Nearly all small businesses claim to protect app user data, but in reality, they do not have security means such as password requirements and data encryption to prevent a targeted attack, according to our survey of 529 small businesses. As apps integrate more personalization and emerging technology like artificial intelligence and augmented reality, it is essential to find new ways to protect consumer privacy.
Small business app developers continue to make more complex apps with added features. The more people rely on these apps, small businesses are focusing on new ways to secure their customers' data.
We surveyed 529 small businesses across the U.S. about the mobile app features and security measures they will prioritize in 2019.
We define small businesses as having limited revenue and between 1 and 500 employees, which aligns with the Small Business Administration’s definition of small business.
We discovered that small businesses focus on providing personal experiences for their app users, but don’t have sufficient resources to protect their app users' data.
As well, one-third of small businesses are exploring the benefits of artificial intelligence and augmented reality in their apps to support personalization. Small businesses can benefit from personalization as users prefer to engage with more customized content.
- More than three-fourths of small businesses (84%) include social media integration or messaging features on their app to keep users on their app for a longer period of time.
- Less than half of small businesses (42%) offer personalized experiences for their apps, such as customized push notifications, discounts, and recommendations.
- Small businesses are investing in emerging technologies to create more interactive app experiences. One-third of businesses integrate artificial intelligence (33%) such as chatbots or voice assistants and augmented reality (30%).
- Nearly all small businesses (98%) claim they protect consumer app user data, but only 41% require users to make a password and 40% encrypt user data.
- More small business apps support Android (69%) than iOS (66%) platforms, though iOS is regarded as safer.
Small Businesses Integrate Social Media and Messaging Into Their Apps
Apps with social media integration and communication or messaging features allow small businesses to promote their products and services organically and onboard new users more fluidly.
Most small businesses (84%) use messaging and social media features to connect with their users and create a community on their app.
Social media (44%) is the most common feature of small business apps, while 40% include messaging and communication functions.
Integrating social media features into your small business’s app allows users to easily learn and share information about your app easily.
Even though social sharing may not generate revenue for small businesses, it allows for organic app promotion by loyal app users.
Integrating social media into an app can increase functionality. Apps like Tinder and Instagram ask people to log in through Facebook, which allows users to access their stored information like interests and pictures easily.
Social media integration also reduces the time required to log in or create an account. Creating an account manually may take several minutes and deter people from downloading your app.
Small businesses can integrate social media sharing and communication into their mobile apps by using a software development kit (SDK), or lines of code created by a third-party that can be added to apps to support new capabilities.
For example, Facebook’s SDK allows businesses to monitor the success of app ads and track installs and app opens, while allowing app users to share content and log in using Facebook.
Joana Kelly, chief operating officer of Small Planet, a mobile app design and development company, explains how using a social media SDK can enhance an app’s performance.
“Businesses prefer to integrate an SDK or social sharing because it motivates new users to download the app and use it,” said Kelly.
Social media integration improves how small businesses connect with users through their mobile apps and eases the log-in process.
Most Small Business Apps Don’t Include Personalization Features in Their Apps
Users expect personalization; like customized app notifications, discounts, and recommendations. Most small businesses, though, do not invest heavily in creating these personalized offerings.
Less than half of small business apps (42%) provide personalized experiences, which are based on past user behavior or interests.
Personalization is essential for creating an app that stands out in the market.
Igor Ishchenko, chief technology officer of Cruxlab, a web and mobile development company based in Los Angeles, gains value from user data in creating personalized experiences.
“The most valuable data businesses can acquire from an app is, of course, a more detailed customer portrait – their geography, age, gender, education, and lifestyle,” Ishchenko said. “This helps make your business successful in general and marketing efforts more targeted.”
"The most valuable data businesses can acquire from an app is, of course, a more detailed customer portrait"
By collecting user data, small businesses gain valuable insight into how their customers behave and which app features interest them the most. Small businesses that collect user data can create a customized experience for their users.
E-Commerce Apps Benefit From Personalization
Small businesses with e-commerce apps benefit from personalizing discounts and ads.
Fewer than half of small businesses (42%) allow app users to shop through their apps. Personalizing ads and discounts allows small businesses to create individual shopping experiences for their customers.
Nearly 80% of customers will only engage with a business’s advertisement if it is personalized according to their past interactions with the brand. People want to feel valued, and by investing time in “knowing” a customer, your business has a higher chance of having a positive interaction with that customer.
