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Advances in Social Sciences Research Journal – Vol.7, No.10
Publication Date: October 25, 2020
DOI:10.14738/assrj.710.9204.
Rachbini, W., Anggraeni, D., & Febrina, D. (2020). Effect of Service Quality on Customer Loyalty through Satisfaction, Perceived Value,
and Customer Engagements (Study on Indonesian Ride-Hailing Online). Advances in Social Sciences Research Journal, 7(10) 300-310.
Effect of Service Quality on Customer Loyalty through Satisfaction,
Perceived Value, and Customer Engagements (Study on Indonesian
Ride-Hailing Online)
Widarto Rachbini
Graduate School, Universitas Pancasila,
Jakarta, Indonesia
Diana Anggraeni
Communication Science, Faculty of Communication Science,
Universitas Pancasila, Jakarta, Indonesia
Diah Febrina
Communication Science, Faculty of Communication Science,
Universitas Pancasila, Jakarta, Indonesia
ABSTRACT
This study attempted to analyze the effect of service quality on
customer’s satisfaction, perceived value, and customer involvement as
well as its implications for customer loyalty in Indonesia. The primary
data used is the result of questionnaires through an online survey
platform with the help of Google Form in July to August 2020. The
sampling method was purposive sampling using specific criteria set by
the researchers with 300 samples that met the criteria. Data analysis
technique used the structural equation models (SEM) with the help of
LISREL software. The results showed that there was a significant
influence on the quality of Indonesian ride-hailing online services on
perceived value, and a significant effect on perceived value on
satisfaction as well as a significant effect on customer satisfaction on
customer involvement. The only construct which directly influences
customer loyalty is customer involvement. This research certainly
provides practical advice for the online ride-hailing industry in
Indonesia where there are three main suggestions aimed at improving
the service quality, satisfaction, customer involvement, and value.
Further research is suggested to analyze online ride-hailing in
neighboring countries such as Malaysia, Singapore, Vietnam, or other
Southeast Asian countries.
Keywords: service quality, perceived value, customer satisfaction, customer
involvement, customer loyalty and online ride-hailing.
INTRODUCTION
Internet has become an important part of daily life in modern civilization since the
commercialization of the internet in the mid-90s (Rachbini and Hatta, 2018). Jakpat (2019) in his
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URL: http://dx.doi.org/10.14738/assrj.710.9204 301
Rachbini, W., Anggraeni, D., & Febrina, D. (2020). Effect of Service Quality on Customer Loyalty through Satisfaction, Perceived Value, and Customer
Engagements (Study on Indonesian Ride-Hailing Online). Advances in Social Sciences Research Journal, 7(10) 300-310.
report of Indonesian Mobile Habit 2019 revealed that smartphone ownership in Indonesia has
reached 355.5 million users. This fantastic number has a significant impact on changing habits and
lifestyles of Indonesian people. The majority of smartphone users actively install various types of
applications in which the number reached 5.07 billion installed applications in 2018.
The habits and preferences of Indonesian people in using mobile devices:
Tabel-1. General Habit Towards Mobile Devices
No. Habit Parentage (%)
1 Chatting 84.1
2 Social Media 82.5
3 Phone Call 78.7
4 Taking Picture/ Video 75.6
5 Gaming 74.7
6 Listening to Music 72.7
7 Online-ride hailing order 64.3
8 Reading news/ info 63.6
Table 1 shows the habits and preferences of Indonesians in using mobile devices. There are eight
habits of Indonesians in using mobile devices where the use of chat features (84.1%) and social
media (82.5%) are the two most common habits. Meanwhile, online ride-hailing bookings is in the
seventh rank (64.3%). This is an interesting phenomenon because online ride-hailing bookings is
one level above the habit of reading info/news (63.6%).
In line with the results of the Jakpat survey (2019) that the latest Statista report (2019) which is the
world's leading global marketing research showed the growth of the ride-hailing online industry in
Indonesia continues to increase from year to year. There has been an increase in online ride-hailing
users from 2017 – 2019 and has reached 21.7 million users in 2019. Based on the forecast
conducted by Statista (2019), there will be a significant increase in online ride-hailing users in
Indonesia by 2023 reaching 37.9 million users. Nevertheless, this forecast is not optimal since the
total of Indonesian population in 2019 has reached 266.91 million inhabitants (Databoks, 2019).
