THE WAY FOR MAINTAINING CUSTOMER LOYALTY AND USING OF E-COMMERCE IN DEVELOPING COMPANY SUCH AS SMALL AND MEDIUM ENTERPRISES

. The Way for Maintaining Customer Loyality and Using of E-Commece in Developing Company Such as Small And Medium Enterproses. This paper aims to analyze the way of maintaining customer loyalty of company in developing their business. One of the way is providing of customer loyalty program with the reward point given to their customer. Beside that, this study analyze also the usefulness of e-commerce in developing Small and Medium Enterprises. Definitely ,the use of e-commerce able to drive business of small and Medium Enterprises quickly and promptly. Involving e-commerce in developing small and medium enterprises (SMEs)is very crucial and important. There are some potential benefits derived from the strategic use of e-commerce provide: i) Enhanced customer services, ii) Reduced transaction costs, iii) Increased business efficiencies, iv) Improved operational flexibility, v). Obtaining competitive advantages and vi). Improved product and service delivery. . This study use Descriptive Qualitative Analysis Method based on the observation of the current situation of e-commerce usefulness in developing company such as small and medium enterprises and the way of maintaining customer loyalty in business development This study shows that both low customer awareness about point-based reward programs and, not surprisingly, low redemption rates. More specifically, lack of awareness about the reward points programs and the redemption procedure was shown. The important conditions positively affecting redemption of reward points were found to include awareness of the reward point program, a positive attitude about the incentives, and average frequency of credit card usage. Also, redemption rates were higher for cards that had been issued more recently. This study find also that e-commerce has big part role in developing Small and Medium Enterprises. In this, e-commerce can develop promotion and selling volume of Small and Medium Enterprises by the smart electronic mechanism.


BACKGROUND OF STUDY
Maintaining loyalty is very important for companies to drive their business.
Beside that, the existing of differentiation between large and small businesses are particularly evident in the examination of small business technology adoption and utilization. Past researchers have revealed at least six major factors influencing the adoption, innovation, management and successful use technology by SMEs. These factors are the role of management, strategic direction, available resources, technical complexity, information technology (IT) knowledge and education, and external issues (Cragg & King, 1993;Thong & Yap, 1995;Fuller 1996). Previous small business and technology research concentrated Vol. 5, No. 1, April 2015 E S E N S I Jurnal Bisnis dan Manajemen 29 on the impact of technology on internal computing applications and systems.
However the implementation of e-commerce extends beyond the application of technology in internal systems (Poon & Swatman, 1999). In this context, the application of existing IT and small business theory provides only a limited basis for examining the intricacies of SME e-commerce. E-commerce has the capacity to transform not only internal practices but also the methods SMEs use to interact with their trading partners, associates and customers. The ability of large businesses to conduct e-commerce differs substantially from the capability of smaller businesses to implement e-commerce. SMEs are often disadvantaged by their ability to allocate resources and finance to new innovation and this is compounded by a lack of technical skills and knowledge (Cameron & Clarke, 1996;MacGregor et al., 1998;Poon & Swatman, 1996;Corbitt et al., 1997;Lawrence & Keen, 1997;Freel, 2000;Van Beveren & Thomson, 2002). Even where the SMEs are capable of conducting e-commerce, research has highlighted they are often reluctant to so (Lawrence & Chau, 1998). Although SMEs may be disadvantaged in their ability to conduct e-commerce, SMEs have traditionally been highly adaptive, innovative and agile within their competitive business environments (Levy & Powell, 1998). The Internet and e-commerce provides SMEs with an opportunity to attain a level of competitiveness in line with larger trading organizations (Ihlstrom & Nilsson, 1999;Jeffcoate et al., 2002). E-commerce differs from past implementations of IT in SMEs. Rather than being simply a support tool, ecommerce has the potential be used as strategic tool to develop new organizational infra structures, business relationships and value chains. Initial research on SME e-commerce has focused on identifying factors that affect the adoption of e-commerce and the potential benefits derived from e-commerce (Abell & Lim, 1996;Lymer et al., 1997;Poon & Swatman, 1996;1999). Direct and indirect cost savings in communications and marketing, greater business exposure and increased access to new customers and trading partners form some of the potential benefits and drivers of adopting e-commerce. The slow uptake of ecommerce by SMEs has been observed and subsequent research determining the factors that inhibit e-commerce adoption has also been explored. These barriers include a lack of financial and organisational resources, a lack of support from THE WAY FOR MAINTAINING CUSTOMER... 30 management, a lack of technology skills and experience and a concern about security and privacy (Lawrence & Keen, 1997;Tan & Teo, 1998;Tan & Konstapel, 1998;Purao & Campbell, 1998;Corbitt et al., 1997;Carroll 1999). Other studies have found that the drivers for e-commerce adoption are a combination of factors derived internally within the organisation and externally from the business environment (Poon & Swatman, 1997;Feindt et al, 2002). To date, there is lack of empirically grounded heuristic IS models in the literature that depict the actual utilisation of e-commerce by SMEs. Emergent models and frameworks that initially appeared in the IS literature were often unsubstantiated or lacked empirical validation. There is a need amongst the IS research community, practitioners and government for a set of e-commerce models that have been grounded in the experiences from SMEs actively utilizing e-commerce. Further more, customer loyalty and e-commerce phenomena are very interesting to be analyzed and discussion more to get formulation in general application for business development. Based on that introduction above, the problem that be studied in this paper are:

