The Role of Digital Customer Experience on Customer Loyalty
Sukardi Silalahi and Popy Rufaidah
Faculty of Economics and Business, Universitas Padjadjaran, Jl. Dipati Ukur No. 46, Bandung 40132, Indonesia
Keywords: Digital Customer Experience, Customer Loyalty, Structural Equation Modeling.
Abstract: The digital era has greatly affected the business focus either in Indonesia or overseas. It creates the
effectiveness and simplicity of the business rule then the customers come as the cue of its succeeding. The
telecommunications industry as a leader of digital transformation, therefore, tends to point out this new term
of customer experience, namely digital customer experience (DCX). In conjunction with customer loyalty,
customer experience shares a positive relationship. The management of customer experience tends to improve
the relationships with customers and build customer loyalty. But the issue of the digital term does not tackle
yet in the role of the customer experience on customer loyalty. So, this paper aims at discovering the
relationship between digital customer experience as an indepeendent variable amd customer loyalty as the
dependent variables. The study employs 598 active mobile data users of Telkomsel from six cities by using
structural equation model to analyze the data.The results define that digital service experience, digital image
experience, digital touch point experience, and digital broadband experience are factors determined digital
customer experience. In conclusion, either indirect or direct effect of digital customer experience, it has
significantly affected the customer loyalty.
1 INTRODUCTION
The development of technology is now increasing
rapidly towards the term of digitalization. This digital
platform has made people move to a new lifestyle that
engages them closer with the digital devices. It
affected to the rapid cultural shifting not only in an
information delivery but also the transactional
business, through such a social media application.
This media capabilities lead people to receive the
information or transaction faster.
The businesses should tend to be more adaptable
with the new culture of people’s lifestyle as
customers. This strategy has been implemented by
one of the telecommunication industry as a leading
company in the digital revolution in Indonesia since
2011. It bears the digital products such as digital
music, digital game, digital movie, digital money, etc.
Nevertheless, those are actually not enough. The
revolution should reach every line of effort for
efficiencies. As Calhoun (2001) predicted that the
benefit is reached for the annual growth or even cost
efficiencies about 5 to 10 percent if they well-
implemented that digitalization. But, when it fails
then Silalahi and Rufaidah (2017) study found the
phenomenon of the digital disruption in a year ahead.
Therefore, Silalahi and Rufaidah (2017) released the
measurement model for this digital customer
experience.
In conjunction with customer loyalty, that is still
questionable for customer experience in this
digitalization era. Interestingly, customer experience
(Kunle Adeosun and Ganiyu, 2012; Chauhan and
Manhas, 2014) without digital term shares a positive
relationship with their loyalties. So, this study tries to
tackle this relationship on digital customer experience
to the customer loyalty.
The subsequent explanation of this paper is
divided into four sections. It is started from the
literature review section, then explaining the
methodology research as materials and methods
section, after that the results and discussion section
and finally the conclusions of the research.
2 LITERATURE REVIEW
2.1 Digital Customer Experience
Digital customer experience is a new construct that
still focusing on customer experience (Pine and
Gilmore, 1998; Teixeira et al., 2012) or service
468
Silalahi, S. and Rufaidah, P.
The Role of Digital Customer Experience on Customer Loyalty.
In Proceedings of the 1st International Conference on Islamic Economics, Business, and Philanthropy (ICIEBP 2017) - Transforming Islamic Economy and Societies, pages 468-472
ISBN: 978-989-758-315-5
Copyright © 2018 by SCITEPRESS – Science and Technology Publications, Lda. All rights reserved

experience (Klaus and Maklan, 2012; Dube and
Helkkula, 2015).
Pine and Gilmore (1998) argue that the company's
products and services must act as a media for
customer experience. Companies must be able to give
customers exceptional value. According to Teixeira
et al. (2012), customer experiences are the core and
root to gain a continuous competitive advantage.
Dube and Helkkula (2015) suggest that service
experience sees the concept of indirect experience
and direct experience as a piece of the service
experience. Klaus and Maklan (2012) consider
service experience and customer experience as a unity
concept because they perceive that customer’s
perspective is a base in formulating the right scale for
evaluating service experience. On the other side,
Klaus (2015) adds that customer experience
management is one of a paramount point in general
strategy especially for industries engaged in service.
