ANALYSIS OF FACTORS INFLUENCING CUSTOMER LOYALTY IN THE USAGE OF VISA CREDIT CARDS THAT ARE REVIEWED FROM THE FACTORS; SERVICE QUALITY, BRAND EQUITY, AND MARKETING MIX STRATEGY
CASE STUDY: PT BANK RAKYAT INDONESIA (PERSERO) TBK
Makiyah Rachmawati, Harjanto Prabowo
Binus University, Jakarta Selatan, +6285780258825,
ABSTRACT
In the globalization era, banking industry plays an important role in everyone’s everyday life. PT Bank Rakyat Indonesia is one of a well settled public bankingin Indonesiawhich issues credit cards to satisfy its customers by supporting a more practical technique of transaction. The objective of this research is to find the most dominant factors that affect customer loyalty of visa credit card holders which are of very low performance and activation level. Factor analysis is used in this study which is then applied to three general factors which exerts a significant influence on customer loyalty. From the factor Service Quality, 3 new factors were formed named Service Transaction, Service Delivery, and Service Recovery. From the factor Brand Equity, 2 new factors were formed named Brand Awareness and Brand Association. Out of the third factor Marketing Mix Strategy, 2 new factors were also formed named Marketing Competitiveness and Product Competitiveness. A general conclusion is then made which requires BRI to improve its marketing tools by increasing the number of merchants which aligns to the lifestyle of targeted visa holders aged between 21-35. (MR)
Keywords:
Factor Analysis, Customer Usage, Service Quality, Brand Equity, Marketing Mix Strategy, Credit Cards, Banking Industry
INTRODUCTION
The banking world is a world with rapid growth of an increasingly sharp competition, as well as the banking world in Indonesia. Each Bank will compete to be the public’s preference by giving the best attractive offerings. In order to maintain existence in this fierce competition, each bank should be able to improve its service to customers in an innovative way by continuously developing products that satisfy market demands. Along with advances in technology, as well as the era of globalization that demand the ease of conducting financial transactions around the world bring new impact to the community.Credit cards today are not just a lifestyle, but it is a necessity for modern societies to support all activities in daily life. All business or personal purposes, ranging from finance travel, entertain clients until the cost of child birth, daily grocery shopping or even vacation with your beloved family.
Credit cards provide payment facility that is more practical than cash and is relatively safe.Chairman of the Indonesian Credit Card Association, Steve Martha, stated that the number of credit cards all over Indonesia has reached 15.428.027( currently Indonesia has 20 credit card issuers, consisting of 4 governmental banks (3 public banks, and 1 syariah bank), 7 national private banks, 3 international banks, and 6 mixed banks, according to MARS Indonesia on The Study of Credit Cards Market of Indonesia on 2012.Concerning the high usage of credit cards nowadays, Steve Martha also stated that the number of credit card users in Indonesia has reached 14.8 million(
MARS Indonesia stated that the increase in trend of credit cards issued reach an average of 15% annually. However, it is estimated that the growth of credit card users will slow down compared to the previous years with only an approximate of 5% increase of creedit card users. This deceleration is caused by the new policies and regulations launched by Peraturan Bank Indonesia (PBI) No.14/2/PBI/2012 about payment tools using credit cards. In brief, this new regulation is made to tighten the requirements more strictly concerning owership of credit cards based on minimum age, minimum income, and maximum limits of credits and amount of cards issued.
Bank Rakyat Indonesia (BRI) which is one of the financial institutions that was established on 16th of December 1895, also participates in the rivalry to win as many customers as possible. Although BRI first launched credit cards in 2006, there are already various types of credit cards issued, such as Platinum, Gold, Standard, Corporate, Business, and Visa.Among all the 6 types of credit cards issued by BRI, Visa is the youngest where it is newly launched in October 2011. This type is targeted for the young generations aged 22 and above, with a high lifestyle. Visa credit card has product merchants ranging from international concerts, recommended restaurants, high technology gadgets, and branded shopping stores. With all of these superior benefits offered, it is expected that Visa will become the most chosen card mostly preferred when it comes to credit cards. However, from the evaluation conducted by the internal divison of BRI credit cards, Visa showed the lowest percentage of activation 29.07% than the 5 other types where Platinum 75.07%, Gold 71.67%, Standard 68.94%, Corporate 75.53%, and Business 37.60%. In addition, it can also be proven that Visa is still under struggle through the amount of monthly transactions which are very unstable. Visa can have a total amount of 27,464 transactions in August 2012 then fall to 23,887 in September 2012 but then rise again in October 2012 to 27,590 total transactions.
