Content area
Research Aims: This study investigates the relationship between electronic service quality (e-SERVQUAL), satisfaction and trust, and three indicators of customer loyalty within the context of loyalty programs organised by e-commerce platforms. Design/Methodology/Approach: An empirical approach using purposive sampling was used to generate a population of 326 Indonesian respondents over 18 years old who have used e-commerce loyalty program features such as store credit, points, discount vouchers, cashback vouchers, and free shipping vouchers. Research Findings: Bootstrapped structural equation modelling (SEM) analysis proved that one out of four factors of e-SERVQUAL that apply to e-commerce platforms as a whole do not apply to e-commerce loyalty programs, but the relationships between e-SERVQUAL, satisfaction, trust, and loyalty still stand. Theoretical Contribution/Originality: Measuring e-commerce platform service quality via a specific feature of the platform instead of the platform as a whole shows that perceived quality for e-commerce platform features does not necessarily have the same antecedents as perceived quality for the whole platform. Managerial Implication in the South East Asian Context: When designing loyalty programs for the Indonesian market, Southeast Asian e-commerce platforms should be aware that security, safety and delivering what is promised are more important than the design of the programs (e.g., the visual layout, ease of use, and convenience). Research Limitation & Implications: Customer behavioural data tended to be homogenous for indicators like age and spending amount, not representative of the entire e-commerce landscape in Indonesia; researchers might try quota sampling to alleviate the bias. Alternatively, a longitudinal study can be done to see how different promotions and shopping seasons affect perceived quality.
Abstract
Research Aims: This study investigates the relationship between electronic service quality (e-SERVQUAL), satisfaction and trust, and three indicators of customer loyalty within the context of loyalty programs organised by e-commerce platforms.
Design/Methodology/Approach: An empirical approach using purposive sampling was used to generate a population of 326 Indonesian respondents over 18 years old who have used e-commerce loyalty program features such as store credit, points, discount vouchers, cashback vouchers, and free shipping vouchers.
Research Findings: Bootstrapped structural equation modelling (SEM) analysis proved that one out of four factors of e-SERVQUAL that apply to e-commerce platforms as a whole do not apply to e-commerce loyalty programs, but the relationships between e-SERVQUAL, satisfaction, trust, and loyalty still stand.
Theoretical Contribution/Originality: Measuring e-commerce platform service quality via a specific feature of the platform instead of the platform as a whole shows that perceived quality for e-commerce platform features does not necessarily have the same antecedents as perceived quality for the whole platform.
Managerial Implication in the South East Asian Context: When designing loyalty programs for the Indonesian market, Southeast Asian e-commerce platforms should be aware that security, safety and delivering what is promised are more important than the design of the programs (e.g., the visual layout, ease of use, and convenience).
Research Limitation & Implications: Customer behavioural data tended to be homogenous for indicators like age and spending amount, not representative of the entire e-commerce landscape in Indonesia; researchers might try quota sampling to alleviate the bias. Alternatively, a longitudinal study can be done to see how different promotions and shopping seasons affect perceived quality.
Keywords: E-Commerce, Loyalty, Loyalty Program, Satisfaction, Service Quality
INTRODUCTION
E-commerce is currently experiencing rapid growth in Indonesia. In 2024, the gross merchandise value (GMV) contribution of e-commerce to the domestic digital economy was estimated to be at US$65 billion at the end of the year. This value contributes to 72% of the GMV of the country's digital economy (Google, Temasek, & Bain & Company, 2024). There are several major industry players like Shopee, TikTok Shop, Lazada, Tokopedia, and Blibli, each e-commerce platform with its own strategy to induce customer loyalty and prevent switching. A survey by SurveySensum (2022) on 1,000 e-commerce users in five major cities in Indonesia reveals that platform switching is still fairly commonplace among Indonesian e-commerce users. They are more than willing to switch e-commerce platforms for a purchase should they find better deals at another platform. Thus, e-commerce platforms face fierce competition to win customers over and ensure loyalty through differentiation, creating higher value for customers than the value that competitors create and also containing costs (Rothaermel, 2021).
The emergence of negative word-of-mouth generated by customer dissatisfaction can result in decreased purchase levels and visits to the site, causing e-commerce platforms to lose their competitive edge. E-commerce platforms must understand how to maintain the service quality of their customer loyalty programs to maintain customer satisfaction and positive word-of-mouth. To evaluate e-commerce loyalty program service quality, are the same attributes of service quality previously used in evaluating e-commerce platforms as a whole also applicable?
