Companies hit by data breaches may be tempted to generously compensate customers in hopes of repairing their public image and winning back customers. But this post-breach strategy of lavishing customers with attention can backfire and actually make them suspicious of the company, according to new research by a group of information systems professors.
In a forthcoming issue of MIS Quarterly, a group of professors presents some interesting conclusions based on a statistical analysis of the 2011 Sony PlayStation Network data breach, which compromised personal and financial information of more than 77 million users. The analysis is complex and involves terms like “polynomial modeling” and “modified assimilation-contrast model,” but the bottom line is that, “If confronted with a data breach, it is important for managers in these organizations to understand that compensation needs to align, almost perfectly, with customers’ expectations in order to retain customers for future transactions,” according to the authors Sigi Goode of the Australian National University, Hartmut Hoehle and Viswanath Venkatesh of the University of Arkansas, and Susan Brown of the University of Arizona.
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