attention.

Beta testing doesn’t always mean bug reports and crash logs. Sometimes it involves Ziploc bags, Sharpie-drawn labels, and driving door to door with a homemade product.

That’s how Jen Liao and Caleb Wang tested their signature frozen dumpling—a vital step in evolving their street food restaurant into a direct-to-consumer (DTC) business, MìLà. Their process shows that while beta testing is commonly linked with software development, it can apply to any product, even food. Jen and Caleb let patterns in customer orders guide the development of their dumplings.

“If there’s a way to do a beta test or pilot, you can gather data points that inform your plan moving forward,” Jen said on the Shopify Masters podcast.

Getting your product—whatever it is—in the hands of actual users in real-world scenarios to collect feedback is a critical step toward iterating before your final release. This guide walks through the essentials of beta testing: what it is, when to conduct it, and how to do it successfully.

What is beta testing?

Beta testing is an essential phase in the product development process where real users try a beta version of your product—a near-final release—in a real-world setting. Their feedback helps you identify issues and make improvements before the official launch.

Unlike internal testing by your development or design team, beta testing relies on external users to highlight functionality, usability, and overall experience. Typically conducted after alpha testing, this phase occurs when the product is stable enough for external users but still open to refinement.

Beyond catching issues, beta testing serves multiple purposes. It validates product quality, provides insight into real-world usage, and can even generate early buzz among potential customers. At its core, beta testing puts users at the center of development, ensuring the final product meets their needs and expectations.

Types of beta testing

There are several types of beta testing. The one you choose depends on how widely you release your product and how much control you want over feedback:

• Closed beta testing. Involves a selected group of invited participants, often loyal customers or target audience members. This controlled approach helps gather detailed, targeted insights.
• Open or public beta testing. Opens participation to a broader group—sometimes to anyone interested. This generates diverse feedback and tests performance under varied real-world conditions.
• Live beta testing. Continues after a product’s official release, with features labeled as “beta” to signal they’re still being refined. While this can be useful for established businesses, as a beginner, focus on pre-launch beta testing to get your core product right before going to market.

Alpha testing vs. beta testing

Alpha and beta testing serve different purposes in the development process. Alpha testing is internal and controlled, while beta testing is external and real world. Understanding the difference helps teams know when and how to use each.

	Alpha testing	Microphone Option
Conducted by	Internal testing team, internal employees	External users, a select group of real customers
Environment	Controlled, lab-like setting	Real-world environment
Purpose	Identify major bugs, test core functionality	Validate user experience, gather real-world feedback
Timing	Earlier, when the product is feature-complete but still has issues	Later, closer to final release (but can be used strategically when significant changes are made)
Focus	Functional testing, technical stability	Usability, user needs, market validation
Participants	Developers, quality assurance (QA) staff, internal testers	Early adopters, loyal customers, target market reps

In short, the goal of alpha testing is to ensure the product works for your team; the goal of beta testing is to ensure it works for your users.

When to do a beta test

Beta testing usually comes after internal testing and before a full launch, but you can also repeat it whenever a product undergoes major changes. Here are the most common scenarios:

• Pre-launch validation. Before bringing the final product to market.
• Major feature releases. When introducing significant new functionality to existing products.
• Product pivots. Involves changes to core features or target markets.
• Market expansion. Before launching existing products in new geographic regions.
• Seasonal products. Testing market response to products designed for specific seasons or events.
• Subscription or service models. Validating new features or updates in ongoing services.
• Physical products. Testing hardware, physical products, or devices in real-world usage scenarios.
• Software updates. Testing new versions before releasing to all users.
• Technical beta testing. When testing is aimed at validating performance, integrations, or stability under different technical conditions.

Beta testing is most valuable whenever you’re introducing something new, making significant changes, or expanding into a different market.

How to conduct a beta test

1. Define your goals
2. Identify and recruit your participants
3. Run the beta test
4. Collect and review user feedback
5. Improve your product

Running a beta testing process isn’t just about handing your product to users and waiting for feedback—it requires planning and structure to ensure meaningful results. A clear process helps you focus on the right goals, recruit the right participants, and gather insights you can actually use. To conduct beta testing effectively, follow these steps:

1. Define your goals

Before launching your beta program, establish clear objectives for what you want to achieve. Goals should guide every other decision in the process. Common beta testing aims include:

• Identifying technical issues before final release
• Achieving customer validation by confirming product-market fit with real users
• Testing user experience (UX) design
• Gathering beta feedback on features or functionality
• Understanding real-world usage patterns
• Building customer relationships and early adopter communities
• Generating word-of-mouth marketing and early buzz
• Reducing development costs by catching issues early
• Testing scalability and performance in real conditions

For example, at a chocolate company, this step might involve testing a new flavor, focusing on taste, texture, and the overall customer eating experience.

2. Identify and recruit your participants

Selecting the right beta testers is crucial for meaningful feedback. Participants should represent your target market and be engaged enough to provide detailed insights. Ideal beta testers include:

• Loyal and existing customers who understand your brand
• Early adopters, who are typically eager to try new functionality
• Representative users from target audience demographics
• Industry experts who can provide professional insights

The size of your beta group depends on your product and goals. A closed beta for a physical product might involve 20 to 40 beta testers for deep feedback, while a public beta for software could scale into the thousands to stress-test performance.

To recruit testers, reach out to your existing customer base via email campaigns or even grassroots outreach. Use social media to identify engaged community members and consider partnering with influencers, thought leaders, or professional associations to reach the right audience.

Some businesses create an application process to ensure participants are committed. Offering incentives like early access, discounts, or exclusivity can boost participation, but it’s equally important to set clear expectations about time commitment and feedback requirements.

At the chocolate company, this step might involve targeting loyal customers from its private Facebook community page, ensuring testers are motivated and familiar with the brand.

3. Run the beta test

The beta testing period can run for two to eight weeks, depending on product complexity and feedback needs. Beta testing happens in each user’s natural testing environment—their home, office, or wherever they’d typically use your product—as opposed to controlled lab settings.