1.
How to develop company by managing customer loyalty?

2.
What the usefulness of e-commerce for Small and Medium Enterprises development?

METHODOLOGY OF STUDY
This paper written use the Descriptive Qualitative Analysis Method based on the observation of the current situation of e-commerce usefulness in developing company such as small and medium enterprises and the way of maintaining customer loyalty in business development.. This study also use literature study of some refferences related with the topic explained. Beside that, case study also used in analyzing of the problem and solution given in this paper.

A. The Way for Managing Customer Loyalty
In developing companies needed ability in managing of customer loyalty. In this, company development can be established by providing Vol. 5, No. 1, April 2015 E S E N S I Jurnal Bisnis dan Manajemen 31 customer loyalty programs. Customer loyalty programs are now thought to have been among the most successful marketing tools of the 1990s, and they have received considerable attention in both trade and academic journals.
Loyal customers are considered an asset to the business, as relative costs of customer retention are substantially lower than those of acquisition (Fornell and Wernerfelt, 1987). Consumer loyalty is considered an important key to organizational success and profit (Oliver, 1997), and practitioners increasingly building lasting relationships as well as to strengthening commitment and …" ‡ƒ-‹•‰ ò˜ ‡Ž˜ ‡-Šƒ• †…-ˆˆ•ó -Šƒ-"'• † -Š ‡ customer to the brand (Dowling and Uncles, 1997). Some key loyalty-marketing trends have been identified and explored in detail (Capizzi and Ferguson, 2005). First loyalty programs appear ''-Žƒ" in parts of the USA during the late 1950s and 1960s. Typically customers received one stamp for every 10 cents of purchase, and could redeem their stamps for merchandise at specially established redemption centers. Trading stamps became so popular in some areas that retailers competed by offering three and four times the normal award of stamps. It was not unusual to see automobile glove compartments and kitchen drawers stuffed with trading stamps. In the early 1980s, airlines added frequent flier programs, with points accumulated on the basis of miles flown and redeemable for free flights, (Wansink, 2003). Frequent flier programs have been in existence for over 25 years and have dramatically changed the pricing and marketing programs of what is essentially a commodity business (Varien, 1999).
During this period also, loyalty programs became popular with other service industries such as hotels, rental caragencies, department stores, and credit cards.
Loyalty programs usually provide rewards based on cumulative purchases, and are an explicit attempt to enhance customer retention and increase product usage. They also serve to attract new customers with the promise of additional benefits. They encourage repeat buying and thereby  Lewis, 2004). Bell and Lal (2002) in their study on the ò •'ƒ…-'ˆ ˆ" ‡"- ‡•- Of course, -ï• very interesting to talking more.

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Definitely, consumers are motivated to participate in such programs because, fundamentally, they like to get something for nothing (Uncles, 1994).
Past research has tried to assess the effectiveness of loyalty programs in creating true customer loyalty. Among the findings are that such programs are more suitable for products and services with high margins or ones that a customer will invest in heavily over a long period of time (Wansink, 2003).
Point-based reward programs, the specific focus of this paper, also work well for products and services that are typically not unique (Geller, 1997), e.g., video rentals, groceries, and car wash services. Rothschild and Gaidis (1981) suggested products or vendors; in such cases, once the loyalty program is withdrawn there is a decline in consumer loyalty. Although a few researchers (e.g. Sharp and Sharp, 1997;Dre`ze and Hoch, 1998;Liu, 2007) reached conclusions that doubted the effect of reward point programs, most research results show them to be beneficial to a wide range of businesses. Thus, there are some ways to maintaining customer loyalty such as giving point reward program to customer.

