By Erik Nachbahr, CISSP President & Founder, Helion Technologies
There’s an old saying, “Reputation is everything.” In the car business, this couldn’t be truer. Historically, car dealerships have battled with negative consumer perceptions and high levels of distrust.
However, things have changed in recent years. According to Reputation.com’s 2019 Automotive Reputation Report, auto dealerships receive better customer sentiment and higher reputation scores than many other major industries. The average reputation score for the auto industry was 607, compared to 401 for healthcare, 552 for retail, and 367 for finance.
This tells me that most auto dealers are working hard to build customer trust and provide better customer experiences. But there’s one critical area that many dealers overlook when it comes to managing their reputations: the integrity of their information technology (IT) infrastructure.
Why Reputation Is Important
According to the Reputation.com report, there’s a strong correlation between reputation and sales. For every 30-to 40-point increase in an auto dealership’s reputation score, there was a one percent increase in sales. Additionally, there’s a 10+ percent difference in sales volume between dealerships that effectively manage their reputations compared with those that don’t.
Companies with good reputations also have an easier time recruiting new employees and are generally assessed at higher market values compared to companies with poor reputations.
Between social media and online reviews, dealers know it’s important to be diligent about monitoring their online reputations. An estimated 95 percent of vehicle buyers use digital sources to conduct car-buying research, and 91 percent of consumers trust online reviews as much as personal recommendations.
Imagine if a car shopper saw reviews and social media postings from your customers, complaining that their personal and financial information was compromised because your dealership suffered a data breach. The damage would be immediate and long-lasting.
Today, one of the greatest threats to a dealership’s reputation is the threat of a cyberattack. Yet most auto dealerships are inadequately managing this risk.
How Cyberattacks Destroy Reputations
One thing is certain: a data breach is a public relations and financial disaster. Yet, many dealerships still believe it won’t happen to them.
Unfortunately, cybercrime is on the rise, and it’s not a matter of if, but when your dealership will be attacked. In 2018, 67 percent of small- and medium-sized businesses (SMBs) reported a data breach in the last 12 months.
It’s well documented that data breaches made public cause an immediate drop in sales, as well as media and consumer outrage. For example, after Target was breached in late 2013, sales fell 46 percent year over year from Q4 2013 to Q4 2014. Could your dealership withstand a 46 percent drop in revenue? If you suffer a data breach, that percentage could be even larger.
According to Total Compliance, 84 percent of consumers said they would not purchase another vehicle at a dealership if their personal data had been compromised. This aligns with a recent survey done in Britain where 86 percent of consumers stated they were “not at all likely” or “not very likely” to do business with an organization that had suffered a data breach involving their credit or debit card details.
If breached, it’s certainly possible to recover and repair your reputation, but how long will it take? Replacing one dealer with another isn’t a big issue for consumers. If your reputation is poor, they will simply choose to visit another dealership.
Fact is, all the work you do on a daily basis to maintain your reputation hangs by a thread and could be undone in a single fell swoop with the discovery of a data breach.
If You Value Your Reputation…
You must value cybersecurity. Too often dealers view investment in their IT infrastructure as an expense to be controlled, instead of as an investment to protect their reputations and increase their competitive advantage.
As we head into 2020 and the threat of cyberattacks continues to rise, it might be time to ask what your dealership’s reputation is worth. Are you managing that reputation and mitigating risks on all fronts?
5 Steps to Protect Your Dealership’s Reputation
- Ask a qualified IT provider for a risk assessment. Even if you have IT staff, it’s critical to bring in an outside party occasionally for testing and to provide objective assessments and recommendations.
- Be prepared to make upgrades in software, hardware, and network security equipment.
- Consider enrolling your employees in security awareness training. It’s very inexpensive compared to the cost of a data breach, which can run into the millions. Security awareness training has been proven to reduce the threat of a data breach up to 98%. This is critical as 91% of all data breaches are initiated with phishing attacks, which are clever emails designed to lure your employees to click on a link or download an infected file.
- Take preventive measures by using strong and unique passwords for every website, application, and system.
- Implement two-factor authentication for access to bank accounts and require verbal authorization for all wire transfers.
About the Author
Erik Nachbahr is president and founder of Helion Technologies, the nation’s leader in Information Technology (IT) management for automotive and heavy-duty truck dealerships. Erik is a Certified Information Systems Security Professional (CISSP) and the auto industry’s foremost authority on IT best practices for dealerships.