One possible source of differentiation is increasing service quality based on features, such as loyalty programs. In Indonesia, e-commerce platforms give out discounts, cashback, and free shipping if a certain number of orders or transactions are completed within a designated period. Loyalty programs on other e-commerce platforms award customers completing missions carried out on the platforms, such as transactions using certain payment channels (buy now pay later, instalments, bank transfers) or participating in one of the platform's gamified credit-earning systems. Loyalty programs in conventional stores have been shown to affect customer satisfaction and happiness (Agarwal et al., 2022), but it has yet to be proven whether this holds true in an online setting.
Gounaris et al., 2010 and Rita, Oliveira, and Farisa (2019) argue that service providers must deliver superior service experiences to customers so that they will be loyal and repurchase from the service provider. Loyalty programs are structured marketing strategies that reward and encourage loyalty or loyalty behaviour towards the company (Sharp & Sharp, 1997), including decreased switching to other sites, increased share allocation requirements for online shopping sites, and increased repeat purchase (repurchase) rates on online shopping sites. Camilleri (2021) and Rita, Oliveira, and Farisa (2019) have compiled indicators of electronic service quality in the context of e-commerce platforms, which can be grouped into four broad categories: website functionality, website attractiveness, security/privacy, and consumer fulfilment. They found the drivers of service quality for online commerce in general, which were not based on the product segments sold on the website. Because a loyalty program is a powerful marketing tool for inducing loyalty and repurchase rates in conventional stores, do they still have the same service quality drivers in an online setting? Do the antecedents of service quality for e-commerce platforms hold true for e-commerce loyalty programs? This study tests whether the service quality factors that are generally important to e-commerce can also be applied to e-commerce loyalty programs. An evaluation is done on the effects of loyalty program service quality on trust and satisfaction in the loyalty program, as well as the effects of loyalty program trust and satisfaction on the three indicators of loyalty: site revisit, word-of-mouth, and repurchase intention.
LITERATURE REVIEW
Customer Loyalty
In the context of this research, customer loyalty is the possibility that customers will continue to buy products from the same site with the intention of repurchase on an online shopping site (Cyr et al., 2007; Nguyen et al., 2018; Zeithaml et al., 1996). A loyalty program is a structured marketing strategy that rewards and encourages loyalty or loyal behaviour towards the company (Sharp & Sharp, 1997). In the context of online shopping sites, loyalty is thus the likelihood that customers will continue to purchase products from the same platform. Because of the existence of various online shopping sites that compete with each other, customers can easily compare products and services to obtain the offer that best suits their needs (Anderson & Srinivasan, 2003; Srinivasan et al., 2002).
Loyalty Program
A loyalty program is a structured marketing strategy that rewards and encourages loyalty towards the company (Sharp & Sharp, 1997). Loyalty on e-commerce platforms thus refers to the likelihood that customers will continue to purchase products from the same platform. Because of the existence of various e-commerce platforms that compete with each other, customers can easily compare products and services to obtain an offer that best suits their needs (Anderson & Srinivasan, 2003; Srinivasan et al., 2002). Customers of an e-commerce platform that participate in a loyalty program are expected to exhibit several behavioural changes. They are less likely to switch to competing platforms, as the benefits and accumulated rewards create a sense of commitment. Additionally, they tend to allocate a larger share of their wallet to the platform with the loyalty program, increasing their overall engagement and dependency on it. This leads to higher repeat purchase rates and more frequent usage of the platform as customers seek to maximise their rewards and benefits. Ultimately, the program fosters a greater propensity for exclusive loyalty, encouraging customers to consistently choose the platform over alternatives.
The groundwork of loyalty programs as a medium for e-commerce platforms to induce customer loyalty is the theory of service-dominant logic created by Vargo and Lusch (2004). This theory emphasises the idea that all forms of exchange can be seen as service-for-service exchange, which is the use of resources that are reciprocal for the benefit of each other. To create value in services, service-dominant logic argues that actors must carry out interdependent and mutually beneficial service exchange activities (Lusch & Vargo, 2014). This theory is the foundation of creating attractive loyalty programs for retail customers. Loyalty programs can be seen as a service exchange activity that is interdependent and mutually beneficial. By offering loyalty programs to customers, service providers provide a benefit to customers by giving them exclusive offers and special treatment that are not given to ordinary customers in return for increased loyalty behaviour. The loyalty also provides the company with additional revenue through increased customer spending. These offers are provided in the form of price discounts, shipping discounts, cashback, and store credit. E-commerce platforms benefit from loyalty programs because customers will be loyal to a platform, while customers benefit from loyalty programs because of the discounts and promotions given on their transactions on the platform.