During this period, users interact with the product in real-world conditions. They may:

• Complete structured feedback surveys at regular intervals
• Participate in focus groups or interviews with product managers
• Report issues through dedicated feedback channels
• Provide feedback on specific features or scenarios
• Share usage data through analytics or tracking tools
• Suggest improvements

Many businesses use beta testing software or simple tools like surveys, feedback forms, and analytics platforms to organize participant responses and track issues systematically.

At the chocolate company, this step might involve distributing the new flavor to loyal customers over a month, letting them enjoy the chocolate at home—a natural setting for a DTC product.

4. Collect and review user feedback

To gather user feedback effectively, use multiple channels and systematic analysis. Create structured ways for beta testers to share their experiences, from quick rating systems to detailed written or verbal feedback.

Use surveys to gather quantitative data on satisfaction, usage, and performance. Conduct interviews or focus groups for deeper qualitative insights. Monitor analytics to understand how people actually use your product versus how you intended for them to use it.

Look for patterns across user types and usage scenarios—recurring issues, unexpected use cases, and suggestions that align with your product vision. The feedback you receive during the beta testing phase, which you can share with participants when possible (building goodwill by closing the feedback loop), becomes the foundation for your product improvements.

Before moving to full release, some teams also conduct user acceptance testing (UAT) internally to verify that they’ve properly addressed beta feedback and the product meets all requirements.

At the chocolate brand, this step might involve pairing surveys (asking people to rate flavor and texture) with short follow-up calls for open-ended feedback, giving the team both quantitative and qualitative insights to work with.

5. Improve your product

The final step in the beta test process involves transforming user feedback into concrete improvements. Prioritize issues by frequency, severity, and alignment with your business goals. First, address major issues or negative feedback that could impact user safety or core functionality, followed by usability refinements and feature requests.

Work with your development team to implement changes systematically. Test improvements internally, and when needed, run another limited beta cycle before full release. The iterative approach ensures fixes solve the right problems without creating new ones.

Evaluate whether you have reduced major issues and improved customer satisfaction. Testers should be actively engaging with the product, and early adoption signals—like repeat orders, referrals, or strong purchase intent—should be emerging. Together, these are signs of a successful beta test.

Keep in mind that you don’t have to implement every suggestion—filter user feedback through your product strategy and target market needs. The goal is a final product that serves your customers effectively, not one that incorporates every idea.

At the chocolate company, this step might involve adjusting the packaging based on customer feedback before deciding whether to run another small beta or move to a full launch.

Developing marketing strategies that are mindful of the nuances of your target audience can improve your brand relations. One effective way to do this is by asking demographic questions in surveys, which help you understand who your customers are and how they prefer to buy.

Demographic surveys ask personal questions that identify different attributes of the survey respondents. Demographic survey data helps you better understand your customer base and tailor marketing to the segments within it.

Here’s why asking demographic questions sets your business up for success—and how to do it in ways that yield accurate, actionable data.

Developing marketing strategies that are mindful of the nuances of your target audience can improve your brand relations. One effective way to do this is by asking demographic questions in surveys, which help you understand who your customers are and how they prefer to buy.

Demographic surveys ask personal questions that identify different attributes of the survey respondents. Demographic survey data helps you better understand your customer base and tailor marketing to the segments within it.

Here’s why asking demographic questions sets your business up for success—and how to do it in ways that yield accurate, actionable data.

Why use demographic data in your business?

Demographic information refers to statistical data about the attributes of a surveyed population. It’s a valuable part of market research because it allows you to segment consumers into groups based on shared traits. It can also help you decide how best to reach those groups, determine which audience is best to target, and prevent biases when conducting research, including underrepresentation.

Types of demographic questions to ask your customers

The more you know about who you want to sell to, the better off your business will be. Here are some examples of demographic survey questions you can utilize as you collect information about your target audience:

Age

Knowing the age groups of your customers shows whether you need to do a better job targeting Gen Z customers or baby boomers. Different ages may require different marketing methods and messages.

Use age ranges rather than exact ages. For this and any other sensitive questions, include a “Prefer not to answer” option. Offering choice improves completion rates without compromising data quality. For example, you can ask:

Which of the following age ranges do you currently fall into?

• 18–24
• 25’34
• 35’44
• 45’54
• 55’64
• 65+
• Prefer not to answer

Gender

Gender demographics help you develop marketing that’s inclusive to all gender identities your brand may appeal to. Questions regarding gender identity should be multiple choice with options not to answer and to clarify their situation. Include an open-ended option for this question—as well as for any others that may require a brief explanation. For example, ask:

Which of the following genders do you identify with?

• Female
• Male
• Non-binary
• Prefer not to say
• Other (please specify)

Ethnicity

Collecting demographic data regarding ethnicity enables you to gain deeper insights into the backgrounds and cultural identities of your customers, allowing you to make your marketing more inclusive. You can use the US Census Bureau’s ethnic categories as a baseline. Make sure to include options for participants to choose more than one option in a checkbox format, fill in their own answer, or not answer at all.

You might ask:

Which of the following groups best represents your ethnicity? Select all that apply:

• Black or African American
• Native American
• Hispanic
• Native Hawaiian or Pacific Islander
• Middle Eastern or North African
• Asian
• White/European
• Prefer not to answer
• Other (please specify)

Marital status

Knowing your customers’ marital status may provide a deeper understanding of their stage of life and social situation, which can help you be more sensitive to their needs in your marketing messaging. It can also help you better segment your audience, personalize campaigns, and meet customers where they are in their life journey.

Singles may be more responsive to products or services that highlight independence, flexibility, or social experiences. Newly married couples might prioritize big-ticket purchases like housing, travel, or financial planning. Divorced or widowed customers may have unique needs that marketers can address with sensitivity, whether it’s financial services, wellness products, or opportunities for social connection. For example, ask:

Which category best describes your marital status?

• Married
• Single
• Domestic partnership
• Divorced
• Separated
• Widowed
• Never married
• Other (please specify)
• Prefer not to answer

Education

Education data gives you insight into elements of buyer personas such as purchasing power, professional goals, and the types of content or messaging that will resonate. Knowing your audience’s education levels can also reveal how to frame certain benefits your company may offer, such as affordability or professional advancement. This type of segmentation allows you to better target campaigns and align your marketing strategies with the values, aspirations, and communication styles of different groups. You might ask:

Which best describes your highest level of education?