B. Awareness of the Point-Reward Programs
For increasing loyalty of customer, company can give credit card reward programs collaboration with determining banks. This program could encourage redemption more than they currently do, especially for first-time card users, in an effort to reduce switching when they are approached, as inevitably they will be, with competitive offerings. Marketers can enhance redemption rates through communications that raise program awareness and simplified redemption procedures. Several of the recommendations that follow are also related directly to this first one. Reward program servicing costs will vary by type of customer. Banks may wish to pursue actions that could lower redemption servicing costs, drive more frequent card usage, and actually build customer loyalty. For example, they may consider restricting redemption to larger reward items that customers will, of necessity, claim less frequently. Because one reason for non-redemption, supported by the findings of the current study, is that some card users never accumulate enough reward points to be eligible for redemption, this can be a sensitive issue. In this respect, card issuers can encourage greater point accumulation with promotions aimed at persuading customers to use their cards for more of their everyday purchases and a generally greater share of wallet. In addition, the the minds of targeted card user segments. Since the most effective kind of promotion is word of mouth endorsement by satisfied customers, participation in point-reward programs that results in card holders acquiring significant and attractive products and/or services can also influence their friends, neighbors, and business associates. The low redemption rates for point-based rewards were partly the result of low awareness levels. Marketers can develop web-based communication plans that more effectively explain the features and benefits of their point-based reward programs, with respect to both what the programs are and how benefits can be redeemed. Early adopters of credit cards in any countries are more likely than the population at large to be internet users, so that putting an emphasized keyword in print or television commercials to encourage audiences to seek specific product information via a search engine could be a cost effective means of explaining somewhat complex details of reward programs and the redemption process.
This could be combined with other paid advertising in conventional media, especially if there are co-branding opportunities with popular search engines.
Reward programs should be used to drive customer buying and to encourage repeat purchases. Loyalty building should be viewed as a long-term THE WAY FOR MAINTAINING CUSTOMER...

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process. There is considerable lifetime value of a customer who is loyal to a particular card issuer and who uses the card both more frequently and for larger purchases as their prosperity grows along with some prosperities.
To this end, delayed rewards may be effective in the long run for some customer segments, assuming that they are satisfied with the service experience.

C. The Usefulness of E-Commerce for Small and Medium Enterprises
development.

E-Commerce and Electronic Banking
Electronic banking is one of the first ecommerce applications  provided significant benefits for a wholesale bakery operating twenty-four hours a day allowing management to communicate with night shift staff and vice versa in a structured manner. E-mail has further improved quality control and the consumer service by channelling customer concerns directly to the production manger. Consumer complaints are resolved quickly enabling product quality to be maintained and controlled. Messages arrive to the appropriate people quickly and an audit trail of communications is available for reference. The use of electronic forms also provides advantages to businesses that process a large volume of communications with consumers and businesses along the supply chain. The use of electronic forms by the wholesale bakery has revolutionized its conventional order entry system.

E-Commerce and Communication
Clients are able to attach electronic order details to e-mails providing an efficient and standardized form of data entry. Electronic forms removed the manual task of data entry that is susceptible to human error streamlining the order system aligning key customer orders directly into back office information systems.
Electronic forms can also be used to structure information imputed through a web page where information is manipulated into a format ready for direct processing by back end information systems. This has enabled a credit agency to streamline their data entry procedures by directly integrating data sets from e-mails or through their web pages. The advances in electronic communications technologies also make it possible to conduct operational management tasks remotely from branch offices. For example, an essential oils supplier with a head office located in Sydney efficiently performs all the branch office accounting functions by running a remote client session on the branch computer. In another example, a retail bakery operates numerous franchise outlets located around the State and remotely downloads daily sales information directly from each cash register located at the franchises for analysis. The business also provides all accounting functions for each of the franchises to maximize operational efficiencies. Although the use of ecommerce communication technologies is slowly gaining acceptance, the diffusion of e-commerce along a complete supply chains is an exception rather