Electronic Service Quality (e-SERVQUAL)
Electronic service quality, or e-SERVQUAL, is defined as how a site facilitates efficient and effective shopping, purchasing, and delivery (Parasuraman et al., 2005) and covers all phases of a customer's interaction with a site. Electronic service quality can also be defined as a higher-order dimension that consists of three parts: environmental quality, delivery quality, and outcome quality (Fassnacht & Koese, 2006). The first two parts can be combined as two forms of process quality and can be divided into two main dimensions: process quality and outcome quality (Barrutia et al., 2016).
Rita et al. (2019) and Camilleri (2021) researched electronic service quality (e-SERVQUAL) and its relationship to satisfaction, loyalty and electronic word-of-mouth. They found that e- SERVQUAL consists of four elements: loyalty program (LP) attractiveness, loyalty program (LP) functionality, security and privacy, and consumer fulfilment. Consumer fulfilment is the most important factor because it has a direct impact on all three independent variables. Of the four e-SERVQUAL factors, LP security was not supported by research results, so this factor can be ignored from the model. Camilleri concluded that electronic loyalty and word-of-mouth are directly affected by customer satisfaction in the context of online shopping websites (e-commerce), and consumer fulfilment has a direct influence on satisfaction, loyalty and electronic word-of-mouth.
Rita (2019) also researched e-SERVQUAL and its relationship to customer satisfaction. They found that the quality of electronic services is not only associated with customer satisfaction but also with customer trust. It was discovered that customer satisfaction and trust can be linked not only to positive word-of-mouth but also to repurchase intentions and site revisits. Rita tested four aspects of electronic service quality: Website Design, Customer Service, Security/Privacy, and Fulfilment on the quality of electronic services. These four factors were tested in the context of e-commerce users in Indonesia. The results showed that all aspects of e-SERVQUAL except Customer Service have a positive relationship with electronic service quality. Meanwhile, the hypothesis that Customer Service has an impact on electronic service quality in Indonesia wasn't proven. In contrast to the results of Camilleri's research and another study conducted in the United States, for users of online shopping sites in the U.S., Security/Privacy was actually an irrelevant factor in the overall model (Blut et al., 2015).
Loyalty program functionality refers to the instrumental utility, technical capability, and efficiency of a website or application in offering relevant information about its products (Cristobal et al., 2007). Accordingly, it is an essential aspect of e-commerce satisfaction and also loyalty program layouts. Service quality is a mediator between capability and satisfaction (Fernandes et al., 2018). Endwia et al. (2021) also mentioned efficiency as a driver of service quality for online platforms in Indonesia. Thus, e-commerce loyalty programs should be intuitive and efficient for users, allowing them to navigate the platform with ease.
H1: E-commerce loyalty program functionality has a positive effect on electronic service quality.
Previous studies have shown that good website or platform design is an important driver of electronic service quality in many industries, such as hospitality (Li et al., 2017) and finance (Zhou et al., 2021). As explained by Parasuraman (2000), the appearance of a website can persuade users to continue exploring content and visit the site again, regardless of whether the product offered is interesting or not. The structure, description and design of a site's contents can attract site visitors both from the web and from mobile devices; likewise, poor design can conversely drive visitors away from the site (King et al., 2016). The aesthetic aspect of designing a website plays an important role in creating a good experience for website visitors. To increase aesthetic value, web designers can use striking and attention-grabbing icons, background colours, images, and graphics, as well as appropriate font sizes. (Li & Yeh, 2010; Ranganathan & Ganapathy, 2002).
H2: E-commerce loyalty program attractiveness has a positive effect on electronic service quality.
Security and privacy in the context of e-commerce platform loyalty programs refer to the security of transaction information and the privacy of personal information disclosed when registering as a program member (Blut, 2016). Security itself is a vital driver of service quality (Parasuraman et al., 2005) and is commonly associated with privacy in an electronic context (Wolfinbarger & Gilly, 2003). To improve service quality, e-commerce platforms must be able to assure customers that the information they disclose to the site will not be misappropriated and misused, especially if sensitive information such as telephone number, email, or credit card number are disclosed (Holloway & Beatty, 2008; Wang et al., 2015).
