In the aftermath of a customer data breach, tallying up the losses can be difficult, especially when considering damage to an organization’s brand. A new study by Javelin Strategy & Research, financial and banking institutions, healthcare providers and retailers can lose up to one-third of their customer base if they fall victim to a major data breach.
“A significant proportion of affected consumers discontinue or reduce their patronage post-breach. That’s real money lost in customer churn and reduced sales, and certainly demonstrates how the reputation of the organization hits the bottom line,” said Al Pascual of Javelin Strategy & Research.
“It’s noteworthy that about a third of people will go as far as to find a new doctor, if their provider is breached, as we all know healthcare services can be a big hassle to change.”
Key findings in the study include:
- 33 percent of consumers will shop elsewhere if their retailer of choice is breached
- 30 percent of patients will find new healthcare provider if hospital/doctor’s office is breached
- 24 percent of consumers will switch bank/credit card provider if institution is breached
Other costs associated with post-breach cleanup can add up fast, the researchers noted, as organizations typically icrease outlays for compliance, legal consultation, and customer reparation costs such as identity protection services.
The study found that:
- 54 percent of healthcare providers offer victims protection
- 40 percent of financial/banking institutions offer victims protection
- 30 percent of retailers offer victims protection
“Businesses are experiencing pressure to protect sensitive data not only from industry and government regulators, but also customers and shareholders. Consumer behavior indicates that data breaches impact both expenses and revenue,” said Todd Feinman, CEO at Identity Finder, who commissioned the study.
“Organizations must be more proactive in preventing a breach by understanding where a data leak can originate. By discovering and managing sensitive information at its source and not at the perimeter or after the fact, businesses can identify risk, change employee behavior, and justify where to spend security dollars.”
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