Analysis of Influence Customer Loyalty Program and

Service Quality on Customer Loyalty with Trust as

Mediation Variables on Samsung Mobile Phone
(Research in Special Region of Yogyakarta)

Andhika Surya Bagaskara

A student of Economic Faculty UII
Email : suryalism@gmail.com

Murwanto Sigit, Drs., MBA.

A lecturer and researcher in Economic Faculty UII
Email :seagate1050@yahoo.com

ABSTRACT
This study aims to determine the effect of customer loyalty programs and
service quality on customer loyalty with trust as a mediation variable on Samsung
mobile phone products. Variables in this research are customer loyalty program,
service quality, trust and customer loyalty. Respondents of this research is
Samsung smartphone users in Yogyakarta. The number of samples of this study is
153 people with convenience sampling technique. Analysis technique in this
research using Structural Equation Modeling (SEM).
The results obtained showed: (a) That the loyalty program has a positive and
significant influence on customer trust and customer loyalty. (b) the quality of
service has a positive and significant influence on customer trust and customer
loyalty. (c) customer trust has a positive and significant influence on customer
loyalty. (d) customer loyalty program has a positive and significant influence on
customer loyalty with trust as a mediation variable. (e) the quality of service has
a positive and significant influence on customer loyalty with trust as its mediation
variable.
Keywords: customer loyalty program, service quality, trust, customer loyalty.

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INTRODUCTION

The current era of globalization is causing intense competition

between one another, individuals, groups or even between countries that
seem to be inseparable in everyday life. The constraints in competition of
current global era are no longer felt because of rapid development of
technology. With development of these technologies, it has led to the
emergence of global competition. Global competition is a form of world
level competition where every country has the right to be involved without
being limited by region (Shitta, 2015)
In global competition, people need a tool to support the speed of
information that is not inevitable. This certainly can be supported by the
existence of adequate communication tools to carry out “activities” that
are in line with the functioning of laptops as a practical tool for doing
work. The statement then becomes the basis global competition
encompasses all lines in life that are not spared also in the field of
electronics, for example mobile phone technology or what is often called a
mobile phone.
There are several advantages for company about how important it is to
maintain customer loyalty. The advantage of customer loyalty is long-term
and cumulative, meaning that the longer the loyalty of a customer, the
greater the profit for company can get from a customer (Griffin, 2002)
From the description, it can be concluded that customer perceived
satisfaction will have an effect on building customer loyalty to the product
or service used.

1. LITERATURE REVIEW

1) The effect of the customer loyalty program on customer trust

2) The effect of the customer loyalty program on customer loyalty

through trust.
Loyalty to the program is operationalized as a high positive attitude
towards the loyalty program which is reflected in the intention of members

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to use the same loyalty program overtime and recommend to others about
the loyalty program (Zeithamal et al., 1996). Therefore, the loyalty
program is defined as encouraging cardholders to continue and maintain
relationships with the customer loyalty program accompanied by the
desire of cardholders to make additional efforts. Customers participate and
use a loyalty program to develop ownership and ownership of the
company. However, it has also been widely documented that stores that
offer loyalty programs to their customers are likely to enjoy the benefits of
store loyalty and / or brand loyalty. So that by participating customers in
using the customer loyalty program services, the higher their trust in the
company will be.
Ha1: The customer loyalty program has a positive impact on
customer trust.

Ha6: The customer loyalty program has a positive influence on

customer loyalty through trust.

3) The effect of the customer loyalty program on customer loyalty.

Ou et, al. (2011) believe that a customer loyalty program is a marketing
plan designed to increase loyalty by providing incentives to customers
through the additional benefits it offers to customers. There are five
elements in the perceived value of the customer loyalty program: "Cash
value", "Choice of redemption options", "Value of aspiration",
"Relevance", and "Comfort" Ou et, al. (2011). A good customer loyalty
program not only increases consumer acceptance as reflected in increased
sales, but also encourages participation through increased interaction
between businesses and customers. In addition, customers believe that
they can receive higher economic value, a variety of awards, and the
opportunity to win prizes through the implementation of a customer
loyalty program. Therefore, when customers give a higher rating to a
business loyalty program, they also reflect a higher level of trust. So that
by frequently implementing customer loyalty programs it will be able to
make customers become loyal or loyal to the company. This study
proposes the following assumptions based on the facts mentioned above

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 Ha2: The customer loyalty program has a positive impact on
customer loyalty.

4) The effect of service quality on customer trust.