E-Commerce and Customer Service
E-commerce is very potential to improve the quality of customer service for many SMEs. The SMEs use e-commerce to support and foster sustainable customer relationships. E-commerce enhances customer service by improving accessibility, convenience and facilitates the provision of valueadded services for the customer. Analysis of the case studies suggests that ecommerce can improve the level of customer service in three ways. Firstly ecommerce provides a mechanism for businesses to communicate directly with customers. E-commerce also provides a feasible and standardized mechanism to deliver structured information to a large number of individuals and trading partners. Finally e-commerce improves customer service by providing customized functions or incentives specific to the needs of the customer. These services are aimed at maintaining customer loyalty and convenience. This study highlights three instances where customer service was improved as a direct result of incorporating e-commerce : i) Provision for Direct Feedback. ii) Information Dissemination. iii) Customer

E-Commerce and Direct Feedback
For increasing quality, companies need many feedback from their customers. The ability to communicate directly with end users of products and services greatly enhances the level of customer service. E-commerce enables businesses to bypass traditional communication linkages along the supply chain by providing a mechanism for direct contact between primary producers or manufacturers and the end user. This can greatly enhance quality assurance, product testing and marketing. The feedback to the business provides a valuable method to maintain quality control of its products and adjust processes '" '"' †-…-Ž‹• ‡• -Šƒ-" ‡-- ‡" •-‹--Š ‡ …-•-'• ‡"ï• demands and desires. Similarly, the business also has the chance to test new The use of e-commerce permitted on-line bookshops to collate information from customers to create customer profiles that personalized future communications and created the potential for customised marketing strategies for similar groups of existing customers.

E-Commerce and Information Dissemination
E-commerce can significantly improve the level of service delivery for those businesses that are in the business of providing information.
Information products are highly conducive to e-commerce transactions due to their flexibility and portability. The credit agency and an agricultural information bureau are examples of information providers that have identified the benefits of using e-commerce to deliver and acquire information.
The use of e-commerce has transformed the level of customer service for credit agency. The costs associated with acquiring, manipulating and reporting information to customers are significantly reduced. The level of ecommerce activity continues to grow as clients recognise the convenience, timeliness and accessibility of acquiring information via an online system.

E-Commerce and Customer Retention
The potential threat of disintermediation by suppliers prompted a clothing supplier to offer an innovative approach to trading with its major customers. The ecommerce application streamlined customer inquiries, enabling clients to access key information about products, order status, and stock availability twenty-four hours a day at their convenience. To increase client rapport and loyalty, the e-commerce system was also designed to provide a value-added service for corporate clients.

E-Commerce Able to Increasing Sales and Marketing
The attraction of a global on-line marketplace was a major driver for

E-Commerce Give Substantial Change to Business Processes
Significant benefits can be achieved from e-commerce by integrating ecommerce functions directly into conventional business processes particularly for businesses that are trading in information based products. The use of ecommerce allows resellers and corporate customers to interact directly and unassisted with the †‹•-"‹"--'"ï• inventory systems. The e-commerce system reduces the number of product queries and fast tracks the ordering process.
These types of e-commerce applications enhanced the business processes by streamlining the handling of customer queries alleviating time and resources for customer phone and fax support. The retail bakery operating a statewide franchise relies heavily on e-commerce to control their franchise system. Information is polled daily from each franchise for analysis.
Based on the information collated from each franchisee, strategic direction regarding marketing, product range and business viability can be discussed.
This dynamic approach to monitoring the franchises is based on an elaborate e-commerce system. The information reporting and financial systems rely totally on the e-commerce infrastructure. Without e-commerce this business could not work as efficiently as is currently possible.

E-Commerce Provides Cost Reduction
It is difficult to measure all the potential benefits that can be accrued from ecommerce by SME. However, the analysis of the data indicates that ecommerce can potentially reduce costs in several key areas; i) Communications, ii) Publishing, iii) Marketing, iv) Product demonstrations, v) Production costs, lower overheads, vi) Supply chain costs, vii) Product delivery and time saving.
A common cost saving for the cases was a reduction in communication costs both internal and external to the business. The use of intranets, e-mail, electronic forms and web forms provide alternative modes of cost effective communications with external clients, and trading partners. Cost savings for external communications, utilising ecommerce technologies, are particularly effective when these individuals are located interstate or internationally. The ability to send technical and sales support information to multiple recipients simultaneously is advantageous, saving time, conventional publishing costs and delivery costs. The ability for a business to disinter mediate components of a supply chain and transact directly with end consumers provides an avenue to reduce the costs of agent fees/commission along the value chain.
Potential cost savings are significant and may be a primary driver for ecommerce if the business is the primary producer or manufacturer of the product.
However these e-commerce initiatives are not fully integrated into existing information systems. Typically, users of these experimental ecommerce systems have to re-enter order details and customer information manually back into existing transaction systems. The potential efficiencies from e-commerce are significantly reduced when an experimental perspective is taken. However the costs associated with adding limited e-commerce to the business are less than an elaborate fully integrated e-commerce trading system. technologies if the businesses can envisage a potential benefit derived from ecommerce, they may decide to commit more resources to develop a more strategic perspective for the use of e-commerce.