H3: E-commerce loyalty program security and privacy have a positive effect on electronic service quality.
Fulfilment ensures that customers receive what they ordered. This includes delivery time, order accuracy, and delivery conditions (Blut, 2016). Also known as reliability, there is a strong link between fulfilment and service quality in the service industry (Balinado et al., 2021). Endwia et al. (2021) also mentioned a direct correlation between fulfilment and service quality in an online educational platform setting. In the context of e-commerce platform loyalty programs, fulfilment is when the rewards received are in accordance with the customers' efforts to be loyal to the site (e.g., purchasing enough items, accumulating enough store credits, completing sufficient missions) or the terms and conditions set out by the site. This is important because differences between ordered and received goods often occur in the context of e-commerce, although it is unknown whether this applies to loyalty programs (Liao & Keng, 2013).
H4: Fulfilment in an e-commerce loyalty program has a positive effect on electronic service quality.
Satisfaction and Trust
According to Solomon (2018), customer satisfaction or dissatisfaction can be referred to as the overall attitude about a product or service after purchase. This is evidence of positive or negative feelings towards a particular site (Collier & Bienstock, 2006). In the context of e-commerce platforms, consumer satisfaction represents the customer's sense of satisfaction regarding previous purchasing experiences through the same or different e-commerce platforms (Anderson & Srinivasan, 2003). Trust can be defined as "the intention to accept vulnerability based upon positive expectations of the intentions or behaviour of another" (Rousseau et al., 1998). This definition was then elaborated in the context of online customer trust, resulting in the definition of "consumer perceptions of how the site will meet expectations, how trustworthy the site information is, and how much trust consumers have in the site" (Bart et al., 2005). Trust is an important factor for customers when determining whether they will buy products from e-commerce platforms (Wu et al., 2018). In the context of e-commerce platform loyalty programs, this can be interpreted as determining whether a customer will use a loyalty program or not. Research indicates that a lack of customer trust is an obstacle to customer adoption of online purchasing, and therefore, the quality of e-services influences customer trust (Chang et al., 2013; Chiou & Droge, 2006; Wu et al., 2018).
H5: Electronic service quality has a direct effect on e-commerce loyalty program trust.
Customer satisfaction is a consequence of the customer's experience in taking part in a loyalty program and is very influential in determining future customer reactions, such as repeat purchases and loyalty (Kotler & Armstrong, 2012; Pereira et al., 2016). There is also evidence that the quality of electronic services has a direct effect on repurchase intention, site revisit, and electronic word-of-mouth (Gounaris et al., 2010).
H6: Electronic service quality has a direct effect on e-commerce loyalty program satisfaction.
Loyalty Behaviour
Blut et al. (2015) developed a hierarchical model of service quality, which improved the prediction of consumer behaviour compared to previous instruments (Chang et al., 2013; Rasheed & Abadi, 2014). The model has also been tested with users of online shopping sites in the United States (Blut, 2016). The study showed that loyalty consists of three elements: repurchase intention, electronic word-of-mouth, and site revisit.
Repurchase intention indicates the buyer's willingness to make a purchase from the same e-commerce platform based on their previous experience (Gounaris et al., 2010). Customers who are satisfied with the services provided by the service provider will increase their usage level and intention to continue with the program in the future (Blut et al., 2015; Henkel et al., 2006). Likewise, if customers already have a high level of trust in a website, it will be more likely that the customer intends to buy from the website (Gao, 2011).
H7: E-commerce loyalty program trust has a direct effect on repurchase intention.
H10: E-commerce loyalty program satisfaction has a direct effect on repurchase intention.
Word-of-mouth (WOM) is information about a product conveyed by one individual to another. Because individuals are more likely to receive information from people they know, information spread through word-of-mouth tends to be more trustworthy and reliable than other marketing methods (Solomon, 2018; Tuten & Solomon, 2015). Due to its effectiveness, e-commerce platforms must be aware of the power of positive and negative word-of-mouth because both are related to increasing sales, especially with customer satisfaction, which greatly influences positive word-of-mouth (Jung & Seock, 2017; Kau & Wan-Yiun Loh, 2006). Before individuals share information with other people, they not only must feel satisfied with the services provided by the website, but also must believe in the information provided (Loureiro et al., 2018).
