Yes retailers can achieve ROI for their investments in cybersecurity during the upcoming holiday season – and for the rest of the year, too! Here’s how.
Cyber Monday retail sales have been on a steady upward trajectory since 2013, topping more than $3 billion last year and expected to reach $3.36 billion in revenue this year. Adobe, which tracks these numbers, anticipates that the annual online shopping day will “continue to be the largest revenue day of the holiday season.”
To get a slice of that growing revenue pie – on Cyber Monday and every day of the year – retailers are trying everything they can to engage existing and new customers. This often means better on-line or mobile interfaces, faster shipping, and more convenient checkout options.
It also means protecting customers’ information from cyberattack, which would bring positive sales momentum to a screeching halt and cause reputational damage with serious repercussions to the bottom line.
According to the KPMG Cyber Services “Consumer Loss Barometer” nearly 20% of consumers say they would stop shopping at a retailer if they learned that a retailer had experienced a hack. One-fifth of their customer base, gone and not coming back. Our survey also found that of the remaining 80%, nearly half (49%) say that it will take six months for them to build their trust back with a brand and continue shopping.
Despite that daunting outlook, many retailers are either blissfully unaware or woefully underprepared for the present risk factors in the industry. According again to the “Consumer Loss Barometer:”
- 89% of retailers have experienced a data breach in the past two years
- 42% of retailers don’t have an executive in charge of cybersecurity
- 55% of retailers haven’t invested in cybersecurity in the past year.
Why are retailers choosing to operate as if cybersecurity isn’t important?
One reason is ROI. Even in the aftermath of high profile breaches at major retailers like Target, Home Depot or Eddie Bauer, investment in cybersecurity protection is often hindered by the tough question of how to measure the bottom line impact. Where an investment in marketing can show immediate ROI in increased sales, traffic and brand awareness, an investment in cybersecurity does little to boost consumer confidence or increase shopping habits.
Or does it?
Conventional wisdom holds that it is hard for retailers to see cybersecurity as a priority because they operate at such razor thin margins; that given the choice between spending on marketing or cybersecurity, legacy thinking – marketing – typically wins.
These failures to invest in cybersecurity are not only dangerous, they are missed opportunities to grow a customer base. Our KPMG research shows that consumers see cybersecurity as a brand builder. For example, 68% of respondents said that a “lack of a solid plan to prevent future attacks” would lead them away from shopping with that retailer again.
According to the KPMG “Barometer,” shoppers are also more likely to do more business with that brand when the company is transparent about its cybersecurity efforts and, in the event of a hack, how they remediate the problem and take care of their customers. In fact, 53% of those same customers stated that a “lack of timely acknowledgement/response from the retailer providing details of the incident and impact on customers” would contribute to them not shopping with that retailer again. Retailers can take their customer communication a step further by offering tips on how consumers can protect themselves while shopping online and creating educational material around that theme.
Cyber Monday sales are likely to keep growing – as will competition for those shoppers. A retailer that wants to protect its existing customer base and also stand-out to new customers, needs to consider cybersecurity as more than an extraneous expense. As our “Consumer Loss Barometer” shows, it’s also a way to build a trusting consumer base that will eventually ensure a return on that investment.
Tony Buffomante is the US cyber security services leader for KPMG based in Chicago. Over the past 16 years, he has managed and executed Information Technology (IT) security, audit and control reviews and implementations for some of the largest companies in the United States, … View Full Bio