E-Commerce in Strategic Use
While Hall (1995) indicates that formal strategic planning is not a widespread phenomenon within SMEs, the strategic use of e-commerce was noted in twenty cases included in this study. The strategic use of e-commerce by SMEs may be explicit in some cases but frequently it is implicitly implied.
The term strategic is defined as : òImportant or essential in relation to a plan of actionó '" òHighly important to an intended objectiveó ™™™ä †‹…-‹'•ƒ"›ä…'• ä These definitions are both pertinent to how the term strategic is discussed in this study. In this study, the strategic use of ecommerce includes those businesses that have significantly altered existing business processes to incorporate e-commerce as a significant component of their business. The strategic use of e-commerce also includes those businesses that depend on ecommerce as part of the daily business practice. Without the use of ecommerce these businesses would be severely disadvantaged. The strategic use of e-commerce by SMEs can be further distinguished by those businesses that have transformed their business processes or organizational structure to acquire the greatest benefit possible from e-commerce.
The potential benefits derived from the strategic use of e-commerce provide: i) Enhanced customer services, ii) Reduced transaction costs, iii) Increased business efficiencies, iv) Improved operational flexibility, v).
Obtaining competitive advantages and vi). Improved product and service Significantly, SMEs do not necessarily migrate between phases in consecutive steps but may establish their e-commerce initiatives at any of the phases. This phenomenon differs from past staged models of e-commerce adoption proposed by other researchers (Daniel et al., 2002;McKay et al., 2000;Poon & Swatman, 1997). SMEs may progress from one phase to another, bypassing sequential phases as they expand their e-commerce activities within their business. Levy and Powell (2002)  However in reality, the evolution of one pathway can directly affect the evolution of the other. Finally the model assumes that organisations take a staged approach to conducting IS/IT and e-commerce activities. The models of e-commerce usage presented by Daniel et al. (2002) and Poon and Swatman (1997) acknowledge distinct types of e-commerce applications but provide limited detail on the impact of the e-commerce initiatives on business processes within the business. These models follow a staged approach to ecommerce but fail to account for more adventurous uses of e-commerce, which may not necessarily follow a staged or step process. So, significantly ecommerce has given big contribution in developing of Small and Medium Enterprises.

CONCLUSIONS
This study is a small step towards understanding the awareness and redemption levels of users of credit cards that feature point-based reward program. While such programs are frequently referred to as loyalty programs, in actual fact they appear to have less to do with building customer loyalty than with attracting new customers and encouraging greater card usage. Redemption activity is related to the conditions of: (i) the consumer being aware of the pointreward point program itself; (ii) the consumer holding a positive attitude about the incentives; (iii) the length of time using the card. (iv) the average usage of the card. The mostly user is in low level of reward-point redemption among credit card users, primarily due to lack of awareness of the programs themselves and/or the redemption procedure, and the perceived convenience of redeeming points relative to the level of customer interest in available rewards.
For the future, millions, or even tens of millions, people will acquire their ˆ‹"•-…" ‡ †‹-…ƒ" †• ‡ƒ…Š › ‡ƒ"ä ƒ••• -Šƒ-…ƒ• " ‡ òˆ‹"•--' ™ƒŽŽ ‡-ó -' • ‡™ • ‡‰• ‡•-• 'ˆ cardholders should be able to achieve a higher equilibrium share of that market than later entrants, along with scale economies from lower unit processing and maintenance costs, and a stronger ability to survive any shakeouts as The potential benefits derived from e-commerce increase where businesses engage in a process of business transformation. As the investment in e-commerce increases optimal benefits can only be obtained by suitable changes in organizational structure and processes. The phases depicted in the conceptual model do not necessarily prescribe an evolutionary path for e-commerce utilization but is dependent on the strategic choices made by the SMEs. This study has found that subject to business directions and strategic goals it is possible through investment for an SME to migrate or establish themselves directly at any one of the four phases.
There are two distinct perspectives adopted by SMEs in relation to the use of ecommerce. The initial perspective comprises a period of experimentation with ecommerce that delivers limited e-commerce benefits and requires limited organizational change. The second perspective involves a clear strategic direction