• High school diploma or GED
• Some college, but no degree
• Technical certification
• Associate’s degree
• Bachelor’s degree
• Graduate school (e.g., master’s, Ph.D., M.D., etc.)
• Other (please specify)
• Prefer not to answer

Employment

Demographics on the employment status of your customers give you some idea of what their spending potential may be. Due to the potentially sensitive nature of this question, this is another situation where giving respondents the option not to answer is recommended.

Employment insights also help marketers tailor messaging based on lifestyle and priorities. For instance, full-time employees may be more receptive to convenience and time-saving products, while students or part-time workers might be drawn to affordability and flexibility. Knowing where your customers fall on the employment spectrum can sharpen audience segmentation and guide product positioning. You can ask:

Which of the following best describes your current employment status?

• Employed (part-time)
• Employed (full-time)
• Self-employed
• Not employed
• Retired
• Not working due to disability
• Other (please specify)
• Prefer not to answer

Household income

Similar to employment status, household income data can inform you of how much money consumers are able to spend based on how much they are earning. Multiple choice formatting with different ranges of income makes this question feel less invasive. For example, you might ask:

Which range does your annual household income fall within?

• $0–$29,999
• $30,000–$49,999
• $50,000–$74,999
• $75,000–$99,999
• $100,000–$149,000
• $150,000 or more
• Prefer not to answer

Living situation

Survey data regarding your customers’ current living situation gives you insight into their lifestyle, potential spending capability, and financial priorities, allowing you to make informed decisions on which products and services to market to them.

Living arrangements also reveal useful context for targeting and messaging. For instance, homeowners may be more interested in long-term investments like home improvement services, insurance, or durable goods than renters. People living with roommates or family could respond better to products marketed around sharing or affordability, whereas individuals living alone may prioritize personalization or ease of use. You might ask:

What best describes your current living situation?

• Homeowner
• Renter
• Living with parents/family
• Temporary housing
• Student housing
• Other (please specify)
• Prefer not to answer

Language

Understanding the primary language spoken in consumer households allows you to communicate with buyers in their preferred way. It also lets you know if you need to update your marketing materials in other languages. Make sure to allow users to select multiple responses, since there are plenty of multilingual households out there.

Language also shapes cultural context and buying behavior, which makes it a critical factor in marketing. Messaging in someone’s native language doesn’t just improve clarity: It builds trust, strengthens brand image, and reduces the risk of miscommunication that could damage your company’s reputation. It also allows you to adapt campaigns to cultural nuances, idioms, and preferences that resonate with specific communities. For example, ask:

What is the primary language spoken in your household?

• English
• Spanish
• Japanese
• Chinese
• Korean
• Tagalog
• French
• Italian
• Arabic
• Other (please specify)

Family and dependents

Knowing how many children live in your customers’ households gives you a deeper understanding of buyer needs and spending capabilities. Families with dependents often have distinct purchasing patterns, such as prioritizing convenience, safety, education, and budget-friendly options. Marketing that acknowledges family size can help you position products as solutions that fit specific household dynamics, from bulk-buy savings to time-saving services. You might ask:

How many dependents are in your household?

• None
• 1
• 2
• 3+
• Prefer not to say

Media consumption

Demographics on media consumption reveal which platforms customers spend the most time on, helping you choose the right channels for your marketing campaigns. Asking where customers get their news, entertainment, or social updates can show you whether to invest more in social ads, podcasts, streaming platforms, or traditional outlets.

Knowing that a key segment prefers TikTok over cable news helps refine your ad spend, strengthen customer retention by meeting audiences where they already are, and shape your brand image to align with the media environments your customers trust. You might ask:

What is your primary source for news?

• Social media
• Internet
• Television
• Radio
• Newspaper (hard copy)
• Newspaper (online)
• Magazines
• Other (please specify)

Buying preferences

Discovering the buying preferences of your customers informs you of where to make your products available to them, which could be online marketplaces, direct-to-consumer websites, brick-and-mortar stores, or subscription models.

Understanding preferences boosts customer retention and shows you’re attentive to how people like to buy things. It also provides insights for future research and strategy from a behavioral perspective, helping you retain customers long-term and refine your brand image. You could ask:

Where do you prefer to make purchases?

• Online via a brand’s website
• Online marketplace, such as Amazon
• Mobile brand app
• Physical store
• Other (please specify)

Best practices for collecting demographic data

When done thoughtfully, demographic surveys can provide powerful insights without alienating respondents. These best practices can help you collect useful data while keeping the process respectful, efficient, and engaging:

Be intentional

Demographic surveys take time to complete and resources to analyze their findings. To be efficient, have a clear goal of what data you hope to gather and what you aim to achieve with that information.

When you know exactly what you’re looking for, you avoid overwhelming participants with unnecessary questions and save your team the burden of sifting through irrelevant data. This clarity ensures that every response ties directly back to your objectives, making the results more actionable and easier to translate into business decisions.

Incentivize survey participation

Demographic research asks customers to volunteer their time and valuable information to your survey. Motivate them by offering discounts or complimentary items in exchange for their participation.

Incentives show that you value their time and increase the likelihood of higher response rates. A stronger response pool also gives you more insights, which leads to better-informed strategies. Even small rewards—like a discount code or entry into a giveaway—can meaningfully boost engagement.

Stay curious

While it’s helpful to have pre-categorized responses, you can occasionally allow customers the option to fill in their own survey responses. This can mine more intel than multiple-choice questions, and it can help prevent blind spots in communication.

Open-ended responses can also surface new categories you hadn’t considered, giving you a more authentic picture of your audience. They also let customers express themselves in their own terms, which can uncover language or priorities that help refine your messaging.

Remember you’re talking to real people

Be mindful that you’re often asking sensitive questions when you collect demographic information. Use your best judgment to determine when to allow participants the option to opt out of a particular question.