Small businesses can offer personalization in their app using:
- Push notifications: Alerts that appear on the home screen of a device that help catch people’s attention. Push notifications allow people to see updates without opening the app.
- Custom content: Content that directly appeals to the user based on previous app behavior. Customized content incentivizes people to open app notifications and use the app more frequently.
- Recommendations: Items that customers are likely interested in based on past purchasing behavior, but have not yet found. Recommending products can increase conversions by 915%.
The Bump, a pregnancy app, uses customized push notifications to help new moms monitor their pregnancy weekly.
People respond to seeing their name and information on an app. Directly connecting an app to personal events in users’ lives makes notifications feel more relevant.
Bump uses friendly language and offers information that applies directly to a specific user.
The app also provides the size of the baby in a relatable and understandable manner. By comparing the baby’s size to a lemon, a parent can better imagine how large their child has grown.
Small businesses that invest in personalization can further engage customers through their app, especially for e-commerce apps.
Artificial Intelligence Mobile App Integration Streamlines User Data Collection for Small Businesses
AI allows small businesses to automate data collection processes and create more personalized app content.
One-third of small businesses (33%) invest in AI features for their mobile app.
AI powers voice search by using automated reasoning to filter through data based on a voice search or command and generate the best answers.
For example, Hound is a digital assistant app that recommends movies, restaurants, or other events.
Hound exemplifies how effective AI is for searching and finding information, and since the app uses natural language, it feels like you are speaking to a human.
AI learns from user behavior and previous interactions – a process known as machine learning. With machine learning, your app can improve its accuracy with every query it runs.
"[Machine Learning] always leads to better and stickier experiences for our customers, which is the name of the game at the end of the day."
AI creates a more engaging app experience, which leads to more loyal customers. Small businesses can save time and increase productivity with AI-integrated mobile apps.
Augmented Reality (AR) Provides Immersive Experiences for App Users
Augmented reality enhances app experiences for users through immersive interfaces and features.
Almost a third of small businesses (30%) have AR features on their apps.
Augmented reality features can boost marketing efforts and offer insight into products, which is especially beneficial for e-commerce apps.
IKEA Place allows users to overlay potential furniture in their home.
This AR feature allows consumers to test a piece of furniture before buying it, so they are sure of their choice.
Sephora’s Visual Artist is an augmented reality app feature that allows users to virtually try on a variety of eyeshadow, lipstick, and foundation over a picture of their face.
Visual Artist’s AR motivates users to try products they wouldn’t normally because they don’t have to pay for a potential product they may dislike.
While retail continues to struggle in the digital age, Sephora remains first in beauty sales. The brand recognized people trending toward emerging technology and created a valuable experience for users through their app. It also recognized the disconnect between retail and online shopping and created a marketing tool that customers can have access 24 hours a day.
Small businesses can mimic the success of IKEA Place and Sephora have experienced by promoting new experiences with AR in their apps.
Small Businesses Claim to Protect Customer App Data
When small businesses integrate more features and emerging technology into their apps, the need to protect consumer data grows more important.
Almost all small businesses (98%) say they keep their customer’s app data safe.
Still, 85% of mobile apps fail to meet security standards, which means most app user data is exposed to hacking or theft.
Small businesses may believe they take adequate measures to secure user data, but the majority of mobile apps violate the Open Web Application Security Project, an organization dedicated to improving software security.
According to OWASP, data storage is the most common risk for mobile apps.
In 2018, for example, data from 150 million accounts of Under Armour’s MyFitnessPal app was stolen. This attack caused shares to plummet 3% within hours. Luckily, no social security numbers or payment information was compromised. The victims, however, did have to delete their accounts and change their passwords.
Most apps store every bit of data they can find, either to create a better experience for users or sell the information to other businesses. With such an extensive database of information, small businesses need to test and secure their mobile apps to protect the privacy of their users.
Small Businesses Lack Significant Security Measures for Mobile Apps
Small businesses may claim to protect consumer data, but their security measures seem insufficient.
Only 41% of small business apps require a strong password and 40% encrypt consumer data.
Creating a strong password is the simplest solution to protect people from hackers; yet almost 60% of small businesses do not require people to make a password to use their app.
Meanwhile, 37% of small businesses use their own server to store user data, and nearly two-thirds (63%) don't have a dedicated server for user data. Small businesses with a dedicated server have better protection against these security threats.
Further, only one-third of small businesses (33%) limit employee access to user data.
Most small businesses do not invest enough resources in securing consumer data, which provides a huge security risk for their mobile apps.
