The Effect Of Service Failure And Service Recovery On Customer Loyalty Firstmedia Service Users With Customer Confidence As Intervening Variables

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The Effect of Service Failure and Service Recovery on Firstmedia Customer Loyalty: Customer Trust as Intervening Variable

Introduction

In today's digital age, the internet has become an essential part of our lives, and Indonesia is no exception. With the rapid increase in internet users, especially with the implementation of work-from-home policies due to the COVID-19 pandemic, the competition among internet service providers has intensified. Firstmedia, one of the leading internet service providers in Indonesia, must provide the best service and build customer trust to achieve customer loyalty. This study aims to analyze the effect of service failure and service recovery on Firstmedia's customer loyalty, with a focus on customer trust as an intervening variable.

The Importance of Customer Loyalty

Customer loyalty is a crucial aspect of any business, and it arises when consumers are able to compare their hopes with the reality received, especially in dealing with service failure. Effective service recovery after failure is the key to maintaining customer confidence in the company. In the context of Firstmedia, customer loyalty is essential to retain customers and increase revenue. With the increasing competition in the market, Firstmedia must focus on providing excellent service and building trust with its customers to achieve loyalty.

Research Methodology

This study is included in the associative research category, and the focus population is Firstmedia customers in Medan who have subscribed in the past year. A total of 1,382 respondents were selected, and using the Slovin formula, a sample size of 310 respondents was determined. The sampling method used is purposive sampling, which allows researchers to choose respondents based on certain criteria that are relevant to research.

Data analysis was carried out using Partial Least Squares Structural Equation Modeling (PLS-SEM) with the help of the SmartPLS program. This approach allows researchers to test the relationship between variables simultaneously.

Research Results

The results of this study showed that:

  1. Service Failure and Customer Confidence: Service failure has a negative and significant effect on customer confidence. This means that when customers experience service failure, their level of trust in the company will decrease. This finding is consistent with previous studies that have shown that service failure can lead to a decrease in customer trust.

  2. Recovery of Good Service and Customer Confidence: Recovery of good service and customer confidence has a positive and significant influence on customer loyalty. When a company is able to improve services after failure, this can rebuild trust and ultimately increase customer loyalty. This finding highlights the importance of effective service recovery in maintaining customer loyalty.

  3. Indirect Effect of Service Failure on Customer Loyalty: Indirectly, service failure also has a negative effect on customer loyalty through customer trust. In other words, if customer trust decreases due to service failure, this will have a negative impact on their loyalty. This finding suggests that service failure can have a long-term impact on customer loyalty.

  4. Service Recovery and Customer Loyalty: Service Recovery has a positive effect on customer loyalty through customer trust. This shows that effective recovery can restore customer confidence and encourage loyalty. This finding emphasizes the importance of effective service recovery in maintaining customer loyalty.

Conclusion

In an increasingly connected world, internet service providers such as Firstmedia must understand that service failure is unavoidable. However, the determinant is how the company responds to the failure. Through proper service recovery and building trust, companies can maintain customer loyalty in the midst of tight competition. This study provides important insights for Firstmedia's management and other service providers to focus on improving the quality of services and responsive recovery to ensure customer satisfaction and loyalty.

Implications for Firstmedia

This study has several implications for Firstmedia's management. Firstly, the company must focus on improving the quality of services to reduce the likelihood of service failure. Secondly, the company must develop effective service recovery strategies to rebuild trust with customers. Finally, the company must prioritize building customer trust through transparent communication and consistent service delivery.

Limitations of the Study

This study has several limitations. Firstly, the study was conducted in Medan, and the findings may not be generalizable to other regions. Secondly, the study only focused on Firstmedia customers, and the findings may not be applicable to other internet service providers. Finally, the study only examined the effect of service failure and service recovery on customer loyalty, and other factors may also influence customer loyalty.

Future Research Directions

This study provides several avenues for future research. Firstly, future studies can examine the effect of service failure and service recovery on customer loyalty in other industries. Secondly, future studies can investigate the role of other factors, such as customer satisfaction and perceived value, in influencing customer loyalty. Finally, future studies can explore the impact of service failure and service recovery on customer loyalty in different cultural contexts.
Frequently Asked Questions (FAQs) about the Effect of Service Failure and Service Recovery on Firstmedia Customer Loyalty

Q: What is the main objective of this study?

A: The main objective of this study is to analyze the effect of service failure and service recovery on Firstmedia's customer loyalty, with a focus on customer trust as an intervening variable.

Q: What is the significance of customer loyalty in the context of Firstmedia?

A: Customer loyalty is crucial for Firstmedia as it helps the company to retain customers, increase revenue, and maintain a competitive edge in the market.

Q: What is the research methodology used in this study?

A: This study uses a quantitative approach, specifically Partial Least Squares Structural Equation Modeling (PLS-SEM), to analyze the data collected from 310 respondents who are Firstmedia customers in Medan.

Q: What are the key findings of this study?

A: The key findings of this study are:

  1. Service failure has a negative and significant effect on customer confidence.
  2. Recovery of good service and customer confidence has a positive and significant influence on customer loyalty.
  3. Indirectly, service failure also has a negative effect on customer loyalty through customer trust.
  4. Service Recovery has a positive effect on customer loyalty through customer trust.

Q: What are the implications of this study for Firstmedia's management?

A: The study has several implications for Firstmedia's management, including:

  1. Improving the quality of services to reduce the likelihood of service failure.
  2. Developing effective service recovery strategies to rebuild trust with customers.
  3. Prioritizing building customer trust through transparent communication and consistent service delivery.

Q: What are the limitations of this study?

A: The study has several limitations, including:

  1. The study was conducted in Medan, and the findings may not be generalizable to other regions.
  2. The study only focused on Firstmedia customers, and the findings may not be applicable to other internet service providers.
  3. The study only examined the effect of service failure and service recovery on customer loyalty, and other factors may also influence customer loyalty.

Q: What are the future research directions based on this study?

A: The study provides several avenues for future research, including:

  1. Examining the effect of service failure and service recovery on customer loyalty in other industries.
  2. Investigating the role of other factors, such as customer satisfaction and perceived value, in influencing customer loyalty.
  3. Exploring the impact of service failure and service recovery on customer loyalty in different cultural contexts.

Q: What are the practical implications of this study for Firstmedia's customers?

A: The study highlights the importance of effective service recovery and building customer trust for Firstmedia's customers. Customers can expect Firstmedia to prioritize their needs, provide transparent communication, and deliver consistent service to maintain their loyalty.

Q: What are the theoretical implications of this study?

A: The study contributes to the existing literature on service failure and service recovery by providing insights into the effect of service failure and service recovery on customer loyalty, with a focus on customer trust as an intervening variable. The study also highlights the importance of customer trust in maintaining customer loyalty.