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'Detractors' could increase cost of data losses
Apr 4 2008, 14:17 PM
The importance of businesses keeping their customers' personal data secure has once again been highlighted after a new study revealed the extent to which consumers pass on negative corporate experiences.
Research conducted by Satmetrix Strategies found that, in general, consumers can be divided into two separate categories, namely promoters and detractors.
While the former group are often keen to tell their friends and family about a positive experience with a company, the latter are likely to pass on negative referrals and therefore potentially damaging a business' reputation.
Furthermore, while promoters were found to bring in an average of 0.5 customers each through positive word-of-mouth, negative reports from detractors cost companies an average of 0.84 customers each.
"Word-of-mouth is one of the most powerful and trusted marketing sources," explained Richard Owen, chief executive of Satmetrix.
"When customer experiences are positive - and loyalty is high - we expect customers to spend more on average and to generate new business via positive word-of-mouth."
Earlier studies have also found that consumers who lose confidence in a business' ability to keep their data safe are likely to pass on their concerns to others, with the cost of this lost reputation often greater than the cost of the information lost.
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