Best Practices for Securing Small Business App User Data
Small businesses can institute security measures on their apps to meet the data privacy expectations of their users.
Here are three ways to protect app user data.
Encryption adds another level of security for small businesses on top of password protection to prevent attacks.
The majority of small businesses (60%) do not encrypt app data, which means that all the company’s consumer data is accessible after breaching the initial firewall.
Clare Bittourna, a marketing designer at Codal, a mobile app development company in Chicago, discusses the value of encrypted code.
“I think it’s very important to protect your app code with encryption; you want the code to be hard to read and secret,” Bittourna said. “A good rule of thumb is to stick with up-to-date algorithms paired with API encryption.”
"It’s very important to protect your app code with encryption."
Small businesses can encrypt user data, so if initial security measures are breached, it appears useless to anyone searching the database. A business can create a code of access for its employees while using an algorithm to make the data nonsensical to outside eyes.
Owen Clark, founder of UBrand.app, a mobile app development company, discusses his company’s stringent security policies to protect user accounts.
“Each user has their own encryption, so there is no way to hack the entire system except individually,” said Clark. “Soon even that will be impossible because of the Cloud. You can store bits and pieces of each user spread out in the cloud making it extremely difficult to hack a single user.”
By keeping the data scattered in the Cloud, hackers will struggle to reconstruct usable information.
2. Invest in a Dedicated Server
Small businesses can also invest in a dedicated server to store user information.
Only 37% of small businesses owning a dedicated server, which increases their security vulnerability since outsiders can more easily breach shared servers.
Small businesses that host mobile app data on a dedicated server prevent hackers from grabbing sensitive information that is passed between the client to the shared server.
3. Limit Access
Only grant access to consumer data to employees who need it. Every employee who can read personal data becomes a liability and a possible threat to the system. By limiting data interaction to only essential employees, the possibility of an attack decreases.
Small businesses should reevaluate their mobile app security measures to protect consumer data from external attackers as data privacy concerns grow.
Small Businesses Prefer Developing for Android Even Though Less Secure
Small businesses have different preferences for developing mobile apps for iOS or Android platforms.
Almost the same percentage of small business apps are compatible with Android (69%) and iOS (66%), although iOS is considered more secure.
Many app developers like Android’s platform because Android relies on open-source code. Developers can manipulate more features and change the code in their own phone or tablet to experiment with their app.
Although Android is globally preferred by developers, people using Android apps have a greater security risk.
OWASP reports that 52% of Android apps have a security hole that puts user data at risk.
Apple, on the other hand, has a closed system, meaning the company does not release its source code to app developers. iPhone owners cannot change the code on their phones, which means the platform is much more difficult for hackers to attack.
While iOS has a much stricter application process for the App Store than Android, iOS apps are also vulnerable to phishing and hackers. Once a small business takes charge of its own app security, it can create stronger firewalls and encryption tactics to protect user data on both Android and iOS.
While Android’s code is open-sourced, it is the small business’s responsibility to encrypt its code and data rather than relying on a third party's security measures.
App developers can create their own custom security standards to better protect user data.
Small businesses may prioritize convenience over security when developing an app, but the need to protect user data continues to increase.
Small Business Apps Do Not Invest in Security and Personalization Enough
Small businesses recognize the importance of social media integration in their mobile apps, but fail to grasp the value of personalization and data security for their mobile apps.
While a large share of small businesses (84%) integrate social media into mobile apps, they also can improve engagement with more customized messaging and recommendations.
As personalization becomes an expectation for customers, one-third of small businesses (33%) recognize that artificial intelligence offers an easier method of collecting and filtering personal data. Augmented reality also can then transform user data into more immersive experiences for users.
While apps continue to grow more complex, 98% of small businesses claim to protect consumer app data. Still, an underwhelming percentage of small businesses actually implement significant security measures.
Less than half of small businesses (41%) require users to have a strong password and even fewer encrypt app data, whether their app is on an Android or iOS platform.
Consult with an experienced mobile app development company to evaluate your app's security standards and ensure that you are providing personalized app experiences for your users.
Clutch surveyed 529 small business owners and managers across the U.S. Small businesses are defined as having between 1 and 500 employees and limited revenue.
Over half of small businesses (54%) have between 1 and 10 employees and 46% have between 11 and 500 employees.
Most respondents are male (52%) and 48% of respondents are female.
Generation Xers make up 45% of respondents, 29% are millennials, and 27% are baby boomers.