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