Honeywell splits into three companies
Honeywell announced a split into three separate companies, following a trend of activist investor pressure on conglomerates. The hosts attributed this to the private equity approach of unlocking enterprise value: investors argue the sum of the parts is worth more than the whole. GE did this in 2021 and GE Aerospace went up roughly 4X. Alcoa did a similar split in 2016 and went sideways. The hosts noted that B2B companies often acquire adjacent businesses over decades, then wake up one morning asking what business they are in with 27 different units.
Continuing metrics month
The episode continued a series on B2B ecommerce metrics. A prior poll found 58% of practitioners said percentage of revenue from ecommerce can be misleading. When asked which metric best captures the true influence of ecommerce, 56% chose customer lifetime value over share of wallet, average order value, and profitability per order. But does that make CLV the single best measure of success?
Customer lifetime value is a great metric in theory. It’s a very difficult metric in reality, but a very necessary one.
Andy Hoar, Master B2B
The CLV formula
Customer lifetime value combines annual spend, purchase frequency, and estimated customer lifespan. The first two components are straightforward to measure. The third is where complexity begins: how do you estimate whether a customer will stay one year, five years, or ten years? In a world where loyalty is declining and the son who took over may shop on his phone without knowing the 800 number, historical retention rates may not predict future behavior.
The virtues of CLV
CLV has clear advantages. It considers both revenue and time frame, providing a longer-term perspective than point-in-time metrics. This matters for customer acquisition cost calculations: you need to know how long customers will stick around to understand how much you can spend acquiring them. When profitability is included, CLV can focus on profit rather than just revenue, though this requires cost data that many companies lack.
Measurement challenges
The hosts identified serious practical challenges. Many B2B companies cannot measure average customer lifetime when retention rates are increasingly unpredictable. Complete and accurate customer order data across all touchpoints often does not exist. The ability to create cohorts and understand cross-channel behaviors requires systems designed for this analysis. And tying digital investment costs back to individual customers for profitability calculations requires allocation decisions that most companies have not made.
You have to go to your boss and ask what is the thing that they want to see. What are the things that he or she thinks are the best ways to measure this stuff?
Brian Beck, Master B2B
Practitioner perspectives
Dan Stepchew from Zest Dental Solutions called CLV the Holy Grail of metrics when combined with cost of goods sold and cost of delivery. He recommended comparing CLV against orders from other channels to measure incremental improvement. The hosts agreed this is the right approach but noted the cost side is difficult to measure: how do you allocate trade show expenses, advertising spend, and sales commissions to individual customers?
The poll results
A LinkedIn poll asked whether customer lifetime value is the single best measure of success. The results: 73% said no, while 27% said yes. The hosts noted this followed a poll where 56% chose CLV as the best option among limited choices. The contradiction makes sense: CLV is the best available metric, but it still falls short of being sufficient on its own.
Use multiple metrics
The hosts concluded that no single metric captures full ecommerce success. They recommended using multiple metrics together and aligning with what the CFO wants to see, since every business has different measurement capabilities and leadership expectations. Traditional ecommerce metrics like conversion rate still provide value for understanding channel performance. Jordan Jewell argued that customer satisfaction scores may matter most: if customers are happy and consistently spending, that first part of the equation matters regardless of complex calculations.