CUSTOMERS FEELING UNSAFE? SECURITY CAN HELP

Jan 1, 2006 12:00 PM, LARRY ANDERSON, EDITOR

More and more business is conducted online these days, and companies, such as banks and even retail stores, are enjoying the benefits of plummeting overhead costs associated with online transactions as compared to the more expensive brick-and-mortar business world.

But a big impediment to doing business online (from the customer's viewpoint) is the risk associated with the practice, whether it stems from doubts about the security of online transactions, fear of identity theft, or even vague concerns about “Big Brother.” That's why you see banks and other businesses falling all over themselves to ensure (and to assure customers) that online transactions are safe. The more people who buy, invest or pay bills online, the cheaper are companies' operation costs and the healthier is their bottom line.

As companies that have suffered from hacking incidents and other losses of data can attest, such incidents can have a catastrophic impact on their brand images.

And drive customers away from their online “stores.”

It's a lesson that translates perfectly into the physical security world, too, and yet one that I'm not sure we focus on well enough.

The fact is, the more secure a customer feels, the more likely he will do business with you. So the question is: What exactly is the cost in revenue to a business that can result from lack of security? How much does it affect the bottom line? And does the extent of our security response appropriately reflect our desire to avoid that possible loss?

Downtown business districts are the most obvious example. Often customers stay away from downtown areas because they do not feel safe, which means downtown merchants suffer. Campaigns to install video cameras in downtown business districts are one way to offer security to these areas … and a resulting business boom. Managers of downtown office buildings in Tampa, Fla., for example, are joining forces with local police to prevent criminal activity in the area and to inform tenants about incidents as soon as possible. “We want downtown to be a place where citizens feel safe conducting business,” Tampa Police Cpl. Mark Delage told the Tampa Bay Business Journal.

It's almost impossible to quantify the negative economic impact of security concerns among customers. But no one denies it. And not enough of us acknowledge the also undeniable corollary: Here's another largely unheralded way that security expenditures add to the bottom line.

I just read about a study in Great Britain that found that 56 percent of Britons plan to vacation close to home because of concerns about security and terrorism. Clearly, fear can motivate consumers to spend less money.

And security can help.

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