78 The Role of Customer Relationship Management on Customer Value and Service Quality in Improving Customer Satisfaction Bagus Nurcahyo

The Role of Customer Relationship Management on Customer Value and Service Quality in Improving Customer Satisfaction

1 Bagus Nurcahyo 2 Renny Nur’ainy

Gunadarma University

Jl. Margonda Raya No. 100 Pondok Cina, Depok 16424 Telp : (+6221) 78881112 bagus@staff.gunadarma.ac.id renny@staff.gunadarma.ac.id

ABSTRACT

The purpose of this research is to determine the influence of CRM on Customer Value and Service Quality in improving Customer Satisfaction. This research focuses on banking industry, where customer serve as the research sample. The data in this research using primary and secondary at once. By using Likert scale questionnaire the respondent obtained as much as 360 respondent. The analytical tool used in this research is Structural Equation Modelling (SEM) with Path Analysis for testing hyphotheses.

Based on the testing that has been done of the obtained result of the goodness of fit is good, so that all hyphotheses can be accepted. This indicates that a good Customer Relationship Management will increase Customer Value and Service Quality are good also. While they will increase the level of satisfaction felt by customer.

So, we can say the that Customer Satisfaction will improve while Customer Value and Service Quality increasing by Customer Relationship Management.

Keywords: Customer Relationship Management, Customer Value, Service Quality, Custumer Satisfaction

1 Management Department, Faculty of Economic, Gunadarma University

bagus@staff.gunadarma.ac.id , Jl. Margonda Raya No. 100 Pondok Cina, Depok, 16424

Telp. (+6221)78881112

2 Accounting Department, Faculty of Economic, Gunadarma University

renny@staff.gunadarma.ac.id , Jl. Margonda Raya No. 100 Pondok Cina, Depok, 16424

Telp. (+6221)78881112

INTRODUCTION

will increase (Ismail et al. 2007; Widayati, 2008). It is In the current business world, where

not an exaggeration given the customer is key for the competition

survival of an organization. Therefore, the customer is increasingly fierce, companies need to differentiate

the most important asset for the company. This themselves from other companies in order to keep

research, pick some invalid constructs research their relationships with their customers. Since this

deemed able to explain customer relationship emphasis on customer relations created a paradigm

management. Sin et al. (2005) outlines that the shift from transactional marketing to relationship

success or failure and customer relationship marketing (Grönroos, 1994; Sheth and Parvatiyar,

management at least influenced by the existence of a 1994; Kyung, 2013).

synergy between people (human resources), quality The development of the business world that

(quality of goods and services), technology, process is increasingly going forward caused the onset of an

and customer focus.

increasingly tight competition. One way to maintain Once upon a time retailers, banks, insurance the viability of the company is to maintain good

companies and car dealers had a close relationship relations with customers. Because of the research

with their customers. They often knew them retain existing customers much easier compared to get

individually, understood what they wanted, and new customers. Very important to know and meet

satisfied their needs through personal customized customer needs quickly and precisely. The presence

service. As a result, they earned loyalty and a large of the Customer Relationship Management (CRM)

share of their customers‘ business. This, however, will be able to resolve the issue above because the

was a costly, inefficient system and customers goal of CRM is to get at the core of the concept of

effectively subsidized this relationship by paying customers who are unclear and put it in the frame of

higher prices. Over the years, through mass marketing the application. In the process, CRM shows how

and increased consumerism customers traded marketing works and the system that is running must

relationships for anonymity, reduced variety and

be able to support the e-commerce environment.

lower prices (Peppard, 2000).

In globalization, increasing competition and In creating customer satisfaction, the advances in information and communication

company should be able to enhance customer value, technology has forced companies to focus on

product quality and service quality. According to managing customer relationships in order to

Isnadi (2005) customer value can be created through efficiently maximize revenues. Customer relationship

the service quality provided by the company to its management (CRM) is the key competitive strategy

customers. The better service quality, will be businesses need to stay focused on the needs of the

increasingly higher customer value to the company. customers and to integrate a customer facing approach

The high quality of service is also not escape the throughout the organization (Ozgener, 2006). At this

internal corporate support, particularly support of its point, close relationship with customers will require a

human resources.

strong coordination between IT and marketing In addition to increasing customer value departments to provide a long-term retention of

company is also not biased to forget about the type selected customers (Onut, Semih at al., 2001).

