Will Customers Remain Loyal to You After A Data Breach?

Will Target be able to restore confidence following a data breach that exposed more than 70 million customers to identity theft? The answer is “Yes.”

Historically, loyal customers do not scare easily. Back in 2007, for example, TJ Maxx experienced a security breach that took place over a period of 18 months. The company used to store customers’ personal data in its servers in an unencrypted format enabling the hackers to retrieve customers’ personal data. The stolen data was used to make fake credit cards that were mainly used to purchase electronics.

One would expect TJ Maxx to crumble due to a damaged public image and loss of customer trust. Oh, contraire! Loyal TJ Maxx customers just shrugged off the incident, chalked it up as a minor hiccup, and continued shopping at the company’s stores.

If history repeats itself, loyal shoppers who LOVE Target will not jump ship and spend their dollars elsewhere. Large retailers like Target have grown in size and expanded across the country by building huge bases of loyal customers. In fact, several news outlets have reported that Target shoppers have simply resorted to using cash or their Target Red Card in the wake of the breach.

Target store officials have been very transparent about the data breach and have taken the appropriate steps to restore confidence. They even gave customers a 10 percent discount the weekend after the breach was announced. According to a survey released by the America’s Research Group at the end of December, Target had retained 70% or more of their customer base. While this achievement sounds impressive, the America’s Research Group views it as a mere “passing” score.

In the report, America’s Research Group CEO Britt Beemer said,” The key to retailing success is retaining at least 70% or more customer base. Two-thirds of retailers got failing grades this year and had better seriously review their merchandising and advertising strategies if they want to stay in the game.”

Loyalty will pay off for Target in the end. If your business suffered from a data breach, are you confident that your customers will remain loyal and undeterred?