Understanding the Social CRM Strategy of Small Businesses in
Captivating Younger Age Market in Indonesia
Mukhammad Andri Setiawan and Yanuar Satrhio Insanaputra
Department of Informatics, Universitas Islam Indonesia, Sleman, Yogyakarta, Indonesia
Keywords: Social CRM, Small Business, Young Age Market, Indonesia Online Shop.
Abstract: The survey conducted by the Indonesia Internet Service Provider Association (APJII) in 2016 presented that
more than half of Indonesia’s population (132.7 millions of people) have been connected to the internet and
almost half of them are between 10-34 years of age. Most of have seen internet as one of the most effective
places for shopping. However, a fierce competition has made businesses to think more of the strategy to
capture the market. With huge number proportion of internet users, younger age makes up 75% of internet
users and has become main captive market for online shopping. Traditional customer relationship
management (CRM) has previously successfully help businesses in increasing their revenue and create trust
relationship with customer. However, traditional CRM works more in a one-way direction. The rise of social
media, has created totally different landscape on businesses environment. The rise of electronic CRM and its
evolution to social CRM has made companies do not want to be left behind. They embrace social media as
never before. However, business entities in Indonesia need to understand more how does this social media
thing work for them. This study investigates and proposes social CRM constructs that work best for young
age internet users in Indonesia market. The study indicates that social CRM plays a significant role in
captivating younger age market in Indonesia.
1 INTRODUCTION
Indonesia has seen a tremendous increase of the
internet users in the past few years. In 2016, more
than half population of Indonesia (132.7 million
users) has been connected to the internet (APJII,
2016). What more interesting is that almost half of the
internet users are those between 10-34 years of age
and those users make up 75% of their population age.
98.6% of internet users in Indonesia, has seen internet
as a place to look for, to buy, and to sell stuffs. Based
on the survey conducted by APJII (2016), 63.5% of
internet users are actively use internet to do online
shopping. A situation like this has sparked boom of
online shops, springing up like mushroom after rain,
from giant online shops like Lazada and Tokopedia to
small businesses that run from home.
With a fierce competition happening in the online
shops market, business need to have special strategy
to gain and retain customer loyalty. A huge
proportion number of internet users in Indonesia use
internet to do research before buying stuffs. Internet
has provided users with comparison of different
offers & products in the form of electronic word-of-
mouth (Hennig-Thurau et al., 2004; Chu & Kim,
2011). Business has started to adopt Customer
Relationship Management (CRM) in electronic
commerce market (eCRM) to fulfil this need.
Many studies suggested that CRM has
successfully maximizing customers’ loyalty from its
usage (Becker et al, 2009). Hence it is able to increase
business’ revenues and reduce costs. Many
technologies have been implemented in
implementing eCRM. However, it is also well studied
that if the focus of the eCRM is only to the
technological part, it will lead to some problems
(Cooper et al., 2008). It turned out that effective
eCRM implementation does not always necessarily
require powerful technologies (Chen & Chen, 2004).
Fortunately, with the rise of social media (Perrin,
2015), eCRM has transformed itself to Social CRM
(Malthouse et al., 2013; Heller Baird & Parasnis,
2011). Technologies are no longer problems for many
companies. Companies just simply use social media
as part of their eCRM strategies. This is due to the
fact that many social media users use social media to
interact with business to find information about
discounts, make purchases, find reviews and
Setiawan M. and Insanaputra Y.
Understanding the Social CRM Strategy of Small Businesses in Captivating Younger Age Market in Indonesia.
DOI: 10.5220/0006504601670173
In Proceedings of the 9th International Joint Conference on Knowledge Discovery, Knowledge Engineering and Knowledge Management (KMIS 2017), pages 167-173
ISBN: 978-989-758-273-8
Copyright
c
 2017 by SCITEPRESS – Science and Technology Publications, Lda. All rights reserved

rankings, and to find some general information about
the particular company. Heller Baird & Parasnis
(2011