In light of numerous personal security breaches within the past year, including the high-profile hacker tales from Citibank, Wells Fargo, and Ernst & Young, consumers are becoming less trustful of companies, according to a new report by the CMO Council. With the total loss from identity fraud up $1.2 billion more per year since 2003, it is hard to blame them. For companies to hold onto customers, the study argues, it is in corporations' best interest to take a proactive stance: brand themselves as secure before the trust has a chance to break.
"Secure the Trust of Your Brand" is part of an initiative by the CMO Council and the Business Performance Management Forum to discover the effect of security successes and failures on the way customers make decisions. "Last year was the worst year for security breaches ever," says Scott Van Kamp, editorial director of the council. He explains that with security levels decreasing, customers are becoming more cautious of who they let handle their personal information. "Customer expectations [for security] are much higher," he says.
The risk of losing customers through a security snag is on the rise as well, according to the study. Forty percent of respondents had stopped an online, phone, or in-store purchase midtransaction because of a perceived security threat. Additionally, one quarter of respondents said they would discontinue supporting a company if their personal information was compromised. This number may not seem exceptionally high, but Van Kamp, says, "Ten million [Americans] experienced ID thefts last year. Two and a half million is a lot of customers."
The threat level is rising to shades of orange and red, and customers are fully aware of this shift, the study states. The report indicates that 60 percent of the total consumer base has become more concerned with security recently and they believe it is up to the company to protect them. Ninety-two percent thought companies have a corporate responsibility to provide end-to-end security protection to their customers, and three quarters reported visible and understandable descriptions of security practices to be "very important" to them.
The CMO Council does not see a shining future for Internet security. In the face of an extended atmosphere of risk, the study indicates that companies would do well to promote themselves as secure to drive business. Few companies are leveraging this message today, leaving a gap to fill in the marketing space. The study urges companies to move quickly. Two and a half million customers is a terrible thing to waste. "Right now it's leveling off, but it's leveling off at bad," Van Kamp says. "I think this will stand until companies and the government take action, but this will be with us for the next couple of years."
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