Respecting boundaries builds trust and improves the overall survey experience. If respondents feel safe, they’re more likely to answer honestly, which results in higher-quality data.

Adaptation is a necessity—in life and in business. For instance, specially tailored marketing efforts prove more effective at addressing customers at each unique stage of the buyer journey.

Online ads make potential customers aware of your brand, while direct email marketing targets customers who already know about your products but are unsure whether to buy. To adopt a holistic strategy that meets consumers where they are for each phase of the buyer journey, consider the full funnel marketing approach.

Learn what full funnel marketing strategies are, why they work, and how to use them to develop effective marketing campaigns.

What are the stages in a full funnel marketing strategy?

Full funnel marketing is how a business follows and motivates a prospective customer, from the point when they learn about a product or service to the moment that they make a purchase. It begins by visualizing a marketing funnel, the route a potential customer travels, and the steps they pass along the way. A marketing funnel breaks down into three main stages:

Top of funnel (ToFu)

This initial awareness stage of a full funnel strategy is where people who’ve just heard about your brand begin to take notice. The goal at this point is to get as much of your target audience as possible to learn about your products or services.

Some of the most common marketing tactics at this stage include social media ads, Google ads, and influencer-led social media posts. This is the point where you’re casting your widest net, trying to nurture leads, but still focusing on the target audience most likely to turn into customers.

Middle of funnel

The middle of the funnel, or the consideration stage, is about developing deeper relationships with the potential customers you attracted in the awareness stage. Those are the potential customers who may want your products or services. They are considering making a purchase and weighing their options. At this stage, you can show them why your products are viable solutions. Content marketing (which may include tutorials and explainer videos) offers an effective strategy at this stage because potential customers often have questions that informative content can answer. Additionally, consider amplifying customer testimonials and success stories that address customer pain points.

Tori Dunlap, the founder of the financial education platform Her First $100K, had early success on TikTok, getting about 100,000 emails from an organic TikTok post in seven days. “I still market to those people,” she says on an episode of Shopify Masters, but she didn’t stop there. “You then have to start thinking, What is the funnel after that?” That’s when she started to move prospects down her funnel by getting them onto a mailing list.

Bottom of funnel

The bottom of the funnel, or the conversion stage, is the final point in a full funnel approach. Your focus here is to engage prospects and convert leads you developed in the earlier stages to get them to make a purchase. At this point, your focus is to remove any last hesitation a potential customer might have and make the path to purchase as easy as possible.

Think of it as a time when you want to reduce any unnecessary friction. A clear landing page and live chat support can both be helpful. You might also want to try some retargeting ads and abandoned cart reminders for those who might still need one final nudge.

In addition to these three main stages, some marketers also include two post-purchase stages: the loyalty stage, where existing customers make repeat purchases, and the advocacy stage, where satisfied customers actively promote the brand through referrals or positive reviews.

Reasons to use a full funnel marketing strategy

Full funnel marketing helps businesses think through the length of their customers’ journey and come up with the most effective tactics for each stage. Different tactics might be more suitable to engage prospects than to convert leads or drive conversions.

Thinking through the length of a marketing funnel lets marketers build a cohesive strategy with differentiated tactics for every stage, improving lead quality and converting potential customers. Seeing the results from key performance indicators (KPIs), such as click-through rates and conversion rates, for different stages can also help marketers know where to focus their efforts.

For example, they might find that running social media ads at the top of the funnel works better than content marketing in the middle funnel, especially if the consideration period for their products is especially short, as is often the case for low-cost purchases like graphic t-shirts, branded tote bags, or other trendy accessories. Having this type of data lets marketers make more informed decisions on where to concentrate their marketing efforts, how to lower their customer acquisition cost (CAC), and how increase customer lifetime value (CLV).

How to develop a full funnel marketing campaign

1. Define your goal
2. Know your audience
3. Choose your channels
4. Monitor performance

To develop a full funnel marketing campaign, you can start by imagining the customer journey. Using the example of VeFuel, a hypothetical plant-based protein shake company, here’s how you might develop a full funnel marketing strategy:

1. Define your goal

Having a clear, concrete goal at the beginning helps you determine the right marketing message, the correct channels, and how to measure performance. In this hypothetical example, VeFuel is trying to increase its online sales of a new flavorless protein shake by 25% during the next 90 days.

2. Know your audience

Learning who your audience is, their spending habits, and the challenges facing them lets you speak persuasively to them. VeFuel’s target audience, in this case, is active, health-conscious women ages 25 to40 who care about clean eating and fitness.

3. Choose your channels

Now that you know what your goals are and who your audience is, you can build a full funnel marketing strategy, selecting the most suitable marketing channels for each stage. Visualizing the full marketing funnel when developing a marketing campaign lets you create a cohesive strategy that is aligned across all three stages of the funnel as follows:

• Top of funnel. In VeFuel’s case, some ToFu channels could be TikTok and Instagram. Paid ads and sponsored content in partnership with fitness influencers can help get the word out on your brand and your new flavor. Your goal at this point is to reach the broadest audience and create awareness of your new flavor and your brand.
• Middle of funnel. As you start to get potential customers moving through the MoFu stage, you can engage them with tutorials and customer testimonials on how your new flavorless protein shake is the right answer for their needs. At this point, you can target your potential customers with relevant content such as protein shake recipes, workout tips, and blog posts that highlight the benefits of a flavorless formula.
• Bottom of funnel. Once customers reach the bottom of the funnel, do anything you can to make the process smoother and increase a sense of urgency to buy. You can send cart abandonment alerts with limited-time offers (e.g., “24 hours to claim your discount”), or use artificial intelligence to set up an AI chatbot to answer customer questions in the checkout flow.

4. Monitor performance

You can track several KPIs to see how your campaign is doing. For some of the top-of-funnel strategies, you can measure online traffic, video views, and impressions. As you move down the funnel, you can keep an eye on email open rates, click-through rates, conversion rates, and customer satisfaction through post-purchase surveys. There is a lot of valuable data to gather at every step to help you make data-driven decisions and refine your campaign.

