The latest data breach that targeted T-Mobile is just one in a growing list of cybersecurity attacks that have occurred this year. But marketing experts and analysts say that it probably won’t be enough to persuade customers to switch carriers. Still, the company might have a harder time recruiting new users while the breach is in the news, with one analyst projecting T-Mobile might lose out on as many as 2 million new customers.
It can feel like a data breach happens every month - involving emails, gas lines, grocery stores, hospitals - to the point that it can be numbing to consumers, says Kimberly Whitler, an associate business professor at the University of Virginia's Darden School of Business.
“Data breaches used to be shocking. Think back to the Target breach or the Yahoo breach in 2016,” Whitler says. “Now they're sort of a part of modern life.”
In a note to investors on Wednesday, analysts at New Street Research estimated that T-Mobile could be losing out on 1-2 million new customers due to the breach.
“We are reminded of the Equifax leak, which involved a similar kind of data breach for around 163MM people (148MM Americans, 15MM UK) and resulted in fines for Equifax of up to $700MM,” the note said. “On similar math, T-Mobile’s leak of roughly 50MM customers would result in a fine of around $215MM.”
While T-Mobile may have to do more to persuade new customers, analysts say it’s unlikely that many current customers will switch.
“I suspect most consumers will shrug it off,” Jonathan Chaplin, an analyst at New Street Research, said via email. “By the time T-Mobile and others have reached the end of their investigations, consumer attention will have moved on. There seems to be a perception that most of this information is already out there from prior breaches. In general, consumers seem to care a good deal less about privacy and information security than I would expect.”
One brand’s misery is another brand’s fortune
Still, the breach is a rare opportunity for competitors of T-Mobile to reach out to customers who left for T-Mobile. It would not be surprising if those consumers start seeing more targeted emails or offers to return to other carriers.
“Subscription consumers often don’t think of changing services,” says Whilter. “It’s a huge time commitment to change carriers, but at what other time would users explore that option?”
She adds that the data breach itself may not be the final straw, but maybe the breach along with other annoyances could push a customer to switch.
“Ramping up offers just as T-Mobile deals with its security issues would make considerable sense,” echoes Tim Calkins, who chairs the marketing department at the Kellogg School of Management at Northwestern University. “Taking advantage of a competitor’s troubles might seem unsportsmanlike, but companies do it all the time.”
Breaches can be a PR nightmare, but marketing experts agree the best response is to be upfront and quickly alert customers, and share what they can do next.
When T-Mobile learned about the cyberattack last week after a tip from online forums, it started investigating. It found that sensitive data of around 7.8 million of its customers had been stolen. The files contain names, dates of birth, SSNs, and driver’s licenses information, according to a release by T-Mobile. No phone numbers or financial information were taken in the cyberattack.
The company is offering customers two years of McAfee identity theft protection and has set up a website for customers wondering about what they can do to protect their accounts, such as changing their PINs and passwords.
“This was another signal that security is a huge issue and has to be a top priority,” says Calkins. “These breaches are so disruptive and costly that investing in security practices and software now will probably pay back many times over. Brands cannot overestimate the importance of a good defense.”
This is not the first time T-Mobile has been hacked. In 2019, attackers gained unauthorized access to prepaid customers’ service account info. No financial data, passwords or social security numbers were compromised in that attack. In 2018, T-Mobile said around 2 million users, had their account data hacked by an unknown international entity. T-Mobile currently has 1.4 million customers based on second quarter 2021 earnings.