H8: E-commerce loyalty program trust has a direct effect on electronic word-of-mouth.
H11: E-commerce loyalty program satisfaction has a direct effect on electronic word-of-mouth.
Website service quality is an indicator of customer satisfaction and also subsequent behaviour such as site revisits (Leung et al., 2011). The more positive a customer feels about a website, the more likely it is for them to return to that website (Gounaris et al., 2010). Thus it can be inferred that there is a positive relationship between e-trust and repeat visits to an e-commerce platform.
The quality of service provided by an e-commerce platform is an indicator of customer satisfaction and also subsequent behaviours such as site revisits (Leung et al., 2011). Therefore, it can be inferred that there is a positive relationship between e-trust and repeat visits to an e-commerce platform. The more positive a customer feels about a website, the more likely it is for them to return to that website (Gounaris et al., 2010).
H9: E-commerce loyalty program satisfaction has a direct effect on site revisit.
RESEARCH METHOD
This quantitative, descriptive research builds on the studies of Camilleri (2021) about factors affecting online service delivery and pursues integration with the theory of customer satisfaction in online shopping by Rita et al. (2019).
Data Collection
The data collection method was purposive sampling by survey, where respondents were arbitrarily screened based on several questions, such as if the respondents are over 18 and have ever used e-commerce loyalty programs, e.g., in the form of store credits, coins, discount vouchers, cashback vouchers, and free shipping vouchers. Purposive sampling was used because it is one of the most effective sampling methods for this study in that it can yield the most respondents that meet the criteria and are appropriate for the study. The study focused on the population of Indonesia, where many are frequent e-commerce users. The questionnaire was created using Google Forms and contains 45 question items developed from previous research by multiple sources. A description of the questions and sources can be found in the appendix. A population of 326 responses were collected. Out of the responses, 21 out of 326 had invalid or missing data, so a total of 305 valid responses were collected. This is in accordance with the common rule-of-thumb of the minimum number of responses in a structural evaluation model being five times the number of indicators in the model.
Pre-Test Validity and Reliability
An initial pilot sample of 75 respondents was collected and tested to make sure that the measurement tools were valid and reliable. Validity was tested with the Kaiser-Meyer-Olkin Sample of Adequacy and Bartlett's Test of Sphericity, while reliability was tested using Cronbach's Alpha. The Kaiser Meyer Olkin (KMO) Sample of Adequacy measures the adequacy of the sample used by weighing the model's correlation coefficient against the partial correlation coefficient, while Bartlett's Test of Sphericity tests whether, between different hypothesised variables, nothing is correlated. Cronbach's alpha measures the internal consistency and reliability of the instruments. The indicator can be declared valid if the KMO and component matrix or factor loading values are more than 0.5 and Bartlett's Test value is no more than 0.05. Each indicator can also be declared reliable if the Cronbach's Alpha value is more than 0.6 (Hair et al., 2010). The results show that all indicators are valid and reliable. Thus, the measurement tools can be used to carry out the main hypothesis testing.
Survey Demographics
The survey was distributed to 305 respondents with the following demographics:
RESULTS AND DISCUSSIONS
Outer Model Validity and Reliability
After conducting the main test and acquiring the number of respondents sufficient to conduct the study, the model was first tested for outer model validity and reliability for both convergent and discriminant traits. Convergent validity proves that respondents can understand all indicators of the variables tested in this study as expected by the researcher. More specifically, it means that a set of indicators represents one latent variable and underlies the formation of that variable. On the other hand, discriminant validity shows that respondents are not confused or influenced by statements on other latent variables when answering statements from certain variables. The model was tested for convergent validity using the Outer Loadings and Average Variance Extracted (AVE) parameter and was declared convergently valid if the Outer Loading parameter was not less than a value of 0.6 and the AVE parameter was more than 0.5 (Gefen et al., 2000). A cutoff value of 0.6 was chosen because this value can be stated as a figure that is quite acceptable in research (Wülferth, 2013). All AVE results were above 0.5, and all Cronbach's Alpha results were above 0.7, according to the data was convergently valid and reliable.
The model was also tested for discriminant validity using the heterotrait-monotrait (HTMT) test, whose parameter is that it should not be less than 0.9. If a latent variable has more variation in the associated indicator variable compared to other constructs in the same model, the model is approved for discriminant validity. If the HTMT value between two reflective constructs is below 0.90, then the two parameters are also approved for discriminant validity. All HTMT relationships except for LPF>LPA, SQ-CF, and SQ-S passed the HTMT test.