5) The effect of service quality on customer loyalty through customer

trust.
Service quality is an important element for service businesses (Mahatma,
2013). To date, the related service literature has been dominated by studies
of service quality. However, most researchers agree that service quality is:
(1) is a form of customer attitude;
(2) depends on the function of the mismatch between performance and
service expectations; and
(3) related to focused evaluations that reflect customer assessments
regarding service elements.
According to Mahatma (2013) said that service products, services, and
service environment are three dimensions of service quality. To date, the
Parasuraman dimension believes that the most popular and acceptable
service quality dimensions. However, a different opinion was expressed in
Budi (2007) who argues that "service quality is considered to be closer to
attitude because it is related to the overall assessment of the service
perceived by the customer". Morgan and Hunt (1994) stated that
"perceptions of service quality that have high quality will be able to build
greater trust. The intended high quality is relevant, timely and trustworthy.
" Then based on the description, a hypothesis can be formulated as
follows:
Ha3: Service quality has a positive effect on customer trust.

Ha7: Service quality has a positive effect on customer loyalty through

customer trust.

6) The effect of service quality on customer loyalty.

The better quality of service provided by the company will also be
followed by customer loyalty which will increase as well. Service quality
has a direct influence on customer loyalty, so with the effort to improve

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the quality of service by the company can be successful, the attitude of
customer loyalty will certainly be created. In addition, according to Bei
and Chiao (2001) revealed that service quality has a direct influence on
consumer behavioral intentions in four of the several industries that were
tested, indirect effects through satisfaction with loyalty from various
industries. Then perceived service quality has a positive effect, directly or
indirectly, on customer loyalty.
Research Aryani and Rosinta (2010) have shown that service quality as an
effect on loyalty. Based on this important role, it is expected that service
quality will directly affect loyalty. Based on this description, a hypothesis
can be formulated as follows:

Ha4: Service quality has a positive effect on customer loyalty.

7) Effect of customer trust on customer loyalty.

trust is a fundamental component of marketing strategies in creating
relationships with customers which are expected to be long-term between
customers and companies. With a long-term cooperative relationship, the
company can work more effectively in saving transaction costs and can
improve its competitiveness with competitors. When consumers believe
that the products offered to them are able to provide what they are hoping
for, there will be a loyal attitude towards the products offered by the
company. This finding is supported by Maity and Gupta (2016) who prove
"the influence of consumer trust on loyalty is positive and significant". "In
this context trust functions as a protector of the relationships that have
been built by (1) continuing to work with existing partners, (2) rejecting
short-term alternatives that seem attractive for the benefit of long-term
relationships with existing partners, and (3) observing the potential for
high-risk actions as a cautious principle of the belief that partners will not
behave opportunistically ”(Maity, 2016). Based on the description above,
a hypothesis can be formulated as follows:

Ha5: Customer trust has a positive effect on customer loyalty.

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 1.1 Customer Loyalty Program
Customer loyalty program can be interpreted as coordinated and
membership based marketing strategies, which are designed to provide
incentives to customer to strengthen further marketing exchanges with
customer and gain their loyalty (Sandada and Matibiri, 2015)

2.3Service Quality
Apostolos et, al. (2013) state that service quality as “perceived value,
which is generated through an evaluation process in which customers
compare their existing expectations with services that customer has
received”.

2.3 Trust
Lerbin dan Aritonang (2017) provide a definition of trust which is an
expectation that is owned by individuals or groups about words, promises,
statements whether they are oral or written statements from other
individuals or groups that can be relied upon.

2.4 Customer Loyalty

Customer loyalty is often associated with the term loyalty, which has
an understanding of customer behavior that remains in one company for a
long period of time to always make repeated purchases, (Ishak, 2011).

2. RESEARCH METHOD

2.1 Research Object

The object or population in this study is about Customer Loyalty
Program, Service Quality and Customer Loyalty with Population Trust in
this study were all user that use Samsung mobile phones in Special Region
of Yogyakarta.
The criteria for the sample to be used are:
1) Samsung mobile phone user in Yogyakarta area.

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 2) Provide accurate information regarding Samsung mobile
products.
3) The screening of selected samples due to limited time and
research costs.
From the above criteria, there were 150 users using Samsung product in
Yogyakarta region.

2.2 Types and Techniques for Data Collection

The types of data needed in this study include primary data in the form
of data obtained by researchers directly from the source, then carried out
observations and recorded for the first time. The data is then obtained
through answers from respondents in answering the list of questions
contained in the questionnaire.