and quality of its products. Companies with this type The companies are practicing elements of an

of product which is very innovative, high quality with approach to marketing that uses continuously refined

competitive price so it can compete with other similar information about current and potential customers to

products will be able to attract more customers. The anticipate and respond to their needs. This is the

more innovative a product so that it can meet all the practice of Customer Relationship Management

needs of customer, it will be increasingly higher (CRM). Many businesses today realize the importance

customer satisfaction (Song and Parry, 1997). of CRM and its potential to help them achieve and

Service in the banking world when it's so sustain a competitive edge. These organizations are

good the rapid technological innovation, product and already changing their business processes and

service. What exactly you want the customer of a building technology solutions that enable them to

bank, its size, its popularity or ability in providing acquire new customers, retain existing ones, and

credit or promotion and gift to be given, it service maximize their lifetime value (Peppard, 2000).

quality remains a central point for a bank. Now it can Customer relationship management research

be said all the bank expects good service but in fact nowadays has been the attention of researchers and

between customer expectations and the reality of the practitioners. Research that developed since the 1990s

service rendered by the bank often happen otherwise. provide tangible evidence, that if the company can

In this study, Customer relationship actually

management can deliver benefits to customers, and management and the company's performance certainly

allow competition barriers make it difficult for a allow competition barriers make it difficult for a

problems led to the emergence of a research question find relationships between variables that have an

is as follows:

impact on customer satisfaction, namely customer

a) Is the Customer Relationship Management has an relationship management as a marketing strategy that

influence on the Customer Value? made the company to maintain and improve customer

b) Is the Customer Relationship Management has an satisfaction through customer value and service

influence on the Service Quality? quality.

c) Is the Customer Value has an influence on the Customer relationship management has

Customer Satisfaction?

become the new paradigm for marketing strategy.

d) Is the Service Quality has an influence on the Customer relationship management is able to

Customer Satisfaction?

empower customers with the desire to pressure the power information technology to give you the

LITERATURE REVIEW

satisfaction of the customer. The stimulus to be An increase in the importance of customer resurrected from the concept of customer relationship

satisfaction, business differences, rapid technological management is a method of attracting attention,

change and the challenge of global competition maintenance of customer satisfaction as well as

demands effectiveness of marketing strategies to improving and strengthening relationships with

maintain and develop the competitive edge of an customer satisfaction. In other words, customer

enterprise. Efforts to improve competitive advantage relationship management is attempting to prolong a

through long-term cooperation relationship believed life time customer (Isnadi, 2005).

to have an effect on the relationship marketing. The In the context of retail banking in particular

complexity of an industry competition caused each markets, slow market growth and the pressure of

company focuses his efforts against the desire as well intense competition requires that the company was

as customer satisfaction (Harryani, 2013). able to maintain existing customers or exit. The importance of keeping more customers because of

Customer Relationship Management

the fact that obtain new customers or get the cost Understanding and cooperation relationship more expensive than retaining customers (Stone et al.,

with customers for the company is very essential, not 1996). Then understanding how or why a feeling of

only focused on increasing sales figures alone but loyalty needs to be developed in the minds of

long-term relationships with consumers. Wahyu customers is the current management issues (Pritchard

(2005) says that the company is to build long term et al., 1999).

relationships with customers will make the company's In conditions of intense competition, the

revenue to be increased, as long as the company is main thing that should be given priority is customer

aware of any loyal customers and find out what makes satisfaction that will ultimately increase customer

them stick to the other competitor. Having a good loyalty, so the company can survive, compete and

relationship with the customer have positive dominate market share. Pritchard et al (1999) States

consequences for the company, namely the purchase that customer loyalty to the brand loyalty is

and larger profits.

influenced directly by the customer satisfaction on a CRM is the strategic application of people, brand that is accumulated over time. In relation to

processes and technology to improve and sustain customer loyalty, Isnadi (2005) States that if

profitable relationships with customers and partners. customers are satisfied with respect to a given product

CRM refers to all business activities directed towards or service then it will create loyal customer.

initiating, establishing, maintaining, and developing Large banking company is currently forcing

successful long-term relational exchanges. Consistent the company to compete in getting the customer as

with Kotler and Armstrong (2004); Parvatiyar, et al. much as possible. A customer saw a company on the

(2001) define CRM as ―the overall process of basis of what they perceive to be the benefits obtained

building and maintaining the profitable relationships from these companies, this can be at the show by the

with customers, delivery of superior value and banking company through customer value, product

satisfaction for the user‖. Building the firm benefits and a good quality of service so that it will

relationships with the users is a prerequisite for create a level of satisfaction of customer and will have

creating the competitive advantage of the organization implications for the customer loyalty will be the

(McKenna, 1991; Stojkovic, 2012). In other words, presence of the company. All of these things can be

CRM can be defined as an interactive process known with any customer relationship management.

achieving the optimum balance between corporate investments and the satisfaction of customer needs to generate the maximum profit.

