How Cybersecurity Awareness Drives Customer Loyalty

May 14

Recently it was reported that 451,000 people were affected by a significant, years-long system failure at JP Morgan Chase that compromised sensitive financial and personal data of its retirement plan members.

And in April of this year, Roku suffered a data breach that compromised the data of over half a million customers.

While many assume that hackers are only targeting these large businesses, it turns out that 46% of cyber breaches impact businesses with fewer than 1,000 employees. And 37% of companies hit by ransomware have fewer than 100 employees. Why? Small organizations often don’t think they are a prime target of cyber criminals and therefore don’t prioritize cybersecurity.

Protecting your customer data, regardless of your size should not only be a priority because it’s the right thing to do, but because it has a direct link to customer loyalty and retention. That’s what we’re discussing today.

Why Customer Data Security Matters

Customer data is incredibly sensitive, encompassing financial information like credit card numbers and personal details like names, addresses, and even health records. A data breach exposing this data can have devastating consequences for both customers and businesses. Financial losses due to fraudulent activity and identity theft can be significant, while customers may also suffer emotional distress and reputational damage.

Additionally, data breaches often trigger legal and regulatory repercussions, including hefty fines and penalties for non-compliance with data protection laws. These consequences highlight the critical importance of robust cybersecurity measures in securing customer data and mitigating the potential risks associated with a breach.

The Connection Between Cybersecurity and Customer Loyalty

Peace of Mind for Customers

Customers entrust businesses with their personal and financial information, and it's crucial that they feel confident their data is protected. When businesses prioritize cybersecurity, they demonstrate their commitment to protecting this information, fostering a sense of security and trust among their customers. This positive feeling translates into customer loyalty, as individuals are more likely to remain engaged with brands they perceive as reliable and trustworthy.

Demonstrating Security Expertise

Prioritizing cybersecurity is not just a necessity, but also a mark of distinction. Companies that demonstrate strong security practices are perceived as being more reliable and trustworthy. This positive perception can attract new customers and foster loyalty among existing ones, as individuals are more likely to engage with brands they believe prioritize their data security.

75% of customers reported they would sever ties with a brand in the aftermath of any cybersecurity issue. (Source: Vercara)

Customer Churn and Lost Revenue

Data breaches can have a devastating impact on customer relationships. When sensitive information is compromised, customers may lose trust in the brand, leading to churn and lost revenue. The financial repercussions of data breaches can be significant, encompassing not only lost business but also potential legal repercussions and reputational damage. Therefore, prioritizing cybersecurity is not just an ethical obligation, but also a sound business strategy for retaining customers and minimizing financial losses.

Building Long-Term Relationships

By prioritizing cybersecurity, businesses can foster long-term customer relationships built on trust and confidence. When customers feel their data is secure, they are more likely to remain loyal to the brand and engage in repeat business. Additionally, positive experiences with a company's data security practices can lead to positive word-of-mouth marketing, further attracting new customers and strengthening the brand's reputation.

How to Showcase Your Company’s Efforts

Publish a clear and concise data privacy policy: This policy should outline how customer data is collected, stored, and used.
Communicate data breaches promptly and transparently: If a breach occurs, inform customers immediately and explain the steps being taken to address the issue.
Regularly update customers on cybersecurity initiatives: Share information about security measures implemented, employee training programs, and ongoing efforts to protect data.
Highlight security features on websites and apps: Showcase features like secure payment gateways, data encryption in transit and at rest, and secure data storage practices.
Offer educational resources on data security: Provide customers with information on how to protect their own data and recognize potential threats.
Conduct regular cybersecurity training for employees: Educate employees on data security best practices, phishing awareness, and reporting suspicious activity.
Emphasize a culture of security within the company: Foster a culture where employees understand the importance of data protection and actively participate in security measures.
Regularly conduct independent security audits: Engage independent security firms to assess the company's security posture and identify potential vulnerabilities.
Share the results of security audits with customers: This demonstrates transparency and commitment to maintaining a strong security posture.

Final Thoughts

Every company, regardless of size, needs to have a plan when it comes to how they will handle their cybersecurity. We recommend layers of security as the best way to protect customer data from falling into the wrong hands. But once you have these layers, policies, and plans in place, it’s important to appropriately share your efforts with your current and future customers to help foster trust and loyalty.

If you’re looking for a partner to guide you through protecting your organization, please contact Cornerstone Technologies at (269) 321-9442 or CornerstoneisIT.com/contact