With data security threats on the rise, consumers are becoming much more aware of the risks of data exposure, and they are beginning to value their privacy more than ever.
Younger generations who grew up with technology are now the prevalent group of consumers and they want to know how and why their data is being collected, where and for how long it’s being stored, who can access it, and how well it is protected overall.
If they feel like their data is not properly handled, they will rather take their business elsewhere.
Respecting customer’s wishes regarding data protection will help you gain a competitive edge and maintain a strong reputation in the public eye. Besides losing customers and tarnishing your reputation, non-compliance can also have some serious legal and financial consequences.
Let’s dissect these reasons for protecting customer data and see why you should stay on top of the best data security practices.
Meeting compliance requirements
Meeting regulatory compliance is undoubtedly one of the most important reasons why every business should protect customer data. Organizations that fail to do so risk facing huge fines reaching tens of millions of dollars and or, in some severe cases, even prison time.
Regulations such as GDPR require businesses to be transparent about how and why they collect customer data, to keep only the necessary data, and to make sure to always enforce proper security practices in order to protect it.
There are also other, industry-specific regulations, such as HIPAA and PCI DSS, regarding the handling of sensitive healthcare records and credit card payments, respectively.
Keeping your records such as contracts and emails for long enough is a must in case any suspicion of improper data handling occurs and the records need to be presented as legal evidence.
However, if you hold on to your email records containing sensitive customer data for too long, they just become a liability. Storing unnecessary data on your servers once they can no longer be subjected to legal audits just makes them more vulnerable to breaches and exposure.
That’s why you should carefully craft an email retention policy that will clearly determine which records should be kept and for how long, so you can ensure compliance and protect sensitive data. When writing your retention policy, you should take into account both your local and international laws, as well as industry-specific regulations.
Prevent data breaches
Preventing data breaches is important for two reasons. First, they can hurt your customers by exposing their personal data.
Second, they can hurt your company, not only by tarnishing your reputation and breaking trust with your customers but also by disrupting your operations and taking a lot of time and resources to recover from.
According to IBM’s The 2020 Cost of a Data Breach Report, the average cost of a data breach in 2020 was $3.86 million. However, this number goes even higher depending on the location and the industry. In the US the average cost was $8.64 million, while the most expensive industry was the healthcare industry, averaging at $7.13 million per breach.
Moreover, it took businesses 280 days on average to identify and contain a data breach, meaning that the businesses were losing almost three quarters of a year on average dealing with the consequences of a data breach!
Maintaining brand reputation
Businesses that make it explicitly clear that protecting customers’ data and privacy is their priority, actively work on being more transparent, and consistently follow best data protection practices have a better chance at building a strong reputation and improving brand value.
A study done by Varonis shows that 65% of data breach victims lose trust in the company. But besides losing customers affected by the breach, you also risk losing potential customers, as 85% of victims of a data breach will spread negative word of mouth and tell others about their experience.
Maintaining a solid brand reputation isn’t only about gaining the trust of your customers, but also your business partners, investors, and the general public.
Companies that don’t implement appropriate data security measures, and subsequently experience data breaches, risk losing trust, having fewer customers, and ultimately, experiencing lower profits.
Moreover, according to a Ponemon study commissioned by Centrify, companies that experienced data breaches also experienced an average drop in stock prices of 5%.
Gaining competitive advantage
The Ponemon study also shows that one in four victims of a data breach decided to take their business elsewhere. With consumers who are becoming more and more aware of data security threats and the importance of privacy, it’s easy to fall behind and lose customers to competitors if you fail to protect their data.
Additionally, a PwC study shows that 85% of customers won’t do business with a company at all if they have any concerns about its data security practices.
These concerns about privacy clearly demonstrate that if you’re proactively working on improving data security and can show that you truly care about the protection of the personal data you’re collecting, you will gain a competitive edge over those who don’t strive to make customer data protection their priority.
Over to you
In a world where consumers are aware of data security risks, educated about their rights, and able to easily spread word of mouth (both good and bad) via social media, protecting their data is no longer optional.
It is evident that the public is demanding good data security practices and privacy protection. Those who fail to properly respond to those demands risk being left behind and crushed by the competition.