As companies gear up for an economic downturn, they’re continuing to invest in robust digital risk protection strategies. Here’s why effective digital risk can give your business a competitive advantage during a recession.
Trouble on the horizon? What’s ahead for 2023
According to Bloomberg Economics, the US will face an economic recession within the next year. They also stated that a recession is a 100% certainty, so businesses need to start preparing for this development as soon as possible.
Despite the economic uncertainty ahead, companies are continuing to spend money on customer service and brand protection. The global market for anti counterfeiting, brand protection, and security solutions is worth an estimated $3.24 billion, and predicted to reach more than $4.26 billion by 2026.
So why, despite tough times on the horizon, should companies continue investing in digital risk protection tools? KPMG’s 2022 CEO Outlook surveyed over 1,300 CEOs at the world’s largest businesses regarding their strategies and outlook. It found that 77% say their organization considers information security a strategic function and a potential source of competitive advantage.
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Key ways digital risk protection can benefit you during a recession
- Two important changes will occur simultaneously in the online market: consumers will look for cheaper purchase options and cybercriminals will up their game. Both of these have a direct impact on business’ revenue streams.
- A key point for protecting your business during tough times is protecting your existing revenue. After all, during a recession, consumers are less inclined to make purchases quickly. This will make them more likely to turn to counterfeit items, which are easily found online for cheaper prices.
- In addition, cybercriminals also feel the pressure from the economic squeeze, so they will step up their efforts, leading to more counterfeits in the online space.
- Cybercrime goes through periods where it increases significantly. During the 2009 recession, the FBI’s Internet Crime Complaints Center logged a staggering 336,655 complaints of online crime – which was a full 22.3% increase from the previous year. We can expect to see something similar with this recession - meaning businesses need to up their digital risk protection, rather than letting it slide.
- As consumers tighten their belts, they buy less, which leads to ever fiercer competition over each individual customer. Any customer lost as a result of a negative experience with a brand copycat means a loss to your bottom line. Research shows that 80% of customers switch brands because of poor customer experience, and 43% said they would switch brands after only one negative customer service interaction. This underscores the importance of ensuring your customers have a stellar experience when interacting with your brand. You can win over new business as customers churn from a competitor who hasn't protected them as they should have.
- In a recession, customer loyalty can be a make-or-break factor that keeps your revenue high. When you maintain consistent positive customer service policies and reliable operations, no matter what’s going on in the world, your consumers will reward you. A 2021 study showed that organizations considered to be leaders in customer experience enjoyed returning customers at a rate 3.4 times greater than those with poor customer experience. So with the recession looming, it’s clear that prioritizing good customer experience should be a high priority for brands.
- When revenue declines, you need to utilize any means at your disposal that yield positive ROI. Investing in digital risk protection gives a high return on ROI for every dollar spent. In fact, companies that make this investment see a return many times over of what they invested in the first place. This is precisely why, especially during recession when businesses are fighting for every bit of revenue they can get, it's time to turn to digital risk protection.
And while it may seem like scaling back on your digital risk protection program can help you save money, it can actually cause long-term damage to your reputation, costing your business serious financial losses in the future. Brand protection is so vital to all businesses that Gartner expects the target client for digital risk protection to increase from 1% in 2020 to 10% by 2025. - When other companies, including your competitors, cancel their brand protection program, you actually gain a competitive edge in the market. Since those companies won’t be able to effectively manage customer complaints and distributor unease, their brand reputations will suffer. Canceling their brand protection programs will pave the way for counterfeits, hurting customer loyalty and making customers more likely to switch to competitors.
Beating the Recession by boosting your brand protection
It’s clear that companies that are looking to cut costs, aren’t willing to compromise on brand protection. “I believe cybersecurity is practically a recession-proof industry,” Cybersecurity Ventures founder Steve Morgan told Fortune. “For organizations of any type or size globally, cybersecurity is mandatory. Without digital protection, a business will go out of business.”
A recession is definitely not the right time to dial down your digital risk protection - in fact, it’s the period in which it’s more important than ever to make sure your strategy is on point. This is the time to protect your business in the most robust, effective way possible.
If you’d like to learn more about ways to ramp up your digital risk protection, get in touch with BrandShield today:
