The fallout from a damaging data breach in October last year continues to affect UK ISP TalkTalk, with new figures claiming that the firm lost 7% of its broadband customers in the fourth quarter.
Market watcher Kantar Worldpanel revealed in new stats today that not only has the provider lost existing broadband customers, but it’s struggling to attract new users in the home services space.
Its share of the home services market – which includes broadband, fixed line and paid TV – fell by 4.4% from the previous quarter in terms of new customers.
And tellingly, only 1.4% of new joiners claimed they signed up because of TalkTalk’s ‘reliability’ – which is much lower than the industry average, according to consumer insight director, Imran Choudhary.
He argued that “customers have lost faith in TalkTalk as a trustworthy brand.”
“TalkTalk continues to offer some of the most attractive promotions across the home services market and almost a third of its new customers did choose it for this reason, but there can be no doubt that it lost potential customers following the major data hack,” Choudhary added.
“If it’s to recover from recent events TalkTalk will need to offer more than just good value.”
BT has apparently been the biggest winner from TalkTalk’s misfortune, snapping up an estimated 40% of those departing customers.
The figures from Kantar Worldpanel seem to suggest the data breach and the way it was handled by TalkTalk have had a significant effect on customer loyalty.
In the end it was claimed that just 4% of customers had sensitive data exposed in the cyber attack – amounting to fewer than 160,000 users.
However, the firm was widely criticized for its muddled media response, and its refusal to waive substantial account termination fees unless customers could prove money had been stolen from their bank accounts as a direct result of the breach.
Shareholders actually responded pretty well to TalkTalk’s hardline stance on exiting customers, with shares rising 12% after the firm’s 1H 2015 financials were released.
However, TalkTalk has already admitted a one-off bill of £35m would have to be paid to cover incident response, external consulting and increasing call volumes as a result of the incident.
CEO Dido Harding claimed in the aftermath of the attack: “in the end our customers will judge us over the course of the next few months, and not by mine or anyone else’s words right now".
It appears that’s exactly what they have done.
Richard Parris, CEO of digital identity firm Intercede, argued that the news should be a “wake-up call” to all businesses.
“Consumers do care about the security of their digital assets and will churn to a competitor if you fail to protect them,” he added.
“Businesses need to act now and stop relying on out-dated verification and authentication technologies. The unfortunate reality is that many are simple enough to be cracked by a small group of idle-thumbed teenagers.”