In literature, many definitions were given to develop a good relationship with its present customers describe CRM. The main difference among these

and try to maintain the same in the future also. definitions is technological and relationship aspects of

3. Decline in Brand Loyalty CRM. Some authors from marketing background

In the present scenario, brand loyalty is on decline. emphasize technological side of CRM while the

The customers are switching over frequently to avail others consider IT perspective of CRM. From

the better facilities from other banks. Newer and marketing aspect, CRM is defined by Couldwell

superior products and services are being introduced (1998) as ―a combination of business process and

continuously in the market. Thus, the banks have to technology that seeks to understand a company‘s

upgrade their products, improve customer service and customers from the perspective of who they are, what

create bonds of trusts through proper care of customer they do, and what they are like‖.

needs and regular communications. With the help of Technological definition of CRM was given

CRM, strong customer loyalty and a good image for as ―the market place of the future is undergoing a

the organization can be developed. technology- driven metamorphosis‖ Peppers and

4. Improved Customer Retention Rogers (1995). The utilization of technology in CRM

In the intensely competitive banking industry, enables the company to understand customer needs

retention of existing customers is vital, which can be and requirements will strengthen the ties between

achieved through the process of CRM. them. The success of CRM strategy implementation

Such as research conducted by Isnadi (2005) will improve customer satisfaction, customer loyalty,

obtained as a result of that Customer relationship boost sales growth and marketing effectiveness

marketing has a positive and significant impact on the (Bhatti, 2001; Wahyu, 2005).

value of customer and product excellence, customer Consequently, IT and marketing departments

value and product advantage a positive and significant must work closely to implement CRM efficiently.

impact on customer satisfaction, and customer Meanwhile, implementation of CRM in banking

satisfaction have a positive and significant impact on sector was considered by Mihelis et al., 2001 (Onut et

customer loyalty.

al., 2001). They focused on the evaluation of the Ariyanti (2006) perform tests on the critical satisfaction dimensions and the determination

influence of Customer Relationship Management to of customer groups with distinctive preferences and

Customer Loyalty, which results in the get that in the expectations in the private bank sector. Here‘s some

conditions of tough competition company should be measure

able to create competitive advantage especially in (Gronroos, 1990; Isnadi, 2005) i.e. ;

defending consumers. One of the ways that can be

1. Long term customer Focus done in order to retain customers, is making

2. Make communication with customer consumers satisfied. To be able to figure out what can

3. Involving member organizations in marketing make consumers satisfied with doing a customer activities

relationship management, customer satisfaction if

4. Implementation process of interactive marketing these can be fulfilled then the customer loyalty would

5. Develop a culture of service to the customer

be obtained.

In addition, the important factors that establish the

Customer Value

need for CRM in the Banking Industry are detailed Customer value is the value that a customer below:

can bring to a company from the company‘s

1. Intense Competition perspective. One direct value is the profit contributed There is intense competition among the Private Sector

to the company by the customer. According to Banks, Public Sector Banks and Foreign Banks and

Woodruff (1997) Customer value is a customer's they are all taking steps to attract and retain the

perceived preference for and evaluation of those customers. New technologies, research facilities,

product attributes, attribute performances, and globalization of services, the flood of new products

consequences arising from use that facilitate (or and the concept of all the facilities under one roof to

block) achieving the customer's goals and purposes in provide better customer service leading to customer

use situations.

delight. In line with Zeithaml's (1988) definition that

2. Well Informed Customers ―perceived value is the consumer‘s overall assessment The Customers in Banking Industry today are well

of the utility of a product based on perceptions of informed. With the introduction of new technology,

what is received and what is given‖, there has been a the world has become like a small village. Thus, if a

general consensus that customer value involves a Bank wants to have more customers, it should

trade-off between benefits and costs.

One perspective in organizational strategy

Service Quality

maintains that creating and delivering superior Knowledge about goods quality, however, is customer value to high-value customers will increase

in-sufficient to understand service quality. Three well the value of an organization (Slywotzky, 1996;

documented characteristics of services-intangibility, Spiteri, 2004). High-value customers have their

be monetary worth as individual customers to the

acknowledged for a full understanding of service organization quantified, whereas value of an

quality.

organization quantifies the worth to its owners First, most services are intangible (Bateson (stakeholders). On the other hand, customer value

1977, Berry 1980, Lovelock 1981, Shostak 1977; takes the perspective of an organization‘s customers,