One good indicator to watch is customer lifetime value, which measures how much your business can expect to earn from any one customer throughout your entire relationship with them. In VeFuel’s case, a low conversion rate might be offset by the number of people who subscribe to auto-refills of its protein powder.

Those types of repeat purchases can be particularly valuable for niche businesses like VeFuel, which might rely more on loyal customers and repeat business than on a large number of one-time buyers, who generally come with higher acquisition costs.

Entrepreneurs and business leaders wear many hats, but no one can do it all, all of the time. As your business grows, you may designate more tasks and responsibilities to your employees (insourcing) or hand over some functions to external providers (outsourcing).

Striking the right balance between insourcing and outsourcing is critical to increased operational efficiency. Handing off too much control to an external provider risks diluting your brand identity and company culture. Conversely, keeping everything in-house might stretch your workers too thin or damage your reputation if demand outpaces your company’s ability to deliver.

Here are the ins and outs of insourcing vs. outsourcing, and how to choose the strategy that can give you a competitive advantage in your market.

What is insourcing?

Insourcing means using internal resources for projects or tasks. Insourcing leverages the time and talent of existing internal employees, avoiding the need to hire new employees or external providers, like consultants, vendors, contractors, or temporary workers.

When you insource by borrowing talent from other roles or departments, you may need to shift responsibilities to manage workloads. Insourcing can give employees an opportunity to try different roles and gain new skills—often referred to as stretch roles.

Supporting existing employees in their areas of interest can help morale and employee satisfaction. For example, if Jim in accounting is passionate about digital design, you might assign him to the new landing page sprint team. This could benefit both his professional growth and meet your business needs.

Pros and cons of insourcing

Weigh the pros and cons of insourcing based on your business’s short- and long-term goals:

Pros of insourcing

Insourcing has benefits for both business processes and existing employees:

Greater control

Insourcing offers more direct control over operations and processes. When working with an in-house team, you have a better idea of everyone’s strengths and weaknesses, so you can put employees in the best position for success. A 2024 Deloitte survey found that 70% of executives had brought previously outsourced functions back in-house during the past five years.

Communication

Full-time employees understand your company’s goals, corporate culture, and dynamics. Insourcing fosters strong long-term relationships and effective communication. It helps avoid potential misunderstandings with external partners working remotely, across cultures, or in different time zones.

Confidentiality

There are fewer security risks to intellectual property and company data when access is limited to internal employees. Keeping sensitive information within your internal team can offer you and your customers peace of mind. 

Employee satisfaction

With the right approach and workload balance, insourcing helps existing employees grow and develop their skills beyond their core competencies. Deloitte’s Workforce Experience research found that employees who feel they can build critical future skills are 2.7 times more likely to stay with their organization in the next year. Supporting career growth and development not only fosters engagement, it can also help retain top talent invested in your company’s long-term success.

Lower labor costs

By utilizing existing resources and avoiding third-party vendor fees, insourcing can reduce operational costs and offer significant cost savings in the long run. In addition to avoiding third-party fees, insourcing builds internal expertise as employees gain knowledge in company-specific processes, reducing the need for retraining.

Cons of insourcing

Insourcing offers a host of benefits to companies and employees, but also poses several challenges:

Upfront investment

Insourcing can require an initial investment in training existing employees, acquiring new equipment or technology, and building infrastructure to support added in-house operations. These costs can be hard to predict and may only become apparent once you’re already committed.

Balancing workloads

Done haphazardly, insourcing can stretch existing resources and push capacity limits. Check in with high-performers juggling multiple responsibilities to ensure they’re supported and not burning out.

Skills gaps

Internal teams may lack the specialized knowledge or expertise required for new tasks, leading to a steep learning curve or subpar results. For instance, Jim from accounting might love digital design. But once he’s on the website team, it might become clear that his skills are more hobbyist than professional.

What is outsourcing?

Outsourcing is a business practice where you hire external parties or an outsourcing company to complete specific tasks, rather than relying on internal resources or employees. It’s often used to access specialized skills, reduce costs, and let your internal teams focus on their core business objectives.

Outsourcing is also commonly used for temporary roles or those tied to a single project. Outsourcing can include a range of business functions, like customer service, marketing, manufacturing, payroll, or IT.

Pros and cons of outsourcing

Relying on an outsourcing firm or independent contractors can provide significant advantages. However, it can bring unique challenges based on your business structure and the long-term goals of your outsourcing initiative. Understanding these pros and cons can help you decide whether to delegate functions to external partners or find a way to get it done in-house.

Pros of outsourcing

Outsourcing offers several advantages, largely by letting you focus on core business operations. Here are some of the key benefits:

Specialized skills

Outsourcing gives you access to specialized expertise and skills that may otherwise be too costly or time-consuming to develop internally. For example, legal and financial consultants and accountants offer tailored, specialized services to help businesses meet specific needs and maintain a competitive advantage.

Cost savings

Partnering with external experts can help reduce costs by nearly 50% in some areas, avoiding expenses tied to training or infrastructure development.

Global talent

Outsourcing roles to remote employees gives access to a worldwide talent pool, enabling you to bring in the best people available.

Minimal oversight

When you outsource a task, you often also outsource the management of the task. Consultants and accountants, for example, typically self-manage, and large outsourced teams specializing in tasks like content creation or customer service typically have their own managers.

Cons of outsourcing

Although outsourcing can yield cost savings and efficiency, and broaden your talent pool, there are drawbacks to consider based on your needs and overall business objectives:

Security of intellectual property

Expanding access to sensitive business information with an external company can increase confidentiality and data protection risks. Use a nondisclosure agreement (NDA) if an outsourced role requires access to customer data, financial information, or proprietary knowledge.

Maintaining quality control

External providers may make it harder to enforce consistent standards, or it may take more effort on your part to ensure outsourced employees meet your expectations. Consider the type of work you might outsource and if it would typically require strict quality control and maintaining brand guidelines.

Communication barriers

An outsourced team might work across time zones, languages, and cultures. This can create communication barriers and misunderstandings. Establishing clear communication channels with your outsourced team helps prevent delays and keeps collaboration on track.

