The More, the Better? Compensation and Remorse as Data Breach Recovery Actions - An Experimental Scenario-based Investigation

With the increasing number of companies actively collecting data, the number of data breaches has exploded. It can be observed that affected often discontinue their relationship with the company. In order to avoid this kind of response, companies should develop and deploy their own recovery strategies. In our paper, we examined the effectiveness of different recovery strategies geared towards retaining customer satisfaction immediately after a data breach. We examine a data breach of a fitness tracker that varies in severity and tests the recovery actions compensation and remorse. The results found that customer satisfaction depends on the severity of the data breach, while combining compensation and remorse together demonstrates itself as the best strategy for increasing customer satisfaction in almost all cases. However, it was also discovered that in case of a severe data breach, customer satisfaction is difficult to restore and in the end remorse has virtually no effect.