Parasuraman, 1985). Because they are performances ―considering what they want and believe that can get

precise manufacturing for buying and using a seller‘s product‖ (Woodruff,

specifications concerning uniform quality can rarely 1997).

be set. Most services cannot be counted, measured, Therefore, Lun (2008) states that the

inventoried, tested, and verified in advance of sale to ―customer value‖ concept actually has two meanings.

assure quality. Because of intangibility, the firm may One meaning focuses on the value that a company can

find it difficult to understand how consumers perceive bring to the customer as a subjective evaluation from

their services and evaluate service quality (Zeithaml, the company‘s perspective. The other definition

1981; Parasuraman, 1985).

focuses on the value a customer can bring to a Second, services, especially those with high company as a subjective evaluation of the products

labor content, are heterogeneous: their performance and services supplied by the company from the

often varies from producer to producer, from customer‘s perspective. Customers are always trying

customer to customer, and from day to day. to maximize their value. When they buy a product,

Consistency of behavior from service personnel (i.e., they always hope to be most satisfied with the lowest

uniform quality) is difficult to assure (Booms and cost.

Bitner 1981; Parasuraman, 1985) because what the According to research Pramono (2001) about

firm intends to deliver may be entirely different from the influence of trust and commitment to the long

what the consumer receives.

term relationship marketing between a company and Third, production and consumption of many customer on PT Gesuri Lloyd Semarang obtained

services are inseparable (Carmen and Langeard 1980, result that there are a positive relationship between

Gronroos 1978, Regan 1963, Upah 1980). As a trust and long term relationship marketing; a positive

consequence, quality in services is not engineered at relationship between trust to customer‘s commitment

the manufacturing plant, and then delivered intact to for long term relationship marketing, and positive

the consumer. In labor intensive services, for relationship

example, quality occurs during service delivery, willingness to make a long term relationship

usually in an interaction between the client and the marketing.

contact person from the service firm (Lehtinen and Siwantara (2011) states that customer value

Lehtinen 1982).

significantly influenced the customer satisfaction, The service firm may also have less customer loyalty, and performance of CRM Halo

managerial control over quality in services where Corporate of PT Telkomsel Bali, customer

consumer participation is intense (e.g., haircuts, satisfaction significantly influenced of customer

doctor's visits) because the client affects the process. loyalty and performance of CRM Halo Corporate of

In these situations, the consumer's input (description PT Telkomsel Bali. The variable of customer value

of how the haircut should look, description of and quality of service has a positive and significant

symptoms) becomes critical to the quality of service influence to the customer satisfaction, then the

performance. Service quality has been discussed in customer satisfaction has a positive influence and

only a handful of writings (Gronroos 1982; Lehtinen significantly to customer loyalty by Mukarom (2012).

and Lehtinen 1982; Lewis and Booms 1983; Sasser, According to research Flint (2011) find that customer

Olsen, and Wyckoff 1978).

value anticipation is a strong driver of satisfaction and Examination of these writing sand other loyalty, with satisfaction acting as a mediator for

literature on services suggests three underlying loyalty.

themes: ฀ Service quality is more difficult for the consumer to evaluate than goods quality. ฀ Service quality perceptions result from a

comparison of consumer expectations with actual service performance.

฀ Quality evaluations are not made solely on the building); corporate quality, which involves the outcome of a service; they also involve

company's image or profile; and interactive quality, evaluations of the process of service delivery.

which derives from the interaction between contact personnel and customers as well as between some

Parasuraman, Zeithaml, and Berry (1985, customers and other customers. They further 1988) conceived that service quality is the difference

differentiate between the quality associated with the between customers‘ expectation and their perceived

process of service delivery and the quality associated performance of a service. Based on this concept, the

with the outcome of the service. five dimensions defined by Parasuraman et al., (1988)

Thereby, Service quality is a measure of how have the foremost role in establishing customers‘

well the service level delivered matches customer judgment of perceived service quality:

expectations. Delivering quality service means

1. Tangibles conforming to customer expectations on a consistent Service environment including physical facilities,

basis. (Lewis and Booms 1983; Parasuraman, 1985). personnel, equipment, and marketing materials

Customer Satisfaction

2. Reliability The pioneering studies of Cardozo (1964), The consistent ability to perform the promised

Olshavsky and Miller (1972) and Anderson (1973) service in a perfect manner

stand out in the original research work relating to

3. Responsiveness customer satisfaction (Millan and Esteban, 2003). Sensitivity to help customers and provide timely

They used, for the first time, the so-called expectancy service

disconfirmation model of satisfaction, thereby

4. Assurance creating the fundamental theories by which a large Courteousness and knowledge of the staff and the

amount of subsequent research concerning customer trust that they instill in their customers

satisfaction would be conducted.