2.3 Data Analysis Methods

This study uses data analysis techniques in form of Structural
Equation Modeling (SEM). SEM is a multivariate statistical technique
which is a combination of factor analysis and regression analysis
(correlation), which aims to examine the relationships between variables
in a model, both between indicators and their constructs and relationships
between constructs. SEM is used to test whether the model can be
accepted or rejected (Singgih, 2014)

3. Result of Data Analysis and Discussion

This study aims to determine the effect of Customer Loyalty Program

and Service Quality on Customer Loyalty with Trust as a Mediation
Variable on Samsung Mobile Phone (Research in Special Region of
Yogyakarta). The number of samples used is 153 Respondents using
Samsung mobile phone in Yogyakarta.

3.1 SEM Data Analysis

In accordance with developed model in this study, the data analysis

tool used is SEM which is operated by using the AMOS application.

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 After the SEM assumptions are made, the next step is testing by using
several conformity indices to measure the proposed model. Some of these
indices are:

Table 4.1. Test Result Goodness Of Fit Indeks

Goodness of fit Cut-off value Research Model

index Model
Significant ≥ 0.05 0,000 Less Fit
probability
RMSEA ≤ 0.08 0,056 Good Fit
GFI ≥ 0.90 0,774 Marginal Fit
AGFI ≥ 0.90 0,745 Marginal Fit
CMIN/DF ≤ 2.0 1,470 Good Fit
TLI ≥ 0.90 0,923 Good Fit
CFI ≥ 0.90 0,928 Good Fit
Source: Data processed in 2018

Based on the results in the table above, it can be seen that

research model approaches as a good fit model.

CMIN / DF is a parsimonious conformity index that measures

the goodness of fit of model with estimated coefficients to achieve
conformity. CMIN / DF results in this study is 1.470 shown that
research model is fit.

The Goodness of Fit Index (GFI) shows overall level of

conformity calculated from residual squared of model predicted
compared to actual data. The GFI value in this model is 0.774.
Approximate values with recommended level ≥ 0.90 indicate a
marginal fit research model.

RMSEA is an index used to compensate for the chi-square

value in a large sample. The RMSEA value of this study is 0.056 with
a recommended value of ≤ 0.08, which shows a fit research model.

AGFI is GFI which is adjusted to the ratio between degree of

freesom that is proposed and degree of freedom from null model. The

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 AGFI value in this model in 0.745. Approximate values with
recommended levels ≥ 0.90 indicate a marginal fit research model.

TLI is an index of conformity that is less influenced by sample

size. The TLI value in this study is 0.923 which shows a fit research
model.

CFI is an index that is relatively insensitive to sample size and

the complexity of model. CFI value in this study is 0.928 with a
recommended value of ≥ 0.90, which shows the research model is a fit
model.

Based on the overall measurement of goodness of fit above

indicates that the model proposed in this study was accepted

Table 4.8. Test Result Hypothesis

No Hypothesis Coefficient C.R. p Information

Customer loyalty program has a There is an
1 .368 4.190 0,000
positive impact on customer trust. influence
Customer loyalty program has a
There is an
2 positive impact on customer .174 2.102 0,036
influence
loyalty.
Service quality has a positive There is an
3 .467 4.261 0,000
effect on customer trust. influence
Service quality has a positive There is an
4 .148 2.136 0,033
effect on customer loyalty. influence
Customer trust has a positive effect There is an
5 .501 5.942 0,000
on customer loyalty influence
Indirect Effects
Hypothesis Direct Indirect Information
Customer loyalty program has a positive impact There is an
6 0,169 0,210
on customer loyalty through trust. influence
Service quality has a positive effect on customer There is an
7 0,158 0,213
loyalty through trust influence

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4. CLOSING

Based on results of analysis the Effect of Customer Loyalty Program

and Service Quality on Customer Loyalty with Trust as a Mediation
Variable on Samsung Mobile Phone Products, the following consclusions
can be drawn:

1. There is a positive and significant influence between customer

loyalty programs on customer trust (0.000<0.05).
2. There is a positive and significant influence between customer
loyalty programs on customer loyalty (0.033< 0.05).
3. There is a positive and significant influence between service quality
on customer trust (0.000<0.05).
4. There is a positive and significant influence between service quality
on customer loyalty (0.036<0.05).
5. There is a positive and significant influence between trust in
customer loyalty (0.000<0.05).
6. There is a positive and significant influence between loyalty
programs on customer loyalty through trust (0.169 < 0.210).

7. There is a positive and significant influence between service quality

on customer loyalty through trust (0.158 < 0.213).

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