In this (possibly) final blog of this series I will be looking at how customers are becoming increasingly concerned at companies’ inability to keep their data safe, and how high publicity data breaches are eroding public confidence.
I previously wrote how it was possible to know where someone stood on issues of internet security just by checking their birth date. Those born after 1980, the so called Generation Y, or Millennials, are generally more comfortable sharing information online. But things are gradually changing. In a 2014 survey by eMarketer it was found that Generation Y and Z were also becoming significantly more concerned about how well companies protected their personal data.
This concern can have a major impact on a company’s profits, as a recent report by the Ponemon Institute’s 2015 Cost of Data Breach Study (in conjunction with IBM) showed:-
Lost business has, potentially, the most severe financial consequences for an organization. The cost increased from a total average cost of $1.33 million last year to $1.57 million in 2015. This cost component includes the abnormal turnover of customers, increased customer acquisition activities, reputation losses and diminished goodwill. The growing awareness of identity theft and consumers’ concerns about the security of their personal data following a breach has contributed to the increase in lost business
By studying many data breaches across many industries, Ponemon have developed an approach whereby they can attach cost per record lost in order to estimate the cost of data breaches. What they have found is that, not only are data breaches becoming more common, but they are also becoming more costly.
The average cost paid for each lost or stolen record containing sensitive and confidential information increased 6 percent, jumping from $145 in 2014 to $154 in 2015.
2015 was perhaps the worst year so far for data breaches. NetworkWorld’s Top-10 data breaches of 2015 reported that many firms became the victim of very public data breaches including
- Children’s toy companies (vTech)
- Phone companies (T-Mobile, TalkTalk)
- Healthcare firms (Premera, Anthem)
- Dating agencies (Ashley Madison)
- Government departments (IRS)
- Security consultancies (Hacking Team)
+ Many more.
The trend does not look good, with the number of breaches predicted to increase in both size and cost for the foreseeable future.
Consumers are now realising that many companies are not vigilant enough in protecting their data, but just as bad, that customer data is being used in ways that are inappropriate and may adversely affect the consumer.
In a poll conducted by leading consultancy Radius Global 78% of internet users said they only purchased from companies they trusted.
The message is clear. If companies are to use customer’s data to provide a better service then they must do everything in their power to ensure the security of their systems and the responsible use of customer data, or run the risk of facing big fines and a catastrophic loss of consumer trust.
Big data and advanced analytics are forcing governments to bring in new regulations to ensure that companies use customer data responsibly, but it’s in every companies interest to ensure that the bond of trust is not broken.