Strategies to Increase Customer Loyalty on Brands (Case Study on Nayam Brand on Grabfood)

Ridho Febrianto Wibowo

Universitas Pancasila,Indonesia

rifewi@gmail.com

Keywords

Abstract

Service Quality, Product Quality, Relationship Marketing Customer Loyalty, Customer Satisfaction.

The use of technology in business is often utilized as a strategy to obtain information related to marketing, sales, and consumer interest. This study aims to analyze the effect of service quality, product quality, relationship marketing, and consumer satisfaction on consumer loyalty of the Nayam brand on the Grabfood platform. Previous research has examined the relationship between these factors, but this study provides a more comprehensive understanding by integrating them in the context of the online food delivery industry. This study utilizes a causal research design to identify causal relationships between variables. Data collection methods include literature studies, field surveys, and questionnaires. The operational variables are service quality, product quality, relationship marketing, customer satisfaction, and customer loyalty. Sampling was conducted using consecutive sampling with a total of 110 respondents in the Jabodetabek area who had ordered Nayam using the Grabfood food delivery service. Data analysis was conducted using PLS-SEM and SWOT analysis. The results showed that customer satisfaction and product quality have an influence on customer loyalty. On the other hand, service quality has an influence on customer satisfaction. Relationship marketing was found to have an indirect positive influence in building relationships between owners and customers. The findings of this study make a practical contribution to business owners by offering a better understanding of how to retain existing customers, increase revenue, improve marketing efficiency, build a good brand reputation, and create a competitive advantage in the market. From a theoretical perspective, this study contributes to the development of a scientific understanding of customer behavior, the factors that influence it, and its impact on business success.

Corresponding Author: Ridho Febrianto Wibowo

E-mail: rifewi@gmail.com

INTRODUCTION

The use of technology in a business is usually used as a strategy in obtaining information such as marketing, sales, and consumer interest. Increasingly sophisticated technology makes buying and selling transactions easier so that many businessmen also promote their products in the midst of this millennial business.

Nayam is one of the businesses engaged in the food and beverage (F&B) sector which began operating in July 2019. Nayam takes advantage of technological advancements by making online sales using the Grabfood application. For now, Grabfood is familiar to urban people, especially in Jakarta, so this service provider can provide sales benefits for Nayam. For Nayam, it was the right decision to join online food delivery (Grabfood) so that Nayam was able to take advantage of the moment of large-scale social restrictions (PSBB) in the Greater Jakarta area which had a positive impact in increasing sales by 1794% in 2020 from 2019, by 35.31% in 2021 from 2020 and experiencing a slight decrease of 25.12% in 2022 from 2021.

Based on Nayam's competitive positioning data from 2019 to 2022, it can be seen that each online food delivery platform has quite tight competition, but the Grabfood platform finds the largest average of around 55%, which means that the market share is still dominated by the Grabfood platform.

Each platform has a different marketing and marketing relationship for each user, but Grabfood still provides a relevant and profitable marketing scheme for its users, so loyal customers are able to provide stability to Nayam's sales.

Picture 1. Data Competitive Positioning

Source: Nayam Competitive Positioning Tracker

Nayam develops into Market Leader Categories of fried chicken processed in Greater Jakarta and trusted by customers in Indonesia. This success was obtained because Nayam prioritizes customer comfort and satisfaction so that it gets loyalty from many customers. As stated by Sunyoto that Consumer satisfaction is one of the reasons that consumers decide to shop somewhere. This is because if consumers are satisfied, they will buy it back or give recommendations to other potential customers (Sunyoto, 2019).

In addition to comfort and satisfaction, service to Nayam customers is also something that must be considered because Service quality which is given the nature of collaborating with platform used is Grabfood. Based on data competitive positioning that Nayam owns, Nayam wants to maintain their sales by optimizing Relationship Marketing, Product Quality and Service quality. According to Hasan in his research, Relationship Marketing, Product Quality, service quality, and customer satisfaction are factors that affect Customer Loyalty (Hasan, 2015). Other studies related to these factors will be discussed and will be hypotheses in this study as follows:

Meliana in her research discusses the variables Relationship Marketing which has an indirect positive influence that can build Relationship Marketing between owner and consumers (Meliana, 2022).