According to Klaus (2015), customer experience
is more complex than customer satisfaction and
service quality. Through several studies, Klaus
(2015) formulated the dimensional of customer
experience quality consist of post-purchase
experience, brand experience, also service
experience. All three customer
experiencemeasurements have a positive and
significant impact on customers’ behavior (Klaus,
2015). Silalahi and Rufaidah (2017) modified the
dimensions of the research undertaken by Klaus
(2015) to obtain a measurement of digital customer
experience. Its measurements of digital customer
experience are digital service experience, digital
image experience, digital touchpoint experience, and
digital broadband experience. Therefore, this study
uses dimensions of Silalahi and Rufaidah (2017).
2.2 Customer Loyalty
Customer loyalty is a Combination of intention to re-
purchase the service and favorable attitude of
customer toward the service and website mobile
commerce (Kim et al., 2004 and Lin et al., 2006).
According to Bell et al. (2005), Customer loyalty is
the level of commitment regarding the association
and customer’s expectation to hold on. Customer
loyalty also defined as a quality of the connection
between the retailer’s responsibility to the
manufacturer and repeat purchasing behavior of the
retailer (Sramek, 2008). Sramek et al. (2008) revealed
that customer loyalty can be seen from how loyal
customers promote the value of companies and
shareholders. Salanova (2005) states that customer
loyalty is a behavioral construct andrefers to customer
behavior intentions as measured by the likelihood of
returning customers to the company. According to
Zeithaml et al. (1996) in numerous ways, loyalty
might be showed; for example by expressing a
preference for a company over others, by proceeding
to buy from it, or by expanding business with it in the
future.
2.3 Integrated Model
Calhoun (2001) said that successful organizations is
the one who focus on improvement of total customer
experience and lasting customer loyalty. In fact,
according to the previous study, customer experience
and customer loyalty as two different construct share
a positive relationship. Chauhan and Manhas (2014)
said that the objective on managing customer
experience is to improve company’s relationships
with customer, furthermore building customer
loyalty. While Kunle Adeosun and Ganiyu (2012)
believed that when creating right customer
experience with the product/service is the most
powerful technique to win brand loyalty. It was
previously known that based on a study conducted by
Klaus and Maklan (2012), customer experience also
has a significant affects customer loyalty.
3 MATERIALS AND METHODS
3.1 Characteristics
This research adapts Aaker et.al (2011)’s study which
employs descriptive research and verification as
characteristic research. The descriptive research
represents the existed variables in this study and
shows the phenomenon of the data. While the
verification reveals the result of the role of digital
customer experience on the customer loyalty.
3.2 Technique Used in the Paper
The study employs quantitative designed approach.
Firstly, the researcher developed a structured
questionnaire using the 5-point Likert scale.
Secondly, it was addressed by personal online
message to Telkomsel subscribers randomly in
specific areas. The online method aims to reach the
far away respondents from the researcher. The third,
the data is analyzed using Structural Equation Model
(SEM) to examine the model of digital customer
experience on customer loyalty. The last step is to
evaluate the final model result.
The Role of Digital Customer Experience on Customer Loyalty
469

The hypotheses of the study are whether or not the
loading factor equal to zero meaning that whether or
not digital customer experience determines the
customer loyalty (H0: γ = 0 or H1: γ ≠ 0; which γ
represents loading factor/validity coefficient). The
process was carried out through LISREL 8.72.
4 RESULTS AND DISCUSSION
This research selected from 645 to 598 respondents
as the data sample since the rest of them have the
missing information as well as unengaged response.
It has adequate for further analysis as passed the
requirements of (Boomsma, 1982, 1985; see also
Nunnally, 1967; Bentler, 1990; Bentler and Chou,
1987) to obtain the favorable statistical results.
This section reveals the demography of
respondents. The gender proportions are almost
balance (male 43.65% and female 56.35%) while the
age proportion of them has various numbers (age of
<17:3.34%; 17-22:47.32%; 23-27:26.59%; 28-
32:6.35%; 33-37: 3.18%; 38-42: 5.02%, and ≥
42:8.19%). Most of them are young aged around 17
to 22 years old. Then they are a college/university
students (31.44%) and entrepreneurs (22.07%).
The study measures the measurements models
that examine the exogenous variable -Digital
Customer Experience (DCX)- and endogenous
variable -Customer Loyalty (CL)- using path analysis
through Confirmatory Factor Analysis (CFA). The
result is obtained that for exogenous variables (DCX),
it consists of four latent variables with 24 indicator
variables while exogenous variables have five
indicators.