Impact on company culture or morale

Heavy reliance on outsourced employees may weaken team cohesion and reduce a sense of shared purpose among in-house staff. Consider your business model, goals, and employees’ long-term goals. Overlooking these can drive top talent to seek opportunities elsewhere.

Insourcing vs. outsourcing: What’s the difference?

Insourcing and outsourcing can help you meet business objectives, but the approaches differ in terms of cost, control, and long-term impact. Choosing between insourcing and outsourcing depends on whether you want to maintain control of specific business functions internally or if you are comfortable delegating them to external providers.

Consider these factors to determine which option offers the greatest advantage for your business:

Investment and resources

Depending on the volume of work and the skills required for a role, the initial investment can differ significantly between insourcing and outsourcing. Insourcing typically requires a larger upfront investment in infrastructure and training, but those costs can pay off if your need is ongoing and frequent.

Outsourcing often reduces the upfront cost of getting work started, but can create ongoing dependency on external service providers. For example, if you need a skilled graphic designer for a one-time project, outsourcing is typically more economical than hiring a permanent worker for a temporary need. But if you need a designer to regularly create marketing materials, it might be more economical to hire or insource.

As a result, both outsourcing and insourcing can lead to either savings or extra costs—it depends on how the availability and skill you have in-house matches the work needed.

Competitive advantage

Outsourcing can speed up processes and provide access to specialized skills that would otherwise be costly or time-consuming to develop internally. This creates a competitive advantage if speed is a priority.

However, insourcing can give more direct control over business functions, quality control, data security, and the development of a unique company culture. This might be the competitive advantage when long-term stability, brand consistency, or sensitive data management are critical to success.

Institutional knowledge vs. external expertise

When insourcing, you rely on your established institutional knowledge, which can strengthen long-term business productivity and continuity. Employees build on their expertise as they take on new tasks or projects.

For example, insourcing staff for your growing marketing team from your large customer support team. You benefit from leveraging employees who already understand your products, customer base, and seasonal sales patterns. As your marketing team develops new campaigns, they can draw on this background to create more targeted promotions.

Meanwhile, outsourcing leverages the external expertise of an outsourcing partner who can offer fresh perspectives and objective insights. In addition to bringing specific skills the in-house team may lack, they can introduce new ideas informed by diverse experiences and industry exposure.

For example, you might outsource your search engine optimization (SEO) strategy to a specialized agency. With experience across multiple industries, the agency can uncover search trends or optimization techniques your in-house team may not have considered.

Employee experience

Insourcing can strengthen commitment and teamwork by fostering a sense of ownership over business results. If your full-time employees have a growth mindset, they’re likely eager to develop new skills and seek promotions.

On the other hand, foisting extra work on existing employees may lead to burnout and resentment. This is especially true if their compensation doesn’t match their new responsibilities. It’s crucial to undertake this endeavour thoughtfully.

Outsourcing may undermine company culture if it causes communication barriers between staff or replaces promotion opportunities. At the same time, it may ease the burden of overworked employees.

In the “carrot and stick” approach to promoting good behavior, a “carrot” is a reward for doing things the right way, and a “stick” is a punishment for doing things the wrong way. When it comes to collecting payments, it sometimes seems like businesses solely wield the stick—mainly by levying late fees when a customer pays past a contractually obligated due date.

As a business owner, you have another way to ward off unpaid invoices: You can reward your customers for paying early. Just like some businesses offer a cash discount or special discount prices when customers use a store-issued credit card, many—especially in business-to-business (B2B) transactions—offer early payment discounts, which lower a customer’s bill when they pay an invoice early.

Here’s why you should offer early payment discounts and how they fit into the broader category of discounting solutions.

What is an early payment discount?

An early payment discount is a financial incentive that a seller offers to buyers so they pay invoices before a prescribed due date. Also known as a prompt payment discount, it rewards members of a seller’s customer base who choose to pay early.

An early payment discount can apply anytime a buyer pays bills early. Here are some scenarios in which payment terms might include early payment discounts:

• An accounts receivable (AR) department charges customers on a sliding scale, where customers receive a 2% discount for paying a month early and a 1% discount for paying a week early.
• A manufacturer extends 3% discounts to distributors who pay within five business days of their original invoice date.
• A service provider extends a discount percentage (like 3% of the total bill) to customers who pay their bills at least one week early.

Of course, there’s no guarantee customers will take advantage of financial incentives by paying their invoices early. But these examples demonstrate how a seller might utilize early payment discounts as part of its strategy to, for example, speed up cash flow to cover operating expenses, reduce its reliance on business loans, or strive to maintain consistent working capital funding.

Benefits of early payment discounts

In many cases, early payment discounts create a win-win situation for both sellers and buyers, helping finance teams achieve more flexibility while mitigating supply chain risk. Here are some specific benefits for buyers and sellers alike.

Benefits for sellers include:

• Improved financial health. Getting paid early can strengthen a seller’s financial health by reducing days sales outstanding (DSO) and accelerating the cash conversion cycle (CCC). The seller enjoys quicker access to extra cash without relying on expensive working capital financing, which requires interest-heavy loans.
• No invoice factoring. Early payments can help prevent the need for invoice factoring, a type of business financing in which a company sells its unpaid invoices to a third party (a “factor”) at a discount to gain quick funds. Receiving payment for your invoices early, even at a discounted amount, is typically more cost-effective than invoice factoring.
• Strong customer relationships. Offering customers financial incentives for paying early can demonstrate trust, foster goodwill, and earn customer loyalty in return. This strengthens seller-buyer partnerships and may even attract new customers looking for cost savings.

Benefits for buyers include:

• More money for the business. Buyers can reduce costs by paying a discounted amount on approved invoices, which can meaningfully improve margins and free funds for business growth over time.
• Strengthened relationships. Early payments may strengthen relationships with suppliers, potentially leading to preferred status in the supply chain and favorable terms on future orders.
• Money for strategic investments. Buyers can invest the money they save via early payment discounts. Instead of going to supplies, this extra cash can be earning interest in a brokerage account, providing ancillary income for their company.
• Accounting upside. Buyers using the gross method of accounting can clearly track the impact of early payment discounts and demonstrate savings in their financial statements. Showcasing such cost savings can improve their standing with shareholders and outside investors.