H1: Relationship Marketing has an effect on Customer Satisfaction

H2: Relationship Marketing affects Customer Loyalty

On the other hand, Komara in his research discusses product quality which is closely related to customer satisfaction (Komara, 2021). This hypothesis was also put forward by Bailia in his research which stated that product quality has a positive effect on consumer satisfaction (Bailia, 2014). These results provide evidence that consumer experience in buying a product will result in consumer judgment of the product.

H3: Product Quality has a positive effect on Customer Loyalty

H4: Product Quality has a positive effect on Customer Loyalty

In Tjiptono's research which discusses customer satisfaction It is stated that the consumer satisfaction index measured by the service quality dimension is tangible, Empathy, Reliability, responsiveness and Assurance has an influence on consumer satisfaction (Tjiptono, 2015). This was emphasized again by Nurcahya in her research which showed that simultaneously the variable of service quality had a significant effect on customer satisfaction (Nurcahya, 2015). Bucak in his research also stated that simultaneously there is an influence between service quality and consumer satisfaction (Bucak, 2014).

H5: Service Quality has a positive effect on Customer Satisfaction

H6: Service Quality has a positive effect on Customer Loyalty

Customer loyalty is the commitment that customers have to a brand, product and company that is reflected in attitude. Customer loyalty or also known as consumer loyalty or Customer Loyalty It is closely related to brand loyalty which can sometimes become synonymous in certain circumstances (Tjiptono & Chandra, 2016).

H7: Customer Satisfaction has a positive effect on Customer Loyalty

Based on the presentation of the above studies, the purpose of this study is to find out and analyze whether service quality, product quality, and relationship marketing affect customer satisfaction, whether service quality, product quality, and relationship marketing affect customer loyalty. This research also aims to formulate the right strategy to increase customer loyalty in Nayam on Grabfood. The results of this research are expected to be able to make a practical contribution for business people to provide a better understanding of how to retain existing customers, increase revenue, improve marketing efficiency, build a good brand reputation, and create a competitive advantage in the market. This research is also expected to be able to make a theoretical contribution to the development of science by providing a better understanding of customer behavior, the factors that influence it, and its impact on business success.

Previous studies have examined the influence of service quality, product quality, relationship marketing, and customer satisfaction on customer loyalty. Meliana's research discussed how relationship marketing has an indirect positive influence in building a relationship between the owner and customers (Meliana, 2022). Komara's research found that product quality is closely related to customer satisfaction (Komara, 2021), while Bailia's research indicated that product quality has a positive effect on consumer satisfaction (Bailia, 2014). Tjiptono's and Nurcahya's research has shown that service quality dimensions such as tangibility, empathy, reliability, responsiveness, and assurance have an influence on customer satisfaction (Tjiptono, 2015; Nurcahya, 2015). Additionally, Bucak's research stated that there is an influence between service quality and consumer satisfaction (Bucak, 2014).

This study aims to provide a more comprehensive understanding of the factors that influence customer loyalty on the Nayam brand on the Grabfood platform. The novelty of this research lies in the integration of service quality, product quality, relationship marketing, and customer satisfaction as predictors of customer loyalty, specifically in the context of the Nayam brand on the Grabfood platform. By exploring these relationships, the study offers a unique perspective on customer loyalty dynamics within the online food delivery industry.

The findings of this study are expected to provide practical contributions for business owners by offering a better understanding of how to retain existing customers, increase revenue, improve marketing efficiency, build a good brand reputation, and create a competitive advantage in the market. From a theoretical perspective, this research contributes to the development of the scientific understanding of customer behavior, the factors that influence it, and its impact on business success. The insights gained from this study can inform future research in the field of customer loyalty, particularly in the context of online food delivery platforms.

RESEARCH METHODS

This research belongs to the type of causal design, which is to identify the causal and causal relationships between variables, researchers track the actual type of facts to help understand and predict the relationship (Ferdinand, 2006). The data collection methods in this study include literature studies, field surveys, and questionnaires.

Literature studies are carried out from previous studies that will be used to explain problem analysis, conduct a basic understanding of theories and results to reveal hypotheses to be tested which will then be developed a form of research model to test the predetermined research hypothesis.

