14 DAY TRIAL // A new study conducted by Javelin Strategy & Research on behalf of sensitive data management solutions provider Identity Finder reveals that data breaches suffered by organizations have a direct impact on sales.
“A significant proportion of affected consumers discontinue or reduce their patronage post-breach,” noted Al Pascual, senior analyst of security, risk and fraud at Javelin Strategy & Research.
“That's real money lost in customer churn and reduced sales, and certainly demonstrates how the reputation of the organization hits the bottom line. 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.”
The data breach suffered recently by the US retailer Target is the perfect example of what a cyberattack can do to a company.
In the case of Target, in addition to reputational damage and a negative impact on sales, news of the breach also led to a drop in stock prices. Furthermore, the company was forced to spend a lot of money on investigating the incident, legal services, and credit-monitoring services offered to affected customers.
The Identity Finder study shows that 33% of customers would shop at another retailer if the one they currently prefer suffers a data breach. In the case of healthcare providers, 30% of respondents said they would switch to a different organization in case of a breach.
As far as banks are concerned, just under a quarter of their customers would find a new financial institution.
The study has found that identity protection services are common cost to each sector. For instance, 54% of healthcare organizations offer data breach victims protection services. 40% of financial institutions and 30% of retailer offer such services, the report reveals.
“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.
“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.”
The complete study, “Avoidable Collateral Damage from Corporate Data Breaches: Assessing the Effects of Data Breach Remediation on Financial Institutions, Healthcare Providers, and Merchants,” is available on Identity Finder’s website (registration required).