Inner Model Validity and Reliability
The strength and accuracy of the overall model is continued by testing the significance of the hypotheses tested in the research. Testing the inner model examines whether there is a causal relationship between the latent variables. The R-Square (R?) test was carried out to see the relationship between first and second-order variables. This evaluation measures how much variance in the first-order construct can be explained by the second-order construct, which explains the amount of variance in the structural model. According to Cohen (1992), an R-Square value of 0.26 and above is included in the strong category; 0.13 to 0.26 is in the moderate category, and the resulting R-Square value between 0.02 and 0.13 is in the weak category. The results of the R-Square test for the research model are as follows:
The path coefficient values all tested positive, which means that all variables show the same direction of positive relationships. However, for the relationships between Loyalty Program Attractiveness and Service Quality (H»), the p-value is greater than 0.05, which means that the relationship between the variables cannot be considered significant (Hair et al., 2022). Therefore, it can be concluded that both hypotheses have been rejected in this research. Hypotheses 1 and 3 to 11 yielded p-values smaller than 0.05, which means that the relationship between the variables is considered significant, and thus, all of them are accepted in this research.
Discussion
Rita (2019), Blut (2016), and Gounaris et al. (2010) have suggested applying service quality measurement in a different setting, which, in this case, narrows down the scope of e-commerce to focus on its efforts at gaining customer loyalty through their loyalty programs. The study found that three out of four dimensions (Loyalty Program Functionality, Security and Privacy, and Customer Fulfilment), as proposed by Rita (2019) and Camilleri (2021), had positive impacts on service quality, while Loyalty Program Attractiveness does not have a significant impact. Nguyen et al. (2018) found that consumer satisfaction and perception are significantly influenced by the breadth and depth of products on a website. In the context of the research, the object studied was only the e-commerce loyalty program, which does not give much room for a large breadth or depth of products. The services provided by loyalty programs are also limited, so the perception of service quality that can be created by customers is likewise limited to deals and promotions that it can offer, not to the entire inventory of products and services sold on the website. Hofman-Kohlmeyer (2016) offered an alternative model of antecedents of customer loyalty to e-commerce platforms, which are attitude, satisfaction, trust, and commitment. In the context of e-commerce loyalty programs, it can be concluded that as a secondary feature of e-commerce platforms, the program's attractiveness does not have a strong influence on the perception of electronic service quality. In designing loyalty programs, electronic service providers should, therefore, pay careful attention to the factors that do matter, which are functionality, security, privacy, and Customer Fulfilment, seeking standards and innovations that can improve satisfaction, trust, and consequently, customer loyalty.
Convenience is one of the aspects of e-commerce that is most often appreciated by customers. Reduction in time and effort to shop compared to traditional shopping and ease of searching for products or services are associated with intention to shop on e-commerce platforms (Vieira et al., 2020). This convenience also includes functionality, which is hypothesised to be an antecedent to service quality within e-commerce loyalty programs. The findings resonate with the research done by Endwia et al. (2021), in which a significant relationship was discovered between antecedents of service quality such as efficiency, fulfilment, privacy and customer satisfaction among Gen Z and millennial educational platform users in Indonesia. As stated in the survey demographics, 68% of the respondents were in the age range of 18 to 25 years old, which means they fall into the category of Generation Z, or the generation born between 1997 and 2005. The respondents in this age demographic value efficiency and functionality because they are the first generation to become digital natives, having become familiarised with digital technology at a younger age than the previous generation. They are already accustomed to the ease or functionality of the websites, programs, or applications they use, so they expect loyalty program functionality as an indicator of service quality. This explanation serves to support why Hi, Hs, and Ha are accepted for e-commerce as a whole and also for e-commerce loyalty programs.
