The pandemic triggered severe social and economic disruption, including the largest global recession since the Great Depression almost 100 years earlier. Stay-at-home requirements wreaked havoc on the supply chain and unprecedented chaos threatened the survival of many businesses. At the start of 2022, CEOs identify supply chain turmoil as the greatest threat to their companies’ growth and their countries’ economies.

But is the chaotic supply chain really the greatest threat to growth? I think not. The more significant threat is labor or the lack of it. The “Great Resignation” was first identified about 14 months into the pandemic during May 2021 when workers started to reevaluate their priorities. In fact, the Covid-era workforce-participation rate remains below pre-pandemic levels, defying expectations for a mass return to work that would have thawed supply chains and cooling inflation.

Burnout has led workers to demand flexibility from their employers. Service workers also want a new deal, resulting in a labor shortage. Some workers want to work remotely forever. Others want a hybrid model. Leaders are at a crossroads, managing short-term pressures against medium- and long-term uncertainties.

The past two years have been challenging for everyone. Fundamental customer behaviors have changed with 73% pointing to customer experience as an important factor in their purchasing decisions. Yet only 49% of U.S. consumers say companies provide a good customer experience today. The net situation is that customer expectations are higher than what is currently being delivered.

What Can Executives Do?

1. Improve the Employee Experience

First, improve the Employee Experience (EX) because this will lead to a better Customer Experience. EX is the relationship an organization creates with employees. Author Jacob Morgan breaks out his definition of EX into three primary environments: physical, cultural, and technological. The “people-first” strategies of Sir Richard Branson of Virgin Group, Tony Hsieh of Zappos, and Howard Schultz of Starbucks, have formed the conventional wisdom that happy employees create happy customers. Glassdoor’s analysis found a strong statistical link between employee well-being and customer satisfaction.

This makes sense because all business outcomes can be simplified to the performance of people, processes, and systems. The most efficient processes and the best systems cannot deliver growth if the people element is not working correctly. However, mastering EX is not enough.

2. Build the Desired Customer Experience

Forbes defines Customer Experience (CX) as the cumulative impact of multiple touch points over time, which result in a real relationship feeling, or lack of it. It encompasses all phases of the consumption process including pre-purchase, consumption, and post-purchase stages.

Take a moment to consider your favorite brand. I can guarantee one of the reasons they are a favorite is because of how their product(s) made you feel during the consumption process. The more consistent that positive (or even wow!) experience is over time, the stronger (and faster!) your loyalty grows.

It is important to note there is a direct relationship between product pricing and a customer’s expectation of the experience they expect to receive. As shown below, the higher the price, the higher the expectations. You might even find that as you deliver a great CX you’ll be able to command up to a 16% price premium according to a PwC report.