The Secret to Sustainable Growth: Calculating Lifetime Value of A Customer

As a small business owner in the Richmond area, you're constantly faced with big decisions. Should you invest in a stall at a local farmers' market, such as the one in Carytown? Is it time to open a small brick-and-mortar shop in the Fan? What about expanding into wholesale or a dedicated e-commerce site? These choices can feel overwhelming, but there's a powerful metric that can help you make them with confidence: Customer Lifetime Value (LTV).

LTV is a simple but transformative concept. It represents the total revenue you can expect to earn from a single customer over the entire time they do business with you. By understanding your LTV, you can see past the immediate profit of a single sale and make strategic decisions for long-term growth.

Let's look at a fictional case study to see how it works in practice.

The Case of "Berry Good Jams"

Sarah, the owner of Berry Good Jams, started her business at a local Richmond farmers market. Her handcrafted preserves were a hit, and she began to think about her next move. She knew a single jar sold for $8, and her cost of goods was $4, but that didn't tell her the whole story.

Sarah wanted to calculate her LTV. Here's how she did it:

1. Average Purchase Value: She looked at her sales data and found that on average, a customer bought 2 jars per visit, for an average purchase value of $16.

2. Average Purchase Frequency: She estimated that her regular customers visited her stall about 4 times per year.

3. Customer Lifespan: Sarah's customers were very loyal. She estimated that her average customer would buy her jam for about 3 years.

Using this information, she calculated her average customer lifetime value for her farmers market channel:

LTV = Average Purchase Value ($16) x Average Purchase Frequency (4) x Customer Lifespan (3 years)

LTV = $16 x 4 x 3 = $192

This number was a revelation. A single customer was worth nearly $200 over their "lifespan" with her business. Knowing this, she could make smarter decisions.

Using the Lifetime Value of a Customer to Guide Business Strategy

Decision 1: The Farmers' Market Stall

Sarah's first thought was how much she could afford to spend to acquire a new customer. A farmers' market stall in Richmond costs around $50 for the day. If she sold to 20 new customers, her cost to acquire each customer (CAC) would be $2.50 ($50 / 20 customers). Since her LTV of $192 was far greater than her CAC of $2.50, she knew the farmers' market was a highly profitable channel for customer acquisition for her Richmond business.

Decision 2: The E-commerce Website

Next, she considered an e-commerce website. Setting up and running the site had higher upfront costs, but it expanded her business's reach to a broader audience. She decided to run a targeted ad campaign on social media to drive traffic to her site. The campaign cost $500 and brought in 10 new online customers. Her CAC for this channel was $50 per customer ($500 / 10 customers).

While her online CAC was higher than the farmers' market, she also noticed a difference in customer behavior. Online customers often purchased in larger quantities and signed up for a subscription service that delivered a new box every month. This meant her online LTV was even higher. She had successfully used LTV to justify a higher-cost, but ultimately more scalable, marketing channel.

Decision 3: Wholesale

Finally, a local gourmet food store approached her about selling her jams wholesale. They wanted a 25% discount on her $8 retail price. On the surface, this looked less profitable per jar. But Sarah knew to think in terms of LTV. The store's consistent, high-volume orders provided a steady revenue stream and required no customer acquisition costs on her part. While the profit margin per jar was lower, the consistent business from a single wholesale account was extremely valuable.

By examining each business channel—farmers' market, e-commerce, and wholesale—through the lens of LTV, Sarah was able to identify the unique value of each and build a balanced, multi-channel strategy for growth.

Ready to Unlock Your Business's Full Potential?

Understanding Customer Lifetime Value is a game-changer for any small business looking to grow beyond its current stage. It’s the key to making smart, strategic decisions—whether you're considering a new sales channel, a marketing campaign, or a pricing adjustment. By shifting your focus from a single transaction to the long-term value of your customer relationships, you can build a more resilient and profitable business.

If you have further questions or are interested in getting help converting this concept into a business strategy tailored to your specific goals, please feel free to reach out.

You can email Dorian Cunion at dcunion@yourpathexecutivesolutions.com.

#smallbusinessowner #businessstrategy #customerLTV #RichmondVA #businessgrowth #entrepreneurship #businesstips #smallbusinessrichmond

Building Your Dream Team: A Guide for Brewery Owners

As a brewery owner, you're passionate about crafting great beer and creating a welcoming space for your community. But what about the team that makes it all happen? Attracting and keeping the right talent is crucial for sustainable success, and it all starts with a clear strategy. This guide, based on the principles of Your Path Coaching and Consulting, will walk you through the essential steps to building a great team.

1. Start with Culture

Your organizational culture is the foundation of your business. It's the unique story of your brewery, from its origin to its current needs and future goals. A strong culture attracts people who align with your values and vision. Take the time to define your mission, vision, and core values to ensure your company is a place where people want to work.