Types of early payment discounts

Whether you’re a vendor looking to receive early payment or a purchaser hoping to capture early payment discounts, it helps to understand the different ways that businesses extend special rates to customers who pay their bills early:

• 2/10, net 30. The buyer receives a 2% discount for paying the invoice within 10 days. Otherwise, the full amount is due within 30 days of the invoice date. An ecommerce merchant running wholesale or B2B sales might provide 2/10 net 30 early payment incentives to build loyalty and optimize working capital.
• 1/10, net 30. This functions like a 2/10, net 30 discount, including the same number of discount days. However, the discount terms are reduced to 1% off instead of 2%. This might be useful for products with tiny profit margins where the seller wants to incentivize early payment but can’t afford a larger discount.
• 3/10, net 30. This is a more aggressive discount, where the buyer receives 3% off if they pay within 10 days. You’re more likely to find it in industries with slim margins but high competition.
• 2/10, EOM (end of month). This model provides for a 2% discount if the buyer pays within 10 days of the end of the month on the invoice. For instance, if an invoice goes out in March, the discount applies until April 10 (10 days after the end of March). This is particularly useful for businesses that process payments in batches at the end of each month.
• Fixed rate discounts. Some businesses may offer a standard, fixed discount regardless of the payment window—for example, a flat 5% discount for any payment made before the due date, whether that’s 60 days before or one day before.

Example of an early payment discount

Imagine a Shopify merchant who runs a custom wooden furniture store. They have a B2B relationship with a materials supplier who provides all their lumber. The supplier sends an invoice for a large shipment of wood totaling $10,000, with the payment terms set to 2/10, net 30.

The furniture maker has two options. The first is paying within 10 days of receiving the invoice. In this case, the early payment discount formula is:

Cost of shipment – (Cost of shipment x discount) = Payment due

This results in the following calculation:

$10,000 – ($10,000 x 0.02) = $9,800

In exchange for paying early, the merchant saves $200 on the invoice, which is a direct reduction in their cost of materials.

The other option is paying the full $10,000 much closer to the due date. A buyer might choose this route if they’re experiencing cash flow problems and would have to borrow money in order to pay early. But even if the furniture maker doesn’t take advantage of the discount, making a full payment by the invoice’s due date is still wise. Nearly all vendors levy penalties for late payments, even if they also offer early payment discounts.

Alternatives to early payment discounts

Early payment discounts benefit a wide range of buyers and sellers—but not all buyers and sellers. Specifically, sellers with very slim profit margins and buyers with very little working capital may not have the financial flexibility to participate in early payment discount programs. Fortunately, there are early payment discount alternatives that may be equally compelling:

Dynamic discounting programs

Instead of a single, fixed discount (e.g., 2% for 10 days), a dynamic discounting program allows for a sliding scale of discounts. This means the buyer can take a smaller discount for a payment that is slightly early, or a larger discount for a payment that is very early. The buyer and seller negotiate the discount amount, basing it on the specific number of days the buyer will pay the invoice before its due date.

Supply chain finance

If dynamic discounting solutions don’t make financial sense to a buyer, there’s also the option of supply chain finance, which people sometimes call reverse financing. In this model, a third-party financial institution pays the supplier immediately on behalf of the buyer, and the buyer repays the institution at a later date, with interest due.

Invoice factoring

There’s also invoice factoring, where vendors sell their approved invoices to a factoring company at a discount. This provides immediate cash without requiring buyers to pay early. However, the factoring company’s fees can sometimes be higher than discounts, making this a less alluring option for many sellers.

Paper-based invoicing is a pain—and it poses a risk as well. According to the Association of Certified Fraud Examiners, the median loss for financial statement fraud is $766,000, with 78% of the crimes worldwide involving the creation or manipulation of physical documents. Beyond the fraud risk, important financial documents can get lost in transit, delaying your payment processing timeline by days or even weeks.

Today’s electronic invoicing (or e-invoicing) allows you to scrap the stacks of paper and manual data entry, providing a secure, centralized system with automated validation and a clear audit trail. Here’s how to implement e-invoicing and achieve better efficiency across your business operations.

What is electronic invoicing?

Electronic invoicing is the process of creating, sending, and storing invoices in an electronic format, with many platforms also enabling users to send and receive payments. Unlike a scanned paper invoice or PDF sent via email, e-invoices use a structured data format—such as electronic data interchange (EDI), extensible markup language (XML), or universal business language (UBL)—so the invoice can be read and processed automatically, even across different accounting systems.

This streamlines the entire invoicing process and simplifies invoicing solutions for sellers, which helps create more predictable cash flow management. By digitizing invoicing and payments on a single platform, merchants maintain a consistent record of business transactions from start to finish.

Types of electronic invoicing solutions

There are two broad umbrellas of e-invoicing: software-based and service-based. Various e-invoicing solutions exist within these to fit businesses of all sizes, from small businesses to large enterprises that deal with complex accounts payable processes. Here are the main differences:

• Software-based. With a software-based model, you buy or subscribe to a software platform—like Zoho or QuickBooks—and manage the e-invoicing process internally. You control every step, using the software’s features to create, send, and track your invoices. 
• Service-based. A service-based model outsources the entire process. You send your standard invoice data—often just a PDF or a data file—to the service provider, who then acts as an intermediary. The service handles all of the technical work, including converting the data into a structured format, ensuring compliance, and securely transmitting it to the recipient’s system.

The challenge for many ecommerce merchants has been managing payments and invoices across multiple platforms, but today’s leading platforms are solving this problem with integrated tools. Shopify, for example, offers both a free online invoice generator and various third-party integrations, such as QuickBooks and Invoice Wizard.

Transitioning to electronic invoicing

The transition to electronic invoicing requires a few key steps to ensure a smooth implementation. All businesses, from small to enterprise, will face some degree of growing pains—but the larger-scale the transition, the greater the focus needs to be on change management, system integrations, and global compliance. Here are some key areas you can focus on to make the transition as simple as possible:

• Integration. Find a solution that seamlessly connects with your existing accounting software to maintain fluid data flow and avoid a complex setup.
• Compliance. Verify that your chosen platform can handle your specific tax and regulatory requirements, especially if you have international clients.
• User experience. Be more likely to get buy-in by finding a solution that is user-friendly and supports an easier onboarding process for your team. 