5. Empathy Customer satisfaction has long been Firm has individualized concern and cares for its

considered a fundamental determinant of long-term customers

customer behavior (Oliver, 1980; Yi, 1990; Ryu, 2007), so service firms increasingly dedicate

A review of extant marketing literature substantial energies to tracking customer satisfaction. suggests that service quality, as measured by

Ryu, 2007 defined satisfaction as ‖an evaluation SERVQUAL, can influence important service

rendered that the (product) experience was at least as outcomes, such as customer satisfaction, intention, or

good as it was supposed to be‖. Similarly, based on loyalty (Parasuraman et al., 1988). This model has

the theoretical empirical evidence to date, Oliver drawn attention from the academic and the practical

(1997) described it as ―the consumer‘s fulfillment circles. However, many scholars have questioned

response.

about the conceptual framework and measurement It is a judgment that a product or service method of this model. For instance, Cronin and

feature, or the product or service itself, provided a Taylor (1992) in Kuo et al. (2009) pointed out that

pleasurable level of consumption-related fulfillment, using service quality performance (SERVPERF, i.e.

including levels of under or over fulfillment‖. the perceived service in SERVUQAL) to measure

Although researchers struggle to clearly define the service quality produces better results of reliability,

concept of customer satisfaction, an essential aspect validity,

of customer satisfaction is an evaluation process SERVQUAL.

and predictive

(Back, 2005; Ryu, 2007). This evaluative process oriented approach has been regarded as the most

Gronroos (1982), for example, postulated effective way to measure the level of customer that two types of service quality exist: technical

satisfaction (Oliver, 1997; Yi, 1990; Ryu, 2007). quality, which involves what the customer is actually

Besides other definitions of customer receiving from the service, and functional quality,

satisfaction describe the formation of satisfaction as a which involves the manner in which the service is

process; they define the key variables and the delivered.

mechanisms of interaction of those variables and they According Lehtinen and Lehtinen's (1982)

recognize that satisfaction is the final step of a basic premise is that service quality is produced in the

psychological process. It is perceived as the final interaction between a customer and elements in the

result of all activities carried out during the process of service organization. They use three quality

purchase and consumption and not only of dimensions: physical quality, which includes the

observation and or direct consumption of the product physical aspects of the service (e.g., equipment or

or service (Oliver, 1996; Millan and Esteban, 2003).

Based on the above description, it can be

Research Hypotheses

proposed that the third hypothesis as follows: According to Isnadi (2005), Customer

H 2 : Service Quality is affected by

relationship management is a form of marketing Customer Relationship Management (CRM) where the companies has a target in the customer and make the relevant marketing communications. While

Customer value is considered a concept that the value of the customer is the emotional bonds that

includes many heterogeneous components (Sweeny et are formed between consumers and producers after a

al., 2001; Deng, 2010). Sheth, Newman, and Gross consumer using a product or service that is produced

(1991) argued that a customer‘s purchase choice was by the companies and found that the product delivers

influenced by a multiple consumption value

a scores. In order to obtain optimal results then dimension, and they developed a framework of five needed system value for the customer, the system

dimensions of value: functional value, conditional consisting of the company's value chain to deliver

value, social value, emotional value, and epistemic value to customers. In delivering value to the

value. Different dimensions have different roles in the customer needed a customer relationship management

user‘s decision. For example, functional value and that focuses on customers in the long term (Gronroos,

social value determine whether to use this service or 1990).

another and emotional value is the key to using the Based on the above description, it can be

selected service. Perceived value occurs throughout proposed that the first hypothesis as follows:

the purchasing process of customer, one-time

H 1 : Customer Value is affected by

purchase or repurchases (Woodruff, 1997). Perceived

Customer Relationship Management (CRM)

value is different from customer satisfaction, but is related to it (Sweeny et al., 2001; Deng, 2010).