As the usage of Visa credit card is still not optimal as evidenced by the BRI Credit Card Division itself, this proves that the marketing approach implemented so far is not yet effective as some factors affecting consumer loyalty are maybe not of central focus or being ignored. According to the earlier findings by Yu-Jia Hu about ‘How Brand Equity, Marketing Mix Strategy, and Service Quality Affect Customer Loyalty: The Case ofRetail Chain Stores In Taiwan’, proven that there is a significant influence of Service Quality, Brand Equity, and Marketing Mix Strategy as variables that exert a great effect towards customer loyalty.
This research aims to focus on the analysis of factors influencing customer loyalty that are reviewed from 3 attributes; service quality, brand equity, and marketing mix strategy. It will investigate on “1) what are the factors influencing customer usage of Visa Credit Card through the attributes of Service Quality, 2) Brand Equity, and 3) Marketing Mix Strategy?” and “4) How is the relationship between the factors; Service Quality, Brand Equity, and Marketing Mix Strategy that influence customer usage of Visa Credit Card?” These will also be the problem statement.The objective of this research is to find the most dominant factors that affect customer loyalty of visa credit card holders which are of very low performance and activation level.
RESEARCH METHODOLOGY
Type of research is Explorative. Explorative research is not a causative relationship in which the independent variables affect the dependent variable. The research method used was a survey. According to Nur Indriantoro(2002), survey is the primary method of data collection based on communication between researchers with respondents. Time Horizon used is cross sectional information is collected at any given time, can be done within a few days or even a few weeks because of the situation. Visa Credit Card Holders as the unit analysis. Time horizon is cross-sectional as it is carried out for a several amount of period for about 6 months.
The study was conducted to determine the factors that influence customer loyalty in the usage of BRI credit cards. Thus, the main research variables consist of three factors; 1)Service Quality Factor 2)Brand Equity Factor 3)Marketing Mix Strategy Factor. The following table will explain in detail the concept of variables measured in the study, covering five aspects of Service Quality factors, namely reliability, tangibility, empathy, responsiveness, and Assurance. The factor Brand Equity covers four main aspects which are perceived quality, brand awareness, brand loyalty, and brand association. Finally the third factor, Marketing Mix Strategy, covers seven dimensions named product, price, place, promotion, people, process, and technology.
This research is an exploratory method which Primary Data is taken in two ways for data collection process through Qualitative Primary Data during interview with internal BRI and through Quantitative Primary Data during questionnaires filling process. A secondary data is also used here to collect internal previous company reports on activation level and monthly transactions and are enhanced by literature studies.
According Kuncoro (2007, p.37), the sampling technique used in this study is Probability Sampling. Probability Sampling is the selection of sample based on selection procedures where each element of the population have equal opportunities to be chosen as a sample. Probability sampling technique used was Random Sampling. Random Sampling is the most simple and easy sampling design. Sampling can be done by using a random list to get the same equal chances to be selected into the sample.For sampling stage, it is collected 100 samples out of an unknown approximately 20,000 visa holders which are the population in this case.
Factor analysis is used in this study which is then applied to three general factors which exerts a significant influence on customer loyalty.The main advantage of factor analysis is to perform the data reduction or in other words summarizing number of variables to a smaller number. The reduction is done by looking interdependence several variables that can be used as a so-called factor discovered variables or factors are dominant or important for further analysis, such as correlated with the dependent variable. In the end the three factors undergone a correlation analysis to see the degree of relationship between them so can be studied further. However before the data collected from the questionnaires undergo factor and correlation analysis, several data testing such as Data Transformation, Validity Test, Reliability Test, and Normality Test are applied in advance.