From the fit indices of the measurement models
(Table 1) emerge a conclusion that indicators of
exogenous (DCX) variables and endogenous (CL)
variables have met the good fit following criteria of
the previous study of DCX by Silalahi and Rufaidah
(2017) based on criteria of Hooper et.al (2008).
Table 1: Fit indices of measurement models.
A
B
C
D
E
F
CL
5
0.81 –
0.93
1.023
0.870
0.990
DCX
4
0.84 –
0.98
2.522
0.051
0.878
DSERVX
5
0.67 –
0.88
0.663
0.007
1.000
DIMGX
5
0.79 –
0.87
1.030
0.007
1.000
DTCPX
7
0.75 –
0.86
1.616
0.032
0.980
DBRBX
7
0.81 –
0.88
1.298
0.022
0.980
Notes: A: Latent Variable, B: Number of Items, C: Range
of Std. Regression, D: chi/df, E: RMSEA, F: GFI.
Then structural model defines the role of DCX on
customer loyalty, see Figure 1. It depicts the result of
analysis on answering the aim of this research that
DCX has as much as 23.40 times on influencing the
customer loyalty with the modeling error is 10.06.
The DCX has 70.2 percent on defining the customer
loyalty while the remaining (29.8 percent) are defined
by other reasons which are not stated on this model.
Figure 1: Result of DCX to CL (t-value, an unstandardized
estimation).
This model applies five of common criteria on the
Goodness of Fit (GOF) Indices to verify the construct
of this theoretical model of DCX on CL (see Table 2).
The first criteria is χ2/df (3.33), the result means that
the proposed model does not follow the normed chi-
square distribution hence this model has used
weighted least square estimator which does not
consider the normal distribution. The second is
RMSEA (Root Mean Square Error of
Approximation). The result reveals the value is in
between 0.05 and 0.08, meaning that the model has
an adequate fit. The third is the expected cross-
validation index (ECVI). It has a good fit since it is
less than the ECVI for the saturated model (Ghozali
and Fuad, 2008). The next criterion is the
Comparative Fit Index (CFI). The result (0.95) is in a
good range value. The last one is Goodness-of-Fit
Index (GFI), and the result (0.968) reveals a good fit
since the GFI value is above 0.90.
Table 2: Goodness of fit model.
Criteria
χ
2
/df
RMSEA
ECVI
CFI
GFI
DCX on
CL
3.33
0.0625
0.123
0.950
0.968
R
2
= 70.2%
It consequently bears the justifiable hypotheses
result that the role of digital customer experience on
customer loyalty has the significantly proper result
due to it rejects H0 (H0: γ = 0 or H1: γ ≠ 0; which γ
represents loading factor/validity coefficient). It
creates the new role on the experience of digital
customers which have a significantly positive
contribution in building the adherence of them.
ICIEBP 2017 - 1st International Conference on Islamic Economics, Business and Philanthropy
470

In addition, there is a positive indirect effect of
digital customer experience to the Y1 (Behavioral
Loyalty) and Y2 (Attitudinal Loyalty), while it shows
the negative indirect effect of digital customer
experience to the Y3 (Situational Loyalty). It means
the digital customers have a good loyalty without
seeing any circumstances on making the decision for
using it. In other side, their experiences are likely
well-interpreted by (1) the image of the product
(DIMGX), (2) the service of the product (DSERVX),
(3) the touch point experience (DTCPX), and (4) the
broadband experience (DBRBX).
This result is quite similar with the previous
research when the customer experience is used
without digital term. There is a positive relationship
between customer experience and customer loyalty as
study of Chauhan and Manhas (2014) and Kunle
adeosun and Ganiyu. The result also in line with the
study conducted by Klaus and Maklan (2012) that
customer experience has a significant effects on
customer loyalty.
5 CONCLUSIONS
The digitalization has been the main focus of the
business strategies, including telecommunication
industries. The result of this study found that people
–digital customers- tend to have good experiences
which are defined by digital image experience, digital
service experience, digital touch point experience,
and digital broadband experience. Furthermore, the
digital customer experience has a positive effect on
customer loyalty. It is in line with the indirect effect
either behavioral loyalty or attitudinal loyalty but it
has a negative loading score on situational loyalty.
The difference value has the meaning that a good
digital customer experience has the significant
positive impact on the customer loyalty regardless of
any situations.
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