What are the real effects of data breaches on consumer trust?

What are the real effects of data breaches on consumer trust? Marty provides the strategic and operational leadership for Ensighten and brings a wealth of experience in high-growth companies. Prior to joining Ensighten, Marty spent 15 years with Spectrum Equity, a leading growth equity firm in the software and internet markets. In addition, he held senior leadership positions at venture backed start-ups and was the Director of Acquisitions at a public company. He began his career with Ernst & Young. Marty holds a B.S. in Accounting from the University of Baltimore.

Numerous high-profile data breaches have made customers question their trust in brands in recent months and years. Although the costs associated with regulatory fines and lawsuits following a data breach can be severe, perhaps no effect is quite as long-lasting or harmful as the loss of consumer confidence that accompanies these breaches.

Consumer trust is not built, nor can be earned back, overnight. That’s why marketing executives should be focused on preventing data breaches rather than on how to respond if one occurs.

Too many businesses are being caught out by leaks and breaches. In some cases, security teams are blind to where their business is most vulnerable. For example, we’ve seen the rise of hacking group, Magecart, intercept websites by inserting malicious JavaScript code to collect consumer card data at website checkouts – leading to attacks known as digital credit card skimming. These hacks expose customers’ sensitive Personally Identifiable Information (PII).

In this new data era trust is essential to garner customer data and stay competitive – so how do businesses foster trust?

Consumer trust is easy to lose but hard to regain

Consumer trust and loyalty are particularly fragile these days, given the disruptive nature of so many industries. When enterprises experience highly publicised data breaches, there’s often a host of smaller players with non-traditional offerings waiting in the wings, eager to scoop up customers who have lost faith in their previously trusted partners.

In addition—and perhaps counterintuitively—the nature of an organisation’s damage control following a data breach often prohibits the type of marketing and communications required to reestablish trust with consumers.

In the wake of a breach, it’s quite common for a company’s legal team to be elevated in its role with regard to external communications and future decisions. While this is understandable, it often means that companies go relatively silent in the wake of a breach. Communications that are issued tend to be steeped in legalese, which is not exactly the type of language that eases people’s concerns.

Longer term, the infusion of greater legal checks and balances into an organisation, though prudent on the surface, can stall innovation and stifle marketing and consumer communications within an organisation. The result is that, even after the initial damage done to consumer trust, those vital relationships continue to erode.

Not so obvious – how do organisations foster consumer trust?

The surest way to foster consumer trust is to proactively protect consumer data properly.  But how can organisations achieve this?

Few marketing leaders understand where their company’s data breach vulnerabilities exist and how to protect against them. Most assume that their IT or security teams have the company covered, but in fact, a company’s senior executives are the ones responsible when an organisation experiences a breach.  Most businesses associate the idea of a “data breach” with malicious hackers and denial-of-service attacks. But data breaches come in many guises.

Touchpoints such as a checkout page on a website or where a consumer adds PII in an app are the very places where criminals are looking to steal data. Many breaches originate from third-party marketing technologies on websites that a business does not control; for example, trackers, tags, ad servers, and social media technologies. These tools, some of which companies might not even be aware of, can introduce malicious code to a site or lead to the leakage of sensitive customer data to third parties.

These types of breaches are preventable with the right technology, but few marketing executives are aware enough of these threats to implement protections prior to a breach occurring.

Given the devastating effects that even a single breach can have on consumer trust and, thus, the long-term health of an organisation, a proactive approach to marketing security isn’t optional – it’s imperative.

Interested in hearing leading global brands discuss subjects like this in person?

Find out more about Digital Marketing World Forum (#DMWF) Europe, London, North America, and Singapore.  

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