A number of studies have provided empirical reputation of a company can quickly translate into

Today competitive market position and good

evidences that customer value has a positive effect on market share and profit, but that distinction is often

satisfaction (Andreassen and Lindestad, 1998; Cronin earned only through a philosophical commitment to

et al., 2000; Eggert and Ulaga, 2002; Fornell et al., service backed by diligent attention to what customers

1996; Hellier et al., 2003; McDougall and Levesque, want and need (Zineldin and Bredenlow, 2001;

2000; Patterson and Spreng, 1997; Storbacka et al., Zineldin, 2005). Unlike manufacturing and some

1994; Ulaga and Eggert, 2006; Wang et al., 2004). As service industries, bankers are not only selling

Hallowell‘s (1996) empirical study in the context of products and service. First and foremost they are

retail- banking showed, ―the service management selling their organization reputation with every

literature argues that customer satisfaction is the result ―customer relationship‖. An effective customer

of a customer's perception of the value received in a relationship requires the marketer to make specific

transaction or relationship‖. Customer value is an efforts to create, establish and develop a good quality

antecedent to customer satisfaction and behavioral package mix in order to be able to maintain and

outcomes (Ulaga and Eggert, 2006), and has been enhance the relationship impact.

recognized as being positively associated with In era when intense competition is being

customer satisfaction (Athanassopoulos, 2000). greatly facilitated by technology, the need of providing adequate product service quality will

When the customer receive benefit greater necessitate that banks have to focus attention on

than the cost (i.e., receiving added value) after the issues of improving, measuring and controlling their

purchase, they become more satisfied, which in turn product and service quality efficiency. Efficiency can

affects subsequent customer value expectations and

be defined as the lack of waste of resources, time and overall customer satisfaction (Hellier et al., 2003; optimization of efficiency elements in line with high

Wood ruff, 1997). Storbacka et al.‘s (1994) quality (Armistead, 1990; Zineldin, 2005). A key

relationship profitability model in the context of question is how the company can develop an effective

financial services sector stated that by improving process for establishing and maintaining the

customer value, customer‘s satisfaction is improved. relationship with key consumers and industrial

Patterson and Spreng‘s (1997) empirical study, in the customers? The answer is that they have to renew or

business-to-business services context in Australian, improve their strategic management and marketing of

supported that customer value has a directly strong their core products and supporting services in a more

and significant impact on satisfaction and repeat systematic manner (Zineldin, 2005). Those companies

purchase intentions. Wang et al.‘s (2004) finding from with the deepest and strongest customer relationships

security firms in Chinese also showed that customer management will stand the best chance of retaining

value has a positive effect on customer satisfaction. the customer‘s transactions.

As Ravald and Gronroos (1996) noted, by competitors whose service quality is perceived to be adding more value to the core product or service,

lower (Babakus, Bienstock, & Scotter, 2004). firms can improve customer satisfaction so that the

Based on the above description, it can be bonds of relationship are strengthened and thereby

proposed that the sixth hypothesis as follows: customer loyalty achieved. Another support proposed

H 4 : Customer Satisfaction is affected by

by McDougall and Levesque (2000) also indicated

Service Quality

that customer value was a significant determinant of customer satisfaction and should be recognized as a

Customer relationship management in the contributing factor to satisfaction. Strongly positive

study can give benefits to the customer and allows for and highly significant impact of customer value on

competition barriers make it difficult for a competitor, satisfaction does exist (Eggert and Ulaga, 2002).

thereby enabling the company to improve customer Based on the above description, it can be

satisfaction. So this research is directed to find proposed that the fourth hypothesis as follows:

relationships between variables that have an impact

H 3 : Customer Satisfaction is affected by

on customer satisfaction, customer relationship

Customer Value

management as the company's marketing strategy to maintain and inproving customer satisfaction through

According to Parasuraman, Zeithaml, and the increasing customer value and service quality. Berry (1988), service quality includes five

From the description, the framework of theoretical dimensions: reliability, tangibles, responsiveness,

thought in this research is as shown below: assurance, and empathy. They and many other researchers demonstrated the validity and reliability

CV

of those measures for perceived service quality

(Cronin & Taylor, 1992; Soteriou & Chase, 1998;

CRM

Deng, 2010). The literature on the relationship

CS

between customer satisfaction and service quality is

ambiguous (Chong, Kennedy, Riquire, & Rungie,

SQ

1997; Deng, 2010). There are three competing theories about the linkages of service quality and

Figure 1

customer satisfaction: satisfaction is an antecedent of

Research Framework

service quality, service quality is the predictor of satisfaction,

RESEARCH METHODS

interchangeable (Kassim & Abdullah, 2008). Despite The variables in this research consists of one the disagreement, the claim that customers might take

independent variable (X), one dependent variable (Y) attitudes or actions after using the services has been

and four intervening variable (Z). supported by many studies (Kassim & Abdullah,

The Independent variable in this study is 2008).