The operation of the research variables is needed to determine the types and indicators of the variables related to this study. In more detail, the operational variables in this research plan can be seen in table 1.

Table 1. Operational Variables

No.	Variable	Dimension	Indicators	Code	Scale
1	Relationship marketing (X1) (Kotler & Keller, 2016)	Belief	Confidence that the company will deliver on its promises and commitments	RM-T1	1 - 5
		Communication	Communication between the company and the customer takes place effectively	RM-T2	1 - 5
2	Product Quality (X2) (Kotler & Keller, 2016)	Conformity	The product meets the promised specifications	PQ-C1	1 - 5
		Aesthetic	The appeal of the product to the five senses	PQ-C2	1 - 5
		Perceived quality	Consumer perception of product quality	PQ-C3	1 - 5
3	Service Quality (X3) (Tjiptono, 2015), (Liang, 2018), (Rahman, 2020)	Reliability	Neat and precise menus and images	SQ-R1	1 - 5
		Reliability	Fast in the booking process	SQ-R2	1 - 5
		Reliability	Menu availability	SQ-R3	1 - 5
		Responsiveness	Understanding customer needs	SQ-RS1	1 - 5
		Responsiveness	Understand the problems faced by customers	SQ-RS2
		Responsiveness	Providing solutions to customer problems	SQ-RS3
		Assurance	Accuracy of the solution provided to the customer in case of an error	SQ-A1
		Tangibles	Neat product layout	SQ-T1
		Tangibles	Neat and professional packaging	SQ-T2
		Empathy	Willing to handle customer complaints to the end	SQ-E1
		Empathy	Understanding customer needs	SQ-E2
4	Customer Satisfaction (Y) (Zeithaml, 2021)	Customer Satisfaction	Able to provide overall customer satisfaction	CS-1
		Customer Satisfaction	Able to provide the suitability of the products and/or services offered with customer expectations	CS-2
		Customer Satisfaction	Able to provide customer satisfaction during customer relationships (experience).	CS-3
5	Customer Loyalty (Z) (Zeithaml, 2021)	Customer Loyalty	The desire to continue the subscription with a long term in Nayam.	CL-1
		Customer Loyalty	Steadiness to buy repeatedly at Nayam.	CL-2
		Customer Loyalty	Recommend or suggest to others to shop at Nayam.	CL-3

To analyze the data, the researcher used a PLS-SEM analysis with a population covering the Greater Jakarta area that had ordered Nayam more than 2 times using the Grabfood food delivery service. The research sample was taken using consecutive sampling with 110 respondents. Validity tests and reliability tests were carried out to test the scanner with the parameters in Table 2 and Table 3. The instrument used is a likert scale with a value of 1 to 5.

Table 2. Validity Test Parameters in PLS Measurement Model

Validity Test	Parameters	Rule of Thumbs
Convergent	Loadings factors	>0.70
	Average variance extracted (AVE)	>0.50
	Communality	>0.50
Discrimination	AVE Roots and Correlation	AVE roots> correlation
	Latent variables	Latent variables
	Cross loading	>0.7 in a single variable

Table 3. Reliability Test in PLS Measurement Model

Reliability Test	Composite Reliability	>0.70
	Cronbach's Alpha	>0.60

In this study, in order to identify internal and external factors that can affect the performance or results of an entity, the researcher uses SWOT analysis (Al-Tit, 2021) Each of the internal and external factors will then be assessed by IFE matrix (Internal Factor Evaluation-EFE Matrix) and EFE (External Factor Evaluation-EFE Matrix) will then generate an IE matrix to find out the company's current position and what strategy is right for the company to develop.

To evaluate and compare various alternative strategies resulting from SWOT analysis (Strengths, Weaknesses, Opportunities, Threats), researchers using QSPM analysis tools (Quantitative Strategic Planning Matrix where alternative strategies will be evaluated quantitatively based on relevant internal and external factors that have been identified in the SWOT analysis (David, 2021)

RESULTS AND DISCUSSION

The following is an overview list of respondents who have contributed to the conduct of this study:

Table 4. Research Respondents

Gender	18 - 25 Years	26 - 35 Years	Over 35 Years	Sum	Percentage
Man	13	27	5	45	38.14%
Woman	13	58	2	73	61.86%
Total				118

The convergence validity test was carried out using SmartPLS software with the PLS-SEM method and the rule of thumb, then the data was generated in Table 5 and Figure 2.