The demographics of respondents, who are mostly Generation Z, can explain why H> is not accepted. Having been exposed to web pages, programs, and applications since they were young, Generation Z no longer sees the attractiveness of a website or application as a determinant of service quality. In the context of marketing through social media such as Instagram, it has also been proven in a study of Generation Z that physical attractiveness is not a determinant of purchasing intention for a product (Huang & Copeland, 2020). With that, it can be concluded that for Generation Z, which makes up most of the survey respondents, the attractiveness of the program is not an antecedent of perceived service quality. Because e-commerce loyalty programs are also a secondary feature of e-commerce platforms, the influence of the attractiveness of the e-commerce loyalty program page on the quality of the loyalty program service is weak. This is because what is emphasised in the loyalty program is not the attractiveness of the program but the function of the program in increasing customer loyalty to the e-commerce platform. Customer loyalty to e-commerce platforms can be described in four components, namely customer attitude (Attitude), satisfaction (Satisfaction), trust (Trust), and commitment (Commitment) (Hofman-Kohlmeyer, 2016). In the context of e-commerce loyalty programs, it can be concluded that as a secondary feature of e-commerce platforms, the level of attractiveness of the loyalty program does not have a strong effect on the perception of the quality of e-commerce loyalty program services.
As emphasised by Rita (2019) and Hofstede (1984), different cultures may have varied outcomes on drivers of loyalty program service quality. Drawing from a mixed nationality study by Camilleri (2021), security was not an antecedent of satisfaction. Another study by Hu and Weber (2014) on Chinese and Japanese customers in the hospitality industry shows that the main attribute that drives perceived quality is not an attribute that is related to communication, whether visual or verbal communication, but it is the fulfilment of customer expectations through guarantees. Although the study was done on a culture other than Indonesia, the subject of this study shows that in certain conditions, attractiveness remains secondary to fulfilment when it comes to perceived quality, which will, in turn, influence customer loyalty. These two studies emphasise the notion that administering this study on populations of different or multiple nationalities may yield varied results similar to or unlike this study, which was done on a homogenous Indonesian population.
The relationship between e-commerce service quality and trust and satisfaction still holds true in a loyalty program context. As a determinant of whether customers will continue to use a loyalty program or not, a lack of trust in an e-commerce platform's loyalty program can hinder repeat purchases on an e-commerce platform. Accordingly, it is important for e-commerce platforms to build trust in customers, one of which is through a commitment to information transparency (Chang et al., 2013; Chiou & Droge, 2006; Wu et al., 2018). From the parameters of trust that have been tested, several factors to be considered when designing e-commerce loyalty programs include customer happiness, fairness in treating customers if problems occur, clear and easy-to-understand program procedures and guidelines, and customer trust that the program will give the promised benefits. It is thus important for e-commerce platforms to continue to prioritise customer trust by organising loyalty programs that consistently meet customer expectations.
Since satisfaction is also an indicator of the customer experience in a loyalty program and is influential in increasing customer loyalty (Kotler & Armstrong, 2012; Pereira et al., 2016), e-commerce platforms must pay attention to customer satisfaction with their experience when using loyalty programs. Based on the parameters tested, satisfaction can be monitored by encouraging customers to provide feedback through surveys after each usage of program vouchers or rewards so that the platforms can maintain consistent customer satisfaction and continue to improve the existing loyalty program system.
Satisfaction and trust in e-commerce loyalty programs will, in turn, translate into repurchase intention, site revisit, and word-of-mouth, as with e-commerce platforms in general. Site revisit, and word-of-mouth is byproducts of brand recall, the ability of customers to remember a brand when given a cue of need for a particular product category or a particular purchasing situation. If customers can successfully recall a loyalty program by repeatedly visiting and using the loyalty program, it means that there is a feeling of loyalty towards the e-commerce platform, which is generated by satisfaction with the e-commerce platform (Keller & Swaminathan, 2020).
MANAGERIAL IMPLICATIONS IN THE SOUTH EAST ASTAN CONTEXT
Now that loyalty program attractiveness has been proven not to have a strong influence on the quality of e-commerce loyalty programs, there are several implications that can be drawn. First, the structure of e-commerce loyalty programs can be re-evaluated to accommodate stronger needs for functionality, security, privacy, and fulfilment of customer needs. E-commerce platforms can track the program's engagement by looking at effective user-centric metrics such as engagement rate, usage rate, and average basket value from each user. In addition, e-commerce platforms can also use existing resources to actively communicate offers to customers such as through email notifications, applications, social media, and others. Finally, e-commerce platforms can also try to foster good relationships between program users and the platform and between fellow program users. For example, for middle and high-tier members, e-commerce platforms can create monthly reports or publications about what offers are valid and will be valid in that month to increase user perceptions of the value of the loyalty program. No less important is the integrity of the program, where every offer given must be conveyed honestly, without any hidden terms and conditions.