Management (CRM). Moreover, Shin and Kim (2008) suggested

Customer

Relationship

Customer Relationship Management (CRM) is a service quality is a consumer‘s overall impression of

strategy that required the company to optimize profits the relative efficiency of the service provider, and

by increasing customer satisfaction. they found that service quality is significantly related

Intervening variables are the theoretically to customer satisfaction. Our view on the relationship

variables that influence the relationship between between these two constructs is based on the claim

independent variable and dependent variable with a that perceived service quality is a predictor of

relationship that is not directly and cannot be customer satisfaction.

observed and measured. This variable is the mediator Researchers maintain that perceived service

between the dependent variable and independent quality is cognitive and thus followed by satisfaction

variable, so that the independent variable does not (Oliver, 1999). Several empirical studies confirmed

directly affect incidence or centralized the dependent that a higher level of service quality was related to a

variable. The Intervening variables in this study are higher level of customer satisfaction (Brady &

Customer Value (CV), Service Quality (SQ). Robertson, 2001; Cronin, Brady, & Hult, 2000;

According Woodruff (1997) in Parasuraman Dabholkar et al., 2000; Yang, Wu, & Wang, 2009).

(1997) Customer value is a customer's perceived Zeithaml et al. (1996) also stated the customer‘s

preference for and evaluation of those product perception of service quality was the main factor

attributes, attribute performances, and consequences predicting customer satisfaction. High service quality

arising from use that facilitate (or block) achieving could attract new customers, retain existing

the customer's goals and purposes in use situations. customers, and even lure customers away from

Service quality is a measure of how well the service Service quality is a measure of how well the service

purpose to find out the validity of the question form customer expectations on a consistent basis. (Lewis

or questionnaire. Validity here has the meaning of and Booms 1983; Parasuraman, 1985).

questionnaires or question form used is able to Dependent variable is customer satisfaction

measure what should be measured. In this study using that defined by an emotional response in the

confirmatory factors analysis in Structural Equation evaluation of product/service consumption experience

Modelling to test validity of constructs. In which is the evaluation of the selected alternative at

confirmatory factor analysis is said to be valid if a least equal/exceed customer expectations.

constructs validity having a good loading factor > 0.5 (Hair et al, 1998). Factor loading is the indicator scale

Population and Sample

validity of constructs.

Population is the subject of research at least In the hypothesis testing of this study, data has the same properties. Characteristic and limitation

analysis methods used is path analysis, which is part of the research population to collect data that is

of the Structural Equation Model (SEM). Structural needed is a banking enterprise.

Equation Model (SEM) is a collection of statistical Determination of the respondent sample

techniques that allow testing of a series of relative using convenience sampling. Convenience sampling,

relationship "complicated", simultaneously. Complex namely the determination of the sample based on

relationship that can be established between one or availability and the ease to get it (Istijanto, 2009).

more dependent variables with one or more Reasons to use convenience sampling because of the

independent variables. By using SEM, researchers can huge population with a high activity of the

study the structural relationships that are expressed by respondent, namely the customer of the bank. The

a set of equations, similar to a set of multiple Sample in this study amount 360 Questionnaire sent

regression equations. This equation describes the to customer banks. The number of samples is already

relationship between the constructs (consisting of exceeding the recommended minimum number of

dependent and independent variables) involved in the samples by Hair et al (1995) in Isnadi (2010). The

analysis.

number of respondents who use more, so that when Until now, multivariable techniques are data is biased or is invalid then it does not reduce the

interdependency or number of respondents below the minimum in

dependency. SEM can be categorized as unique samples suggest by Hair et al (1995) in Isnadi (2010).

combinations of both of these as the basis of the SEM In this research, we used the primary data

are the two main multivariable techniques, namely and secondary data. The primary data is data that

factor analysis and multiple regression analysis. SEM comes directly from the source data collected

is often also referred to as Path Analysis or specifically and directly related to the problems in

Confirmatory Factor Analysis, for surely these two accurately (Cooper and Emory, 1995; Pramono,

names are the kinds of specific SEM. Processing of 2001). The primary data in order to maximize the

the data in this study using path analysis. results.

Measuring instrument

used

was

questionnaire. Variable items were transformed into HYPHOTHESES TESTING Likert-scales and the respondents were asked to

In this section will be explained about the indicate their perceptions of their bank on each item

descriptive data obtained by the respondent. using a five point scale ranging from ‗‗5 = strongly

Descriptive research data is presented so that it can be agree‘‘ to ‗‗1 = strongly disagree‘‘.

seen the profile of research data and the relationships Reliability test is a test of reliability in order

that exist between the variables used in the study to find out how far a measuring instrument is reliable

(Hair et al, 1995; Isnadi, 2010). or trustworthy. Reliability relates to the estimation of

The descriptive data that describe the state or the extent to which a measurement tool, when viewed

condition of the respondents need to be noted as from the stability or internal consistency of

additional information for understanding the results of answers/questions if the observations done repeatedly.