Table 5. Result Convergent Validity

Variable	Outer loadings
CL1 <- CL	0.939
CL2 <- CL	0.933
CL3 <- CL	0.887
CS1 <- CS	0.901
CS2 <-CS	0.817
CS3 <- CS	0.878
PQ-C1 <- PQ	0.900
PQ-C2 <- PQ	0.902
PQ-C3 <- PQ	0.900
RM-T1 <- RM	0.978
RM-T2 <- RM	0.978
SQ-A1 <- SQ	0.882
SQ-E1 <- SQ	0.868
SQ-E2 <- SQ	0.860
SQ-R1 <-SQ	0.813
SQ-R2 <- SQ	0.826
SQ-R3 <- SQ	0.870
SQ-RS1 <- SQ	0.862
SQ-RS2 <- SQ	0.858
SQ-RS3 <- SQ	0.827
SQ-T1 <- SQ	0.729
SQ-T2 <- SQ	0.829

Picture 2. AVE Results

Based on the table and graph above, it can be seen that the factor analysis test with the convergent validity test produces factor values Loading Each indicator in each construct has a value greater than 0.7 and AVE greater than 0.5 refers to the parameters mentioned by Hair, J et al. So it can be concluded that all indicators of the question have the status of valid (Hair et al., 2019).

For the validity test of discrimination, the value used is the value of cross loading. An indicator is said to meet the validity of discrimination if the value of cross loading The indicator of the variable is greater than other variables (Abdillah, 2015).

Table 6. Result Cross Loading

Variable	CL		CS		PQ		RM		SQ
CL1		0.939		0.735		0.603		0.369		0.608
CL2		0.933		0.697		0.566		0.349		0.611
CL3		0.887		0.795		0.677		0.416		0.695
CS1		0.737		0.901		0.720		0.339		0.794
CS2		0.490		0.817		0.501		0.351		0.683
CS3		0.852		0.878		0.598		0.349		0.681
PQ-C1		0.573		0.637		0.900		0.335		0.739
PQ-C2		0.567		0.592		0.902		0.294		0.696
PQ-C3		0.665		0.674		0.900		0.377		0.774
RM-T1		0.407		0.414		0.386		0.978		0.495
RM-T2		0.395		0.367		0.343		0.978		0.436
SQ-A1		0.604		0.674		0.696		0.421		0.882
SQ-E1		0.557		0.673		0.738		0.364		0.868
SQ-E2		0.664		0.756		0.768		0.391		0.860
SQ-R1		0.542		0.720		0.719		0.382		0.813
SQ-R2		0.503		0.693		0.596		0.423		0.826
SQ-R3		0.642		0.736		0.769		0.410		0.870
SQ-RS1		0.601		0.679		0.760		0.435		0.862
SQ-RS2		0.501		0.641		0.653		0.414		0.858
SQ-RS3		0.570		0.662		0.633		0.365		0.827
SQ-T1		0.568		0.698		0.555		0.369		0.729
SQ-T2		0.642		0.760		0.648		0.418		0.829

In the results of the cross loading table above, the marked value is the relationship between the correlation value of the variable and each indicator which shows the highest value when compared to the correlation value between other variables. For this reason, based on the above values, it can be concluded that all indicators that have been tested are valid.

For reliability tests, the parameters used to assess reliability are composite realibility. A measuring tool is considered reliable if it has a score composite reliability >0.7 (Hair et al., 2019).

Table 7. Result Composite reliability

Variable	Cronbach's alpha	Composite reliability (rho_a)	Composite reliability (rho_c)	AVE
CL	0.909	0.910	0.943	0.846
CS	0.832	0.836	0.900	0.750
PQ	0.884	0.884	0.928	0.811
RM	0.955	0.955	0.978	0.957
SQ	0.958	0.959	0.963	0.705

The results of composite reliability in table 4 show that all variables of this study are reliable.Use open tables and tidy up

To measure reliability, the researcher used other parameters, namely Cronbach's Allpha where the variable is declared reliable if it has a value of Cronbach's Alpha >0.6 (Hair et al., 2019).