Therefore, it can be concluded that only 8.13% of Indonesian population has used the online ride- hailing application in 2019. However, this figure is relatively low compared to online ride-hailing
users in other countries such as China which has reached 459.4 million users, Brazil with 27 million
users, and India which has reached 173.6 million users in 2019 (Statista, 2019). Thus, the service
quality of ride-hailing online service providers must continuously be improved in order to maintain
the loyalty of users who are ultimately able to recommend or invite other consumers to use the
service.
Companies are measured on how good they are by treating customers systematically, identify the
factors that shape satisfaction, and change operations and marketing as the result (Kotler and
Keller, 2016). The survey from Alvara Research Center (2019) which involved 1,204 respondents
from several major cities in Indonesia showed that Gojek was the favorite online motorcycle among
the millennial generation compared to Grab as its competitor.
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The results of Alvara’s research showed that 70.4% of respondents were inclined to choose Gojek
where the respondents rated that Gojek was better/ superior compared to Grab. This can be seen
from the positive responses from Gojek respondents through a number of important performance
indicators such as the aspects of image, loyalty, engagement, and performance. These number of
service quality aspects are owned by the two service providers.
Customer loyalty is a key aspect of the development and survival of a business/company. The key
to the business success is building and maintaining strong customer relationships (Bergeron, 2002).
Customers who are considered loyal to a brand have the will to support and recommend the brand
to their friends and family (Kotler et al., 2017). It is certainly highly desirable that ride-hailing online
service users can do positive word of mouth so as to increase the number of service users.
The quality represents the extent to which an entity meets the needs of its users (Batagan et al.,
2009). As such, quality tends to play an important role in the success of the service industry due to
the intangible nature of services (George and Kumar, 2014). The relationship between service
quality and customer satisfaction, perceived value, customer involvement has been a major concern
in a number of previous scientific literature (Lee et al., 2011; Olorunniwo et al., 2006; Izogo, 2015;
Puriwat and Tripopsakul, 2014; Zameer et al. ., 2015; Arcand et al., 2017; Shi et al., 2018; Al-dweeri
et al., 2018), and the four constructs were finally able to have a positive impact on customer loyalty
(Boonlertvanich, 2019; Bapat, 2017; Rifai and Wahyudi, 2016; Tsai et al., 2010).
Many previous researchers conducted studies related to electronic-based services such as Arcand
et al., (2017); Asadpoor and Abolfazli, (2017) in the realm of mobile/electronic banking, Al-dweeri
et al., (2018); Shi et al., (2018) who examined customer loyalty in online retailing/e-commerce, and
various other studies. However, the research is still limited in terms of service quality, and its impact
on a number of constructs in online-ride hailing business sector in Indonesia. Therefore, this study
aimed to analyze the effect of service quality on customer loyalty through satisfaction, perceived
value, and customer involvement in online ride-hailing in Indonesia.
MATERIALS DAN METHOD
Customer loyalty
Loyalty refers to the customer’s willingness to keep connected with a company in the long run,
preferably exclusively, and recommend the company's products to colleagues and friends. Loyalty
is an outcome of customer satisfaction (Wirtz and Lovelock, 2018). Customers who are very
satisfied or happy will continue to buy the same products and brands, spread the goodness about
the product to others, and become "customers for life" (Schiffman and Wisenblit, 2015). Consumers
have various levels of loyalty to certain brands, stores, and companies. Loyalty has been defined as
"a firm commitment to repurchase a product or service that is preferred in the future regardless of
situational influences and marketing efforts that have the potential to cause switching behavior
(Kotler and Keller, 2016).
Wirtz and Lovelock (2018) revealed that customer loyalty plays an important role in creating profits
for companies, which can reduce customer service costs, decrease price sensitivity, positive word
of mouth, increase purchase levels, and amortize acquisition costs for a longer period. Targeting,
acquiring, and retaining the right customers is at the core of the success of service-based companies.