What Consumers Think About Businesses Post–Data Breach


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Over the past few years, hundreds of businesses have suffered the ultimate technology failure: the data breach. Even enormous companies, such as Target, eBay, The Home Depot, and JP Morgan Chase, that claim more than enough profits to erect an all-but-infallible security system suffered the shame of cyber insecurity as millions of customer accounts were leaked and personal information spread around the web.

Though some businesses might recover from a data breach, believing their technological snafu to be little more than an embarrassing blunder, the truth is that data breaches have a lasting impact on brands’ reputations and consumer opinions. It is important to understand how the customer’s experience changes after a data breach ― and to protect one’s business against cyberattack so such disastrous effects never happen again.

Loss of Consumer Trust

As soon as news of a business’s data breach is made public, consumers lose trust in that business. Individual consumers have supreme power over a business, and when they lose trust due to a business’s insecurity, they use their power to support a business’s competitors.

Image by Shutterstock
Image by Shutterstock

For example, after one of the most infamous data breaches in history, Target’s sales fell by 46 percent in the fourth quarter of 2013 ― which amounted to a loss of more than $200 million in profits. Such a loss in available cash is undoubtedly devastating, especially when a business is overspending on efforts to move past the data breach, such as engaging legal teams to prosecute cybercriminals, contracting security firms to rebuild protections, and enhancing PR efforts to regain consumer trust.

Almost regardless of what kind of data is leaked, whether it is related to customer information or not, consumers are unlikely to do business with such insecure companies. If personal data, such as credit or debit cards, phone numbers, or addresses are lost, more than 86 percent of consumers are unlikely to buy from that company again. The immediate loss of consumer trust is exceedingly detrimental to a business’s short-term and long-term profits.

Long-Term Damage to Brand Reputation

After much of the scrambling that occurs immediately post–data breach, businesses tend to return to operations as usual. Stock prices recover and growth might resume ― but consumers rarely forget. A data breach is as injurious to a brand’s reputation as poor customer service or environmental disasters, like the Exxon Valdez spill that still mars the brand’s name 27 years later. A data breach remains in the public consciousness for years, corrupting brand image and lowering sales.

However, it is important to note that not all data breaches are equally damaging. One study found that breaches that compromised customer information diminished a brand’s value by as much as $332 million, while the hacking of employee or business data was less important to consumers, devaluing a company by only about $180 million. Therefore, businesses should strive to protect customer data first and foremost if brand image is important to their sales.

Image by Shutterstock
Image by Shutterstock

Techniques for Mitigating Harm

Unsurprisingly, the primary way to avoid damage due to data breach is to avoid them altogether. Businesses and private individuals should secure all connected devices with appropriate maximum security software, which will protect data from all sorts of intrusions. Even after a data breach has occurred, reestablishing security through security software should be a high priority, and businesses should partner with reliable cybersecurity firms for the best protections.

Many cybersecurity experts suggest that the breach itself isn’t what causes consumers to question a company’s reliability; rather, it is how the business reacts to the breach that indicates how long it will survive after the hack. Thus, it is vital that companies prepare proactive responses to alleviate negative consequences of a breach. As yet, there is no tried-and-true formula for regaining trust and reputation post–data breach, but being honest about losses, explaining plans for remuneration, and having a strong marketing plan should earn consumers’ patronage, if not necessarily their confidence.

Cybersecurity isn’t only vital for private individuals or businesses; even governments are learning the importance of advanced security protocols. In the coming years, the number of annual data breaches is likely to increase, and thus public faith in businesses might recede. To survive the oncoming storm, businesses must be prepared ― with defenses as well as plans of attack ― to salvage positive consumer opinion.

Endri Hasanaj
Financial Economy Blog
Endri is interested in digital marketing, particularly in CRM via brand acquisition. Being a trilingual helps him doing researches around Multicultural Marketing.


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