By Kim Del Fierro
Suffering a data breach has dire consequences for any company or organization. Not only is your sensitive data at risk, but also your relationship with your customers. A data breach can severely damage this relationship, harming even the most prominent companies.
The bottom line is that you will lose customers if they can’t trust you to keep their data safe. Many customers don’t seem to realize that part of the responsibility for keeping data safe, such as implementing security best practices, belongs to them as well. Nevertheless, in the event of a data breach, blaming the company that couldn’t keep the data safe is to them, the logical first step. How do your customers feel if your organization suffers a data breach? Let’s take a look at the latest information revealing customer attitudes towards data safety:
Data Breaches and Customer Loyalty
According to Gemalto’s Data Breaches and Customer Loyalty 2017 study, an overwhelming majority of consumers would stop doing business with a company if it suffered a data breach. Moreover, almost 70 percent of consumers believe that companies are not taking customer data security seriously. On the other hand, the same study showed that 56 percent of consumers use the same password for different accounts, and 41 percent don’t use the more advanced data protection technologies available to them, such as two-factor authentication.
It paints a somewhat strange picture: consumers are anxious about their data, yet they delegate most of the responsibility for it to the companies that they give it to. In truth, companies that handle customer data are under constant cyberthreats arriving in the form of email phishing attacks. Fully 95 percent of breaches resulting in data or fund loss are a direct consequence of these relentless targeted attacks, which deliver all types of malware and BEC. These targeted attacks handily slip through conventional defenses like spam filters and secure email gateways to land in employee inboxes. At a single click, customer data is compromised or stolen.
This information makes it clear just how dire the consequences of a cyberattack resulting in a data breach may be. A successful attack can cost your company customer loyalty, which leads to revenue and reputation loss as well as brand damage.
How the Loss of Consumer Loyalty Affects a Company
We need not look far to find examples of devastating consequences of data breaches. Customers don’t easily forget a breach-inflicted blow to a company’s reputation, even if revenue actually recovers. In 2013, Target lost more than $250 million after they suffered a data breach. No matter the type of data that was leaked, the loss of consumer trust and goodwill is immediate and affects the company both in the short and long term.
The aftermath of a data breach caused by email phishing attack can be enormously costly. Those damages are not calculated only in terms of lost revenue, but also the amount that has to be invested to repair brand reputation and recover some of the lost consumer trust. Companies often need to hire teams that will deal with the legal consequences of the breach. IT professionals must invest in fortifying security, as well as put more funds into PR damage control.
Maintaining customer trust and loyalty at a high level is one of the highest business priorities. That’s why investing in a multi-vector anti-phishing strategy in today’s high-risk environment is strongly recommended by experts such as Gartner. Improved cybersecurity in the form of preventing phishing attacks delivers a substantial advantage, both in protecting data and securing customer loyalty. A preemptive approach such as Area 1 Horizon anti-phishing service is far more effective than reacting with damage control after a breach. The best practice is to get ahead of the cyberattacks, rather than waiting for disaster to strike and hoping customers will be forgiving.
Kim Del Fierro is VP of Marketing for Area 1 Security