Customer data breaches have a significant impact on whether a customer will ever interact with an organisation again, according to research among 4,500 adults in the US, UK, Germany, Japan, and Australia, conducted by information security and data protection firm SafeNet.
The survey found that nearly two-thirds (65%) of respondents would never, or were very unlikely to, shop or do business again with a company that had experienced a data breach where financial data (credit card information, bank account number, or associated login details) was stolen.
According to the findings of the Q2/2014 Breach Level Index a total of 237 data breaches occurred between April and June 2014, exposing more than 175 million records worldwide. This illustrates the impact that data breaches can have on customer loyalty and corporate revenue alike.
Data breaches involving personal identifiable information were deemed to be slightly less harmful to an organisation than breaches involving financial data, with just over half (57%) suggesting they would never, or were very unlikely to, shop or do business again with a company that had experienced a data breach of this nature.
"Data breaches are not just breaches of security. They're also breaches of trust between companies and their customers, and can result in not only negative publicity but lost business, lawsuits, and fines that can threaten the viability of the business," warned Tsion Gonen, chief strategy officer for SafeNet. "For companies that fail to address potential security vulnerabilities, the problem is only going to get worse as stricter regulations governing the reporting of data breaches are introduced across the world, making breaches more visible to the public."
For adults saying that they would never, or were very unlikely to, shop or do business again with a company that had experienced a data breach where financial data was stolen, the breakdown by country was as follows:
- 54% in the US
- 68% in the UK
- 53% in Germany
- 82% in Japan
- 72% in Australia
The research also found that only half of adults surveyed feel that companies take the protection and security of customer data seriously enough - a sentiment that's likely to have been influenced by the comparatively high volume of data breaches reported in 2014. During the second quarter of the year, data breaches hit many well-known companies including AOL, Dominos, eBay, Office, and Spotify.
"With the increasing frequency and size of data breaches, it's clear that being breached is inevitable and perhaps only a matter of time. Cyber criminals are going after easier targets, and that is frequently personal data that is often unencrypted," concluded Gonen. "It's time for companies to start thinking about protecting more of that data with strong encryption and multi-factor authentication. Only those organisations that adopt a 'secure breach' approach and ensure that all customer data remains encrypted will find themselves able to retain their customers should a data breach occur."