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Among the several implications of a security breach is customer loyalty. So how do so-called “digital natives” feel about breaches, having grown up in a world where they are increasingly commonplace? New research [pdf] carried out by Forrester Consulting on behalf of American Express finds that a security breach would cause more Gen Y and Gen Z respondents to abandon a company than would better competitor rewards offers or a variety of poor digital interactions.

Indeed, of 8 options offered, a slight majority of each group said that a security breach would be one of the top-3 reasons for stopping using a product, service or brand.

An earlier survey from SafeNet noted that about half of US respondents would either never do business again with a company which had a data breach where sensitive information (such as card details, bank account, social security numbers and passwords) was stolen (24%) or – would be very unlikely to give the company another chance (27%). If the breach only concerned non-financial information such as contact information, fewer than half would be likely to abandon the company.

(In the case of the AmEx study, while the question didn’t reference financial information being breached, it’s likely that this was assumed due to the topical nature of the research.)

How companies deal with breaches can also have a strong impact on loyalty and trust. Research has shown that one of the key building blocks of trust is taking responsible actions to address an issue or a crisis. When it comes to a breach, that involves timely acknowledgment of the breach and a guarantee to cover losses.

Unexpected Fees and Charges Cause Defections

Even more than a security breach, though, unexpected fees and charges will cause customer defections, per the AmEx study. This is particularly the case for Gen Y respondents, 71% of whom said this would be a top-3 reason causing them to stop using a brand, product or service.

The influence of unexpected costs is also seen in the e-commerce space, where recent data from comScore [download page] demonstrates that 6 in 10 would be at least somewhat likely to abandon a shopping cart if they discovered that free shipping was not offered.

Majority of Gen Z Has Experience With Financial Instruments

While Gen Z are young (16-22) with many in school, they’re beginning to be financially savvy, according to the study. Most commonly, this younger generation has a checking or saving account (72%), but many also have prepaid credit cards (36%) and general purpose credit cards where they are the primary account holder (27%). Some 15% are making peer-to-peer payments.

Not too surprisingly, Gen Z is relatively comfortable with digital payment types, whether those be card-branded digital wallets (43% having used in the prior 3 months) or device-specific mobile payments (33%).

For more data on youth and financial services, see MarketingCharts’ comprehensive study, Marketing Financial Services to Millennials.

About the Data: Forrester conducted an online survey of 1,027 North American Gen Y and Gen Z consumers in the United States to evaluate their expectations for and interactions with brands. Survey participants included 50% males and 50% females from Gen Y (ages 23 to 27) and Gen Z (ages 16 to 22). Respondents all had experience with digital purchases and/or customer service. Respondents were offered a small incentive as a thank you for time spent on the survey. The study was conducted in March 2017.

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