6 stages of the electronic invoicing process

1. Invoice creation
2. Secure transmission
3. Data validation
4. Automated matching
5. Approval and payment
6. Status updates and archiving

Specific elements vary depending on the e-invoicing solutions used, but most accounting software includes these phases:

1. Invoice creation

The seller’s invoicing software creates a standardized, machine-readable invoice file containing all the necessary information—such as customer details, line items, and billable amounts—in a data format ready for electronic transmission.

2. Secure transmission

The seller can then send digital invoices from their accounting software to a dedicated e-invoicing platform, which securely transmits the file directly to the recipient’s system. Encrypted file transfers, which are often used for this step, provide a stronger level of security than sending invoice attachments via email—particularly when protecting against security breaches.

3. Data validation

Once the seller sends the invoice, the buyer’s electronic invoicing system automatically receives and validates it. Since the invoice will be in a machine-readable structured data format, the software instantly checks data integrity and accuracy, even if the buyer and seller use different e-invoicing platforms. Data validation typically includes verifying the seller’s tax ID, ensuring all required fields are filled in, and checking for additional errors.

Software is typically designed to meet local and national tax compliance requirements, which many solutions automatically update to reflect new laws. For international payments, these systems usually connect to global networks that handle cross-border regulations, helping ensure the invoice meets the unique standards of the recipient’s country.

AI and machine learning often power this process, enabling the system to flag potential fraud. This advanced technology also helps prevent financial and legal consequences by automatically identifying issues that could lead to costly problems—such as overpayments, audit failures, compliance violations, or triggers for significant governmental fines.

4. Automated matching

This step ensures transactional accuracy in the accounts payable process. The system automatically matches the received invoice against the buyer’s corresponding business documents, such as purchase orders and receiving slips. This automated check, often referred to as three-way matching, verifies that the invoice details, such as the quantity and cost of services or goods, align with the original purchase orders and goods received.

5. Approval and payment

After the invoice is validated and matched, it moves through an automated approval workflow. You can typically configure the system to route the invoice to a designated team member for review and authorization. In many cases, the system can also automatically approve it based on pre-defined business rules. After approval, the invoice is officially recorded in the buyer’s accounting ledger and scheduled for payment.

This automated workflow directly improves your cash flow by removing payment friction. An e-invoice arrives and can be paid instantly online, accelerating your payment collection even with tight payment windows.

6. Status updates and archiving

Throughout the entire process, e-invoicing software tracks the invoice status in real time, providing full transparency to both the seller and the buyer.

These status updates give you visibility into where an invoice stands at any given time. For business owners, this transparency transforms cash flow management. You can see when an invoice has been sent, received, and approved, and most importantly, you can quickly identify which payments are delayed or past due. This real-time tracking empowers you to follow up on late payments and resolve issues before they impact your business.

Once the buyer has completed the payment, the invoice is then automatically and securely archived by both the seller and the buyer. Because the invoice is a structured data file, it is easily searchable, letting you quickly retrieve specific invoices for audits or historical reference. This digital storage also guarantees that a complete and accurate record of the transaction is preserved and protected.

Electronic invoicing challenges

Businesses transitioning from manual invoice processing should prepare for both technical and organizational challenges. Despite these initial hurdles, electronic invoicing can modernize key components of your company and help achieve overall long-term benefits. Here are some potential setbacks you may encounter and how to overcome them:

Implementation costs

One of the biggest barriers when it comes to adopting e-invoicing solutions can be the upfront cost. This includes the expense of acquiring e-invoicing software, the technical resources needed to integrate it with existing enterprise resource planning (ERP) or accounting systems, and the cost of training staff. For companies that relied on manual processes for years, the shift can seem overwhelming. Without a proper plan, integrating new technology can lead to project delays and budget overruns.

Start with a phased approach. Instead of full-scale implementation, consider launching a limited pilot program. This lets your accounts payable team work through technical issues and build a strong business case before a full-scale rollout. Many e-invoicing providers also offer cloud-based solutions, which have become the industry standard for secure and simple implementation. This model reduces upfront infrastructure costs and simplifies integrations by enabling efficient data exchange between different business systems.

Vendor onboarding

While your internal systems may be ready, your suppliers might not be. Many suppliers still use manual invoicing or email PDFs, which are more susceptible to fraudulent interception and require manual data entry. This creates a dual system where your team must manage paper and PDF invoices alongside electronic ones, reintroducing the very inefficiencies and security risks that a fully automated solution is meant to solve.

Modern e-invoicing solutions often include supplier onboarding tools, which range from self-service portals where vendors can easily submit digital invoices to services that automatically convert different invoice formats into what you need. Joining a global e-invoicing network can dramatically accelerate onboarding. This network is a secure infrastructure that connects different systems, similar to how email works seamlessly across different providers—which is why someone using Gmail can still communicate with someone on Outlook.

Once your business syncs to the network, you can instantly connect with any other trading partner already on the network. This eliminates the need for a separate, time-consuming technical setup for each new partner, enabling you to start sending and receiving invoices almost immediately.

Change management

Gaining buy-in from internal teams can be a major challenge. Employees comfortable with manual invoice processing may resist learning a new system, fearing the disruption of their established workflows.

Overcoming external supplier resistance can be another hurdle. Vendors may be reluctant to stop using their traditional invoicing methods or may lack the resources to switch to a new electronic format. This could create a dual system where your team still has to manage both paper and digital invoices, defeating the purpose of a fully automated solution.

To drive adoption, clearly communicate the benefits of the new system, such as faster payments, reduced invoice errors, and better visibility into invoice status. Offering training and dedicated support to the accounts payable team can address their concerns. For vendors, easy-to-use portals—dedicated web interfaces for submitting and tracking invoices—or early adoption incentives can encourage businesses to make the switch to an automated invoicing process.