2. Craft an Effective Job Description

A well-written job description is your most critical recruiting document. It's more than just a list of tasks; it's a tool to clearly define a role and demonstrate how it aligns with your brewery's strategy. An effective job description should include:

• Overview: A brief description of the role and its context within the company.

• Accountabilities: Up to five clear, specific, and measurable goals for the role.

• Skills and Requirements: The education, certifications, and hard skills needed.

• About the Company: Details about your brewery's mission, vision, and unique culture.

• EEO Statement: A statement on your commitment to being an equal opportunity employer.

3. Define Your Ideal Candidate

Before you can find the right person, you have to know who you're looking for. Your ideal candidate isn't just a set of skills and experiences. They should also align with your company's values and norms. Taking the time to imagine this person will help you attract the right talent.

4. Cast a Wide Net

Don't limit your search to a single platform. Leverage multiple talent acquisition channels to reach a diverse pool of candidates²⁰. Consider these common avenues:

• Referrals: People you know are often an excellent source for new hires.

• Company Websites: A great place for candidates to learn more about your brand and culture.

• Job Search Platforms: Utilize platforms like Indeed to post and manage applications.

• Social Media: Engage with your community and use social channels to promote open positions.

• Look where others don't: Consider looking at different talent pools with high unemployment rates, such as individuals without a college degree, military spouses, and those with criminal records.

5. Streamline Your Process

From defining your need to onboarding, a clear and consistent process is key. Establish a process for interviews, and use a consistent guide and evaluation scorecard to ensure you're making the best hiring decisions. Once you've made an offer, have a solid onboarding plan to set your new team member up for success.

By focusing on these core principles, you can attract, hire, and retain the people who will help your brewery thrive.

Are you interested in a job aid to help you get started? Follow this link to access a free tool that can help you create job descriptions, an interview guide, and establish your process.

https://www.yourpathexecutivesolutions.com/post/attracting-the-right-talent-to-your-brewery

Attract the right talent to your team.

Free and Low-Cost Business Education Opportunities in Richmond

All business owners, whether they are just starting out or have been running a business for years, benefit from ongoing education. Before investing in purchasing a collection of business books, pursuing an MBA, or hiring a business coach or consultant, it is wise to explore free and low-cost resources for developing skills and generating new ideas. Workshops and business incubators are excellent ways to expand your knowledge and build your skills. Here are a few that are available in the Richmond area in September. 

Low Cost Workshops in RVA

Top 10 Low-Cost Business Opportunities

Ranked in Order

1. Bon Secours Entrepreneur Bootcamp: Starts Tuesday, September 23rd, 6 pm at the Bon Secours Sarah Garland Jones Center for Health and Living. Bon Secours Entrepreneur Bootcamp Fall 2025: Level 2 Tickets, Tue, Sep 23, 2025 at 6:00 PM | Eventbrite

2. Black Business Accelerator Program: Starts September 10th and runs every other week until November. Cost $300 Black Business Accelerator Program Application (3/24) - Central Virginia African American Chamber

3. Mastering Google Business Profiles: September 9th, Noon Profile Power-Up: Mastering Google Business Profiles Tickets, Tue, Sep 9, 2025 at 12:00 PM | Eventbrite

4. Government Contracting/ Navigating Federal Contracts: September 25, 2 pm to 4 pm at the Varina Area Library Government Contracting Tickets, Thu, Sep 25, 2025 at 2:00 PM | Eventbrite

5. Book + Balance Bookkeeping: Sept 3rd, 10 am at NorthPark Henrico Library, Books + Balance Bookkeeping Session Tickets, Wed, Sep 3, 2025 at 10:00 AM | Eventbrite

6. Henrico Business Town Hall: September 25, 2 pm to 4 pm at Advanced Career Education Center at Hermitage,Henrico Business Town Hall Tickets, Thu, Sep 25, 2025 at 2:00 PM | Eventbrite

7. Unlocking Opportunity Through Internships: September 16, at InUnision, Unlocking Opportunity Through Internships with BCEC Tickets, Tue, Sep 16, 2025 at 9:00 AM | Eventbrite

8. Prepare for the future of your business: September 17, at The MBL Office,Member RECHARGE - Prepare for the Future of Your Business - Sep 17, 2025 - Events

9. Harnessing AI for Business Marketing: September 11, at Tuckahoe Area Library Catalyst Henrico Business Academy: Harnessing AI for Business Marketing - LibCal - Henrico County Public Library

10. Verizon Digital Ready-online free resource. Landing Page

Many of the clients I work with participate in one or more incubator programs before engaging my coaching services. Once they have that foundation, I encourage them to attend one to two events a month to support their ongoing development. Leveraging these resources can help you grow professionally and define your business challenges.

Schedule a call if you need additional support in understanding concepts, building your plan, or holding yourself accountable for taking the necessary steps to grow your business. Education is the first step towards progress. The second step is converting what you learn into action.  This is where working with a business coach can help you accelerate your professional development.

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