his research. Respondent in this research is a public When a measuring instrument when used repeatedly

bank. As many as 360 customer who participated in and the measurement results obtained relatively

this research can then itemized based on gender, age consistent then the gauge is considered reliable and

and occupation. The third aspect of the demographic reliable. Testing the reliability of the entire

has an important role in improving the bank's loyalty. item/question used in this study cronbach alpha

Composition of respondents based on gender formula will use (cronbach Alpha coefficient), which

it appears that female respondent are a majority of is generally considered to be reliable if the value of

respondent i.e. 55 % out of a total of 360 respondents Alpha cronbach > 0.6 (Ghozali, 2001).

who participated in this research. respondent aged 23

– 28 years is the largest respondent i.e. amounting 153 Based on the result of path analysis, it is (42,5 %) to a total of 360 respondent who participated

known that hypothesis 1 can be accepted because the in this research.

value of significance (p-value) generated is smaller The majority of the respondent as bank

than the limit, that is equal to 0,05 or 5% (Hair et al., customer for 1 to 5 years as many 199 (55,3 %) for a

1998; Sekaran, 2000; Nur'Ainy, 2010). Estimate value total of 360 respondent who participated in this

is standardized regression weight and the p-value is a research and from among employees has the greatest

significant value, as seen in table 2: contribution in this study i.e. amounting 192 (53,3 %)

Table 2

to a total of 360 respondent. Path Analysis for Hypothesis 1 By using AMOS Ver. 6.0 software, the goodness of

Estimate Direction P fit results reflected in Table 1 below:

Positive *** Source: AMOS Primary Data Processed (2014)

The result of path analysis shows that CRM

Goodness of fit index for the model

variable has a value of standardized regression weight at 0,491 in predicting Customer Value. The

Good of Cut- Model

Explanation significance of this can be seen in the p-value which

fit index off

result is smaller than 0,001 (in AMOS marked ***) and value

smaller than the limit that has been required, which is - Chi-

5,547 Expected small value 0,05 or 5%, so that H1 is accepted. Thus, it can be Square

said that CV is affected by CRM. It can be inferred

that the better CRM in the companies then customer Significan

X - ≥ 0,05 0,236

Good

value that the customer will obtain is better.

ce prob. RMSEA

hypothesis examination GFI

illustrates the effect of Customer Relationship AGFI

Good

Management (CRM) on Service Quality (SQ). CMIN/DF

H2: Service Quality is affected by Customer

Relationship Management (CRM) CFI

Based on the result of path, it is known that hypothesis 2 can be accepted because the value of

Source: AMOS Primary Data Processed (2014) significance (p-value) generated is smaller than the limit, that is equal to 0,05 or 5% (Hair et al., 1998;

It happens because of the number of samples Sekaran, 2000; Nur'Ainy, 2010). Estimate value is are small. Significance probability is more than 0,05,

standardized regression weight and the p-value is a it shows that the research model is accepted. The

significant value, as seen in table 3 below: RMSEA is at 0,033 and CMIN/DF is at 1,387 is less

Table 3

than cut off value, it means suitability of research Path Analysis for Hypothesis 2 model is good. The GFI is at 0,995; AGFI is at 0,974;

Estimate Direction P TLI is at 0,995 and CFI is at 0,999 is more than cut

Positive *** off value, it means suitability of research model is

CRM  SQ

Source: AMOS Primary Data Processed (2014) good. So, we can say that over all the model is good.

The result of path analysis shows that CRM Testing of hypothesis performed with Path

variable has a value of standardized regression weight Analysis using the software AMOS version 6.0. Limit

at 0,424 in predicting Service Quality. The of significance (p) which is used in decision making

significance of this can be seen in the p-value which admissibility hypothesis that is equal to 0,05 or 5%. In

is smaller than 0,001 (in AMOS marked ***) and another words, hypothesis will be accepted if the

smaller than the limit that has been required, which is significance value (p) obtained less than or equal to

0,05 or 5%, so that H2 is accepted. Thus, it can be 0,05 or 5% (p ≤ 5%) (Hair et al., 1998; Sekaran, 2000;

said that SQ is affected by CRM. It can be inferred Nur'Ainy, 2010).

that with increasingly good CRM that is owned by the company and service quality that is produced by the

The first hypothesis examination describes company will be getting better. the effect of Customer Relationship Management (CRM) on Customer Value (CV).

The third hypothesis examination illustrates

H1: Customer Value is affected by Customer

the effect of Customer Value on Customer Relationship Management (CRM) Satisfaction.

H3: Customer Satisfaction is affected by