Picture 3. Result Cronbach's Alpha

The results of Cronbach's Alpha in the graph above show that all the variables of this study are reliable.

From the results of data processing, R-Square results are obtained as shown in Table 8.

Table 8. R-Square Results

Variable	R-Square	R-Square Adjusted
Customer Loyalty	0.681	0.669
Customer Satisfaction	0.694	0.686

The table above shows that:

1. The Customer Loyalty variable is 68% influenced by the Customer Satisfaction variable. And the other 32% was influenced by other variables that were not used in this study.

2. The Customer Satisfaction variable was 69% influenced by the Customer Loyalty variable and the other 31% was influenced by other variables that were not used in this study.

The results of the data analysis are contained in Table 9 where the results are obtained that the relationship between the Customer Satisfaction variable and Customer Loyalty has a P-Value of 0.000 so that it can be concluded that the variable has a significant effect. The Product Quality variable on Customer Loyalty also had a significant effect with a P-value of 0.018. There is also a significant influence on the relationship between Service Quality variables on Customer Satisfaction which has a P-value of 0.000. Meanwhile, the relationship between Product Quality to Customer Satisfaction, Marketing Relationship to Customer Loyalty, Marketing Relationship to Customer Satisfaction, and Service Quality to Customer Loyalty each had P-values of 0.288, 0.068, 0.492, and 0.147 which showed that these variables had no significant effect.

Table 9. Summary of Hypothesis Test

Hypothesis	P-value (0.05)	Information
Hypothesis 1: Relationship Marketing has an effect on Customer Satisfaction	0.492	H1 Rejected
Hypothesis 2: Relationship Marketing has a positive effect on Customer Loyalty	0.068	H2 Rejected
Hypothesis 3: Product Quality has a positive effect on Customer Satisfaction	0.288	H3 Rejected
Hypothesis 4: Product Quality has a positive effect on Customer Loyalty	0.018	H4 Accepted
Hypothesis 5: Service Quality has a positive effect on Customer Satisfaction	0.000	H5 Accepted
Hypothesis 6: Service Quality has a positive effect on Customer Loyalty	0.147	H6 Rejected
Hypothesis 7: Customer Satisfaction has a positive effect on Customer Loyalty	0.000	H7 Accepted

In determining the internal and external factors of SWOT, the researcher conducted a discussion with Nayam Top Management and produced SWOT and TOWS in Table 10.

Table 10. SWOT TOWS Analysis

Internal Factors External Factors	Strengths - S	Weakness - W
	· Special chicken marinade recipe and variety of toppings · Professional workforce is expert in food processing · Coverage outlet area	· Lots of competitors · Using quality raw materials so that the price is more expensive · Businesses rely heavily on online delivery platforms
Opportunities - O	SO - Strategies	WO - Strategies
· Opportunity to expand business offline · Professional workforce is expert in food processing	· Conducting campaigns with KOLs in parallel to expand the coverage area to get attention from new customers, thereby increasing the opportunity to get loyal customers. · Soft selling by holding a free pop up cooking class.	· Communicating to consumers massively a menu that has quality raw materials · It is increasingly convincing to expand business to offline stores (dine in)
Threats - T	ST - Strategies	WT-Strategies
· The decline in the trend of online food business · Many competitors slammed the price · The price of raw materials tends to continue to increase	· Convincing consideration to open an offline store (dine in) · Maintaining seasonal menu variants · Looking for more efficient suppliers	· Renegotiate with existing suppliers to get the best margins, and open up opportunities for new suppliers · Convincing consideration to open an offline store (dine in)

The SWOT analysis that has identified each internal factor and external factor will be assessed using the IFE (Internal Factor Evaluation-EFE Matrix) and EFE (External Factor Evaluation-EFE Matrix) matrices, the results of which can be seen in Table 11 and Table 12.