The e-commerce landscape of Southeast Asia continues to change rapidly, and local key players such as Shopee, Tokopedia, and Lazada are facing fierce competition from the Chinese market, with platforms such as TikTok and Alibaba quickly gaining popularity. Although this dominance provides ample opportunities for local sellers to grow, Chinese platforms have added advantages in that key nodes in the Southeast Asian e-commerce supply chain, like suppliers and logistics providers, are also typically Chinese entities (Foster, 2023). Loyalty programs offering user-centric benefits such as price and shipping discounts and store credits might be an effective way for Southeast Asian e-commerce players to maintain an edge over their competitors, especially knowing that consumers still shift to platforms that can offer the best value for their money (Arora et al., 2022).
THEORETICAL IMPLICATIONS
Several theoretical implications arise through this study in that the antecedents of service quality for e-commerce loyalty programs are different from the antecedents of service quality for e-commerce platforms in general. This study shows that for the e-commerce industry in Indonesia, the functionality and attractiveness of e-commerce loyalty programs do not have a significant effect on customer trust and satisfaction with e-commerce platforms. Therefore, the two antecedents of service quality found are data security and confidentiality (Security/Privacy) and meeting customer needs (Customer Fulfilment). This can be the starting point for determining other antecedents of e-service quality that apply to e-commerce loyalty programs.
There are several limitations to this study. First, Shopee's dominance in the Indonesian e-commerce ecosystem can make the data inaccurate. As seen in the demographic survey, 59% of respondents chose Shopee as their favourite e-commerce platform, while a minority chose other e-commerce platforms. This can lead to bias because Shopee's value propositions may be very different from the values offered by other e-commerce platforms. Therefore, although this data may not be representative of all e-commerce platforms in Indonesia, the Indonesian e-commerce ecosystem at the time of writing is clearly visible, and Shopee still was the market leader. In addition, it has also been proven that geographical location affects the construct of electronic service quality (Blut et al., 2015). Because this data only focuses on the Indonesian e-commerce industry, the findings in this study are not representative of the global e-commerce industry. A quota sampling of all the top e-commerce platforms in Indonesia (Shopee, Tokopedia/TikTok Shop, Lazada, Blibli) might produce a more nuanced analysis. In addition, bias also comes from the demographic age of respondents, where 68% of respondents are aged 18-25 or mostly in Generation Z and 18% of respondents are aged 26-35 or are in Generation Y or Millennials. Therefore, the data produced is not representative of all levels of Indonesian society. The shopping habits of Generation Z and Millennial consumers can be very different from the shopping habits of previous generations, namely Generation X and Baby Boomers. The third bias comes from the average expenditure of respondents. In the survey, only 17% of respondents fell into the high-spending category, which is more than IDR500,000 per month. The gap between the two samples for multigroup analysis with monthly e-commerce spending moderation causes bias. The data might be more representative if the comparison between high-spending and low-spending respondents was more even so that more accurate output could be produced. To make the results more accurate, further research can use different sampling methods. Instead of purposive sampling, where respondents are selected arbitrarily through a screening question, quota sampling can be used to better represent the landscape of Indonesian e-commerce platform users. Quotas can be applied to age demographics (Gen Z, Millennial, Gen X, Baby Boomer), favourite e-commerce platforms (Shopee, Lazada, Tokopedia, etc.), or monthly expenses in e-commerce. Alternatively, longitudinal research instead of cross-sectional research can also be utilised to accommodate the different patterns in consumer behaviour throughout the year (e.g., twin dates, holiday sales, end-of-month sales, etc.).
CONCLUSION
The study demonstrates that functionality, security, and privacy are important aspects of service quality of e-commerce loyalty programs. In contrast to general e-commerce findings, program attractiveness does not significantly influence e-commerce loyalty program users. Several conclusions can be drawn from the results. First, with stronger aspects of functionality, security, privacy, and meeting customer needs, loyalty program design can be re-evaluated. Metrics that are user-centric or customer-centric, such as complaint handling time, processing speed, engagement rate, usage rate, and average basket value for each voucher, can be monitored as benchmarks for loyalty program effectiveness. Apart from that, e-commerce platforms can also use existing resources by communicating existing vouchers and promotions to customers via channels such as email notifications, applications, and social media. Finally, e-commerce platforms can also try to build relationships between users and the platform and between fellow users through their loyalty program. For example, for middle- and high-tier members, e-commerce platforms can create monthly reports or publications about available offers that month to increase user perception of the value of the program.
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