Insureon Blog

Uh-Oh: Customers Don't Trust Businesses When it Comes to Data Security

11. May 2015 08:09

gazelle bracing before a pool of water

MarketWatch reports on a study by the cyber security firm Fortinet, which revealed 71 percent of US consumers are more worried about data breaches exposing their personal information than they were last year. And no wonder: 2014 was the unofficial year of data breaches.

US companies experienced 783 data breaches last year – a record-breaking number, according to the Identity Theft Resource Center. Plus, given the continuous headlines about the Sony hack and the lingering ramifications of Target's 2013 breach, it seems consumers are right to be wary.

But the study revealed customers are unwavering in their mistrust when it comes to others protecting their data:

As though you need it said, those lousy trust numbers may translate into lost business. Customers are likely going to seek out competitors who can offer assurances about how they protect third-party data.

Your Word Is Only as Good as Your Reputation

So what do these numbers mean for small-business owners? Here are three takeaways:

  1. You can't afford to gamble with your customers' trust. As you already know, trust plays a vital role in sales. As data security becomes more of a factor in customer buying decisions, they will go elsewhere if they think their data is at risk.
  2. If you suffer a data breach, your business's reputation may tank as a result. Most small businesses survive and thrive because of their reputations. They depend on word-of-mouth referrals to get new clients. But who's going to recommend their friend or colleague go to a business that just had a data breach? Plus, according to Experian's research, consumers report the only things worse than a data breach for a business's reputation are environmental disasters and reprehensible customer service.
  3. Rebuilding your reputation takes time and serious money. Unlike huge corporations that have the resources to breathe life back into their images, small businesses aren't so lucky. While they scramble to repair their servers and notify customers, they may not have anything left in the budget to hire a PR firm.

In short, data breaches put your reputation on the line, and for most small businesses, those stakes are too high for comfort. Let's explore what you can do to mitigate the risk of losing customers over their security misgivings.

Putting Data Security First

If you handle customer payment information, personal identification information, medical records, or other confidential third-party data, you must sharpen your data breach defenses. That may mean…

Though your General Liability Insurance may help pay for reputational damage you cause someone else, it won't help you out when a data breach harms your business's reputation. Cyber Liability is the only policy that can lend that muscle. Learn more about that in "Why Your General Liability Insurance Doesn't Cover Data Breaches."

And contrary to popular belief, you don't have to have Scrooge McDuck kind of cash to afford a Cyber Liability policy. In fact, you may be able to add the coverage to your Business Owner's Policy to save some money.

Tags:

Cyber Risk Insurance | Data Breach | General Liability Insurance | Small Business | Small Business Risk Management | Tips for All Small Businesses

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