Table 11. IFE Matrix

Internal Factors	Information	Weight	Rating	Total Score
Strength	Special chicken marinade recipe and variety of toppings	0,32	4	1,28
	Professional workforce is expert in food processing	0,22	4	0,88
	Coverage outlet area	0,14	3	0,42
Weakness	Lots of competitors	0,12	4	0,48
	Using quality raw materials so that the price is more expensive	0,08	1	0,08
	Businesses rely heavily on online delivery platforms	0,12	3	0,36
SUM		1,00		3,5

Table 12. EFE Matrix

External Factors	Information	Weight	Rating	Total Score
Opportunity	Opportunity to expand business offline	0,28	4	1,12
	Professional workforce is expert in food processing	0,22	3	0,66
Threats	The decline in the trend of online food business	0,12	2	0,44
	Many competitors slammed prices	0,14	3	0,42
	The price of raw materials tends to continue to increase	0,14	3	0,42
SUM		1		3,06

From the results of IFE matrix analysis and EFE matrix analysis, the Nayam IFE matrix has a total score of 3.50 while the Nayam EFE matrix has a total score of 3.06. The position of Nayam in the IE matrix can be described as follows:

	Strong (3.0 - 4.4)	Medium (2.0 - 2.99)	Weak (1.0 - 1.99)
Height (3.0 - 4.4)	I	II	III
Medium (2.0 - 2.99)	IV	V	VI
Weak (1.0 - 1.99)	VII	VIII	IX
	Sell and Divest
	Preserve
	Growth

Picture 4. IE Matrix

Based on the IE matrix, the position of Nayam is in quadrant I. This position indicates that Nayam is in a grow and built position. Strategies that can be implemented include intensive (market development and product development) or integrative (backward integration, forward integration, and horizontal integration) can be the most appropriate choice. However, the most appropriate strategy for Nayam's current condition is an intensive strategy that includes market development and product development, this is also related to the results of the hypothesis test above.

The following results of the SWOT analysis evaluation using QSPM can be shown in Table 13.

Table 13. QSPM (Quantitative Strategic Planning Matrix)

Key Factors	Weight	Alternative Strategy
		Product Development		Market Development
		AXLE	BAG	AXLE	BAG
CHANCE
1. Can still expand business offline	0,28	3	0,84	4	1,12
2. Opening more branches because it suits the tongue of the Indonesian people	0,22	4	0,88	4	0,88
THREAT
1. The decline of the trend of online food business	0,22	2	0,44	2	0,44
2. Many competitors slammed the price	0,14	3	0,42	3	0,42
3. Raw material prices tend to continue to increase	0,14	3	0,42	4	0,56
	1		3,00		3,42
STRENGTH
1. Many variants of toppings	0,32	4	1,28	4	1,28
2. Professional workforce who are already experts in food processing	0,22	4	0,88	3	0,66
3. Outlets have spread in Greater Jakarta	0,14	2	0,28	4	0,56
DEBILITATION
1. Very many competitors	0,12	4	0,48	3	0,36
2. Using quality raw materials so that the price is more expensive	0,08	3	0,24	3	0,24
3. Businesses rely heavily on online delivery platforms	0,12	2	0,24	3	0,36
	1		3,40		3,46
			6,40		6,88

Based on the results of the QSPM table, each alternative strategy has a different total attractive score (TAS). Product Development with a TAS value of 6.40. Market Development collected a TAS score of 6.88. Referring to the total results of TAS for each alternative, the main alternative strategy that can be applied by Nayam is Market Development and for the application of the second alternative strategy, namely Product Development because the results of the value of alternative strategies tend to be high and only have a slight difference, namely 0.48.

CONCLUSION

Based on the results of this study, it can be concluded that there are several factors that affect Customer Loyalty and Customer Satisfaction. Customer Satisfaction and Product Quality have proven to have a significant influence on Customer Loyalty. High customer satisfaction and good product quality increase customer loyalty. On the other hand, the Service Quality and Relationship Marketing factors do not have a significant influence on Customer Loyalty. This is due to the reliance on third-party platforms, such as Grabfood, which mediate the customer service experience, as well as suboptimal relationship marketing efforts.

The factor that affects Customer Satisfaction is Service Quality, which shows that services that meet customer expectations contribute significantly to their satisfaction. However, Product Quality and Relationship Marketing do not significantly affect Customer Satisfaction. Even though there are problems with product quality, customers who have been in contact with Nayam for a long time are still satisfied. In addition, the lack of good Relationship Marketing efforts also results in a lack of impact on customer satisfaction. This research provides useful insights for improving business strategies, especially in strengthening service aspects and marketing relationships to increase customer loyalty and satisfaction.

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