Data Misuse Threatens One-Third of Company Revenues From Affected Consumers

NEW YORK, NY--(Marketwired - Jun 21, 2016) - Recent consumer research from the BCG Henderson Institute has uncovered a previously hidden obstacle to successfully unleashing the trillion-dollar opportunity of big data: data misuse. Consumers' reactions to data misuse can lead them to reduce their spending by about one-third, The Boston Consulting Group (BCG) estimates in a new publication, "Bridging the Trust Gap: The Hidden Landmine in Big Data."

Data misuse does not refer to a use of data disclosed in an agreement that no one reads when signing up for a credit card, mobile phone, or social media service; it is not even about whether a use actually causes harm to consumers. Data misuse occurs when consumers experience an unwelcome surprise in the collection and use of data about them. Consumers are increasingly reacting negatively to these surprises -- even when the use is actually benign.

"If companies take the right steps now to manage the risk of data misuse, they will not only head off the looming threat to their earnings performance but they will also gain a sustainable competitive advantage," says John Rose, a senior partner and lead author of the article.

To help organizations develop differentiated strategies for navigating the landscape of trust in the age of big data, BCG surveyed 8,000 consumers in the US and the top five European economies (France, Germany, Italy, Spain, and the UK). The major findings include:

• Consumers will stop or significantly reduce spending if they believe that a company has misused data about them or other consumers. This can have dramatic results: in the US, a reduction in spending by about a third among customers who perceive themselves to have been affected. Overall, that means a 5% to 8% loss of total company revenues in the first year after these customers have stopped or reduced their spending, dropping to a 3% to 5% loss in year two. However, as consumer awareness and concerns increase, we believe that data misuse has the potential to cut overall revenues by 10% to 25% in year one, dropping to 5% to 15% in year two.
  
  
• Concerns about data misuse remain at high levels across generations and countries. Consumers who said they are concerned about the sharing of personal data online increased slightly since 2013, rising from 83% to 86% in the US. Four out of five US millennials are similarly concerned. While differences exist between the US and the European countries surveyed, the potential revenue losses are comparable.
  
  
• Consumers are primed to view most new uses of data as data misuses. Nearly half the consumers we surveyed believe that companies are not being honest about their use of data and will not protect it. Only about 20% of consumers across all the countries surveyed trust companies to "do the right thing" with data about them, and approximately 30% across all the countries surveyed believe that companies will not do the right thing. This is particularly troubling given that 71% to 79% of the surveyed consumers said they would be unlikely to share or let data about them be used by a company they did not trust.
  
  

"Many companies are on a collision course with their customers when they use data in new ways," says Rose. "Unless companies do something to combat the toxic environment of distrust that surrounds data use, consumers will be predisposed to view all new uses of data about them as misuses."

A copy of the report can be downloaded at www.bcgperspectives.com.

To arrange an interview with one of the authors, please contact Eric Gregoire at +1 617 850 3783 or gregoire.eric@bcg.com.

About The Boston Consulting Group
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About the BCG Henderson Institute
The BCG Henderson Institute (BHI) is founded on the belief that leadership starts in the mind and that ideas precede action. It aspires to develop the ideas that inspire forward-looking leaders to shape their next game. Thought leadership has long been a cornerstone of BCG. The BCG Henderson Institute -- named after BCG's founder and the pioneer of business strategy, Bruce Henderson -- continues this legacy though its hubs in the US, Europe, and Asia. For more information, please visit bhi.bcg.com.

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