Customer Relationships Are Becoming a Competitive Advantage
Indonesia's MSME sector continues to expand as competition intensifies across traditional and modern retail markets. Businesses selling similar products increasingly face difficulties differentiating themselves based on product quality or pricing alone. In this environment, customer retention has become just as important as customer acquisition.
The researchers identified this challenge at UD Sumber Agung, a business specializing in the procurement and distribution of shallots for households, restaurants, catering businesses, retailers, and wholesale buyers in Nganjuk Regency. Their preliminary observations revealed that customer information was still managed manually, loyalty programs were not systematically implemented, and personalized communication remained limited. These conditions created risks for customer retention as competitors introduced more attractive promotional strategies.
According to the authors, sustainable business performance depends not only on effective marketing but also on maintaining meaningful and continuous interactions with customers. This perspective reflects the growing importance of Customer Relationship Management in Indonesia's MSME sector.
Simple Quantitative Study Focused on Real Business Practices
The research adopted a quantitative case study design involving 96 customers of UD Sumber Agung. Respondents were selected using the Cochran sampling formula and purposive sampling criteria. Data were collected through questionnaires supported by interviews, observations, and company documents before being analyzed using multiple linear regression. Prior to statistical analysis, the research instruments passed validity and reliability testing to ensure consistent measurement.
Rather than examining sophisticated digital CRM platforms, the study evaluated practical relationship-building activities commonly implemented by MSMEs, including customer communication, service quality, customer data management, and loyalty initiatives.
CRM Produced the Strongest Effect on Customer Loyalty
The analysis demonstrated that both marketing strategy and Customer Relationship Management significantly improved customer loyalty. However, CRM contributed more strongly than marketing strategy.
The principal findings include:
- Marketing strategy significantly increased customer loyalty with a regression coefficient of 0.324 (t = 3.874; p < 0.001).
- Customer Relationship Management produced a stronger effect, recording a regression coefficient of 0.456 (t = 3.192; p = 0.002).
- Both variables jointly influenced customer loyalty with an F-statistic of 48.220 (p < 0.001).
- The predictive model was expressed as Y = 4.678 + 0.324X₁ + 0.456X₂, indicating that improvements in both marketing strategy and CRM increase customer loyalty simultaneously.
The researchers also found that customer loyalty was shaped not only by promotional activities but by long-term trust, responsive service, and consistent communication between the business and its customers.
Human Relationships Matter More Than Technology
One notable conclusion from the study is that successful CRM in MSMEs does not necessarily require expensive software or advanced digital infrastructure.
At UD Sumber Agung, CRM was primarily reflected through practical actions such as proactive communication, prompt complaint handling, recognizing loyal customers, and maintaining personal relationships. The authors noted that these human-centered interactions generated stronger customer attachment than traditional promotional activities alone.
As Salis, Augustinah, and Sarwani of Dr. Soetomo University Surabaya explain in their discussion, CRM demonstrated a stronger influence on customer loyalty because relationship quality creates customer value that extends beyond individual transactions. In relatively homogeneous commodity markets, customers remain loyal when they experience consistent personal attention and trustworthy service rather than simply lower prices. This interpretation reflects the authors' analysis of their empirical findings.
Practical Implications for MSMEs and Policymakers
The findings carry important implications for Indonesian MSMEs operating in highly competitive markets.
For business owners, the research suggests that investing in customer databases, loyalty programs, personalized communication, and responsive customer service can produce stronger long-term results than focusing exclusively on advertising or price discounts.
For government agencies and business development organizations, the study highlights the importance of expanding MSME training beyond digital marketing. Capacity-building programs that strengthen customer relationship management skills may improve business sustainability, customer retention, and local economic resilience.
The researchers further recommend formalizing CRM practices through structured customer databases, systematic appreciation programs, and greater use of digital communication platforms while continuously adapting marketing strategies to changing market conditions.
The study also reinforces a broader message relevant to businesses worldwide: attracting customers is only the first step. Long-term competitiveness increasingly depends on building trust, maintaining consistent relationships, and delivering personalized customer experiences.
Author Profiles
Nur Arfiah Salis is a researcher in the Business Administration Study Program, Faculty of Administrative Sciences, Dr. Soetomo University Surabaya, with research interests in marketing strategy and MSME business development.
Fedianty Augustinah serves as a lecturer and corresponding author in the Business Administration Study Program, Faculty of Administrative Sciences, Dr. Soetomo University Surabaya. Her research focuses on marketing strategy, Customer Relationship Management (CRM), business administration, and MSME competitiveness.
Sarwani is an academic in the Business Administration Study Program, Faculty of Administrative Sciences, Dr. Soetomo University Surabaya, whose work centers on business administration and marketing management.
Source
Article Title: Marketing Strategy Based on Customer Relationship Management to Increase Customer Loyalty at UD Sumber Agung Store, Nganjuk Regency
Journal: Formosa Journal of Science and Technology (FJST)
Publication Year: 2026
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