RESULT AND DISCUSSION
After all the analysis has been carried out, it is resulted that out of the three main factors of service quality, brand equity, and marketing mix strategy that influence customer loyalty in the usage of visa credit cards, new factors were then formed. For the factor Service Quality, 3 new factors were indicated which are Service Delivery, Service Transaction, and Service Recovery. The most dominant indicator in the formation of Service Quality factor is customer’s concern (0.737) which is under the new factor Service Recovery.
For the factor Brand Equity, 2 new factors were indicated which are Brand Awareness and Brand Association. The most dominant indicator in the formation of Brand Equity factor is product performance (0.701) under the new factor Brand Association.
For the factor Marketing Mix Strategy, 2 new factors were indicated which are Marketing Competitiveness and Product Competitiveness. The most dominant indicator in the formation of Marketing Mix Strategy factor is effective marketing tools (0.661) under the new factor of Marketing Competitiveness.
The correlation analysis proves that there is a significant relationship between the 3 factors of sig value < 0.05. It also shows that the strongest relationship can be found between the variables Service Quality and Marketing Mix Strategy with a value of coefficient correlation 0.833 > 0.5.
CONCLUSION AND RECOMMENDATION
Based on the analysis that has been discussed above, it can be concluded as follows:
1. Factors under the attribute of service quality that influence customer loyalty in the usage of visa credit cards can be grouped into three factors, which are: (1) service delivery factor that consists of employee appearance, punctuality of service, employees alertness, and employees credibility and competency , (2) service transaction factor that consists of prioritize customer’s importance, physical facilities, and security transactions, and (3) service recovery factor that consists of concerned towards customers, accuracy of service, immediate responds towards complaints, and employee alertness.
2. Factors under the attribute of brand equity that influence customer loyalty in the usage of visa credit cards can be grouped into two factors, which are: (1) Brand Awareness factor that consists of brand recognition, brand recall, behavioral perspective, customer benefits, and product characteristics (2) brand association factor that consists ofattitudinal perspective, lifestyle, and product performance.
3. Factors under the attribute of marketing mix strategy that influence customer loyalty in the usage of visa credit cards can be grouped into two factors, which are: (1) Marketing Competitiveness factor that consists of affordable price, effective promotion tools, simplicity of procedures, and physical facilities and (2) Product Competitiveness is represented by the variables; superior product, easy access, and employees hospitality.
4. There is a significant relationship of a very strong level between the three factors of service quality, brand equity, and marketing mix strategy that influence customer loyalty in the usage of visa credit cards.
From the conclusions that have been described above, the author is up on some suggestions as below:
1. In terms of service quality, the company should improve on its service accuracy and put more concern towards customers which makes up the most dominant factor of service quality under the new factor service recovery by giving more regular trainings to the service providers to improve its transactions during service delivery.
2.In terms of brand equity, the company should increase the number of merchants associated with visa credit cards that matches the visa card holders’ lifestyle. As visa credit card holders are mostly of age 25 and above, various restaurants, coffee shops, beauty centre (gym, salons, fitness centers), and other entertainment industries (cinemas, tour and travel) can be an example of targeted merchants to be associated with visa.
3.In terms of marketing mix strategy, the company should also put in mind to only give offers to merchants of latest trend that again aligns the visa holders’ lifestyle such as in association with clubs or other hangout places that people of age 25 and above visits after office hours. Also, BRI may consider improving its promotion tools such as providing more discounts or offerings to the targeted merchants and this information concerning new offers can be delivered via online emails/texts that are of recent mobile updates.
4.The company is advised to continuously improve and pay attention to these 3 important factors of service quality, brand equity, and marketing mix strategy of visa credit card as they are very significantly related to each other. The improvements therefore should be made simultaneously towards the 3 factors in order to achieve significant increase in the activation level of visa credit cards.
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