Companies tally most of the damages from data breaches in numbers. Concerns are usually about how many users’ data hackers accessed and how much the response will cost.
But underneath the monetary cost of a security breach is a bigger issue: wrecked reputation. Security breaches shock consumer confidence, resulting in an invisible tsunami of lost revenue.
Why Data Security Is An Issue for Digital Marketers (Not Just IT Departments)
“Data security” doesn’t sound like an issue for marketers. But even though it sounds like an IT problem, it’s a digital marketer’s issue too.
Security Is A Selling Point
Modern consumers are cynical about data security. In fact, 35% of consumers don’t trust any company with their information.
You can take advantage of that gap by marketing your firm’s data security. Just take it from Proton, who built an entire company based on responsible security.
You don’t have to go as far as Proton, but their success shows how hungry consumers are for data security.
Promote user privacy, and you’ll stand out from your data-hungry competitors.
Security is Everyone’s Problem
You might think of hackers as hooded criminals hunched over laptops in the dark. But in reality, they’re more likely to be someone pretending to be your company’s tech support.
Professionals call that kind of hacking social engineering.
Social engineering is tricking someone into disclosing confidential information. And this sort of attack causes up to 90% of breaches.
Any company employee is a target for imposters, not just IT workers. As digital marketers often have direct access to website settings, they must know security basics, too.
Data Breaches Leave Digital Marketers Scrambling
Data breaches can be hugely disruptive to your digital marketing team. After a breach, they have to put everything on hold to do damage control.
This means disrupted social media campaigns, ruined A/B tests, and halted ad campaigns. It also means a damaged reputation creating an uphill battle—possibly forever.
Data breaches don’t only cost you lawsuits and fines. They also cost you lost revenue from destroyed marketing campaigns.
The stress can even push frustrated marketers to quit, making things worse.
Current Stats on Brand Trust (Or Lack Of)
The most forgotten consumer trend is trust. When marketers get caught up in the latest trends, they often forget the invisible things that don’t seem to matter.
Trust is one of those invisible things that makes a huge difference. After all, 81% of consumers say they need to trust their brands.
Your annual report might not mention trust, but it’s making a major factor in a customer’s decision to work with a brand. Here are some stats to prove it:
- 67% of consumers agree: “A good reputation may get me to try a product, but unless I come to trust the company behind the product, I will soon stop buying it.” [Edelman]
- 46% of consumers pay more for trusted brands [Salsify]
- 66% of consumers say transparency makes a brand more appealing [Accenture]
- Only a third of consumers trust the brands they buy from [Edelman]
- 62% of consumers value companies that put ethical practices first [Accenture]
- 77% of consumers buy from brands sharing their values [Vivendi]
To continue getting the benefits of consumer trust, keep your security tight. Data breaches are the fastest way to ruin your credibility.
How Breaches Affect Trust and Reputation
Data breaches eat away at trust in your company. When customers give you personal data, they trust you to keep it safe.
And when they discover you’ve lost that data, that trust is compromised. 65% of consumers will lose faith in your firm upon hearing about a breach.
The damage can be irreparable depending on the industry. Even in a best-case scenario, it will take years to repair the mess fully.
Examples of Companies Who Have Suffered a Breach
Data breaches can cost your entire reputation, and your company must take every measure to prevent them. These examples will tell you why:
Data breaches are especially bad for emerging sectors already lacking in consumer confidence. Such was the case for Uber, the ridesharing company.
Uber was controversial enough when it suffered a massive data breach in 2016. Widespread stories of customer safety woes had already made many hesitant to use their service.
Following Uber’s data leak, its shady reputation took another nosedive. But this wasn’t just a financial problem for Uber; it was a marketing problem.
At the forefront of the average Uber customer was safety. Entrepreneur Mark Cuban famously rejected funding Uber due to his safety concerns.
Eventually, Uber’s safety-focused marketing convinced vulnerable consumers to trust its drivers.
When news of the hack broke, all that trust was gone. Uber’s horrific response only made things worse. Uber’s marketing team had to work hard to salvage its reputation.
Data breaches’ reputational cost is hard to gauge. Uber’s revenue still thrived, but legislative pressure turned into long-term problems for Uber.
Uber’s loss of face also helped its competition. Lyft reported a massive leap in revenue between Q1 and Q2 2018—the first filing after Uber’s November 2017 release had time to manifest itself.
This shows how damaging the impact of a data breach on customers can be. The effects might not be clear at first, but the damage is real.
In 2017, credit reporting agency Equifax lost hundreds of millions of sensitive records. The hack—and the disastrous response—is widely considered the worst consumer data leak in history.
Equifax relies on trust because it’s one of the government’s credit trackers. Unfortunately, that trust splintered when hackers steal 147 million people’s most private information.
What little faith they had left crumbled when it emerged that willful neglect was to blame. Today, Equifax’s credibility remains tarnished. To make things worse, it had to pay a $425 million settlement.
It’s unlikely they’ll ever fully recover their reputation. Even if Equifax’s security is stronger than ever, no amount of marketing can restore a company’s goodwill after such a loss.
In 2016, Yahoo reported two separate data breaches:
- A 2013 hack of data associated with billions of its users
- A 2014 hack of over 500 million usernames and passwords
The disclosures crippled Yahoo’s attempts to regain its former glory as an internet mainstay. Its marketing efforts suddenly had to contend with one of the worst breaches in history.
A $118 million class-action settlement marked a whimpering end to the Yahoo empire. One year after the scandal, Verizon acquired the company that almost bought Google.
As an independent brand, Yahoo never reclaimed its reputation.
Some breaches cost more than just reputation. Such was the case for Verifications.io—a former email verification service.
In 2019, researchers traced several then-unexplained data leaks to a single source: a massive, unencrypted database hosted by Verifications.io
This database left 763 different email addresses completely exposed. Many entries had personal information too.
After trying to play off the disaster in a hilariously nonchalant email, Verifications.io shut down permanently. If you’re a small startup like they were, a data breach can end your business too.
First American Financial Corp.
In 2019, a real-estate developer happened upon an exploit on the First American Financial Corp website. This exploit allowed anyone to view highly sensitive customer information from 2003.
Any data breach will have a massive cost to a financial institution’s reputation. In First American’s case, this resulted in a major PR disaster and a fine.
A reputational hit like this never goes away. Though First American survived, it will always bear the scars of that negligence.
Data breaches are no longer issues to hand off to IT folks, fingers crossed. If one happens, it’s up to digital marketers to protect your company’s reputation too.
But as the old saying goes, “An ounce of prevention is worth a pound of cure.” The cost of a security breach can be astronomical; it’s better to avoid one altogether.
In that spirit, we’re hosting a webinar focused on identifying the biggest threats digital marketers face today and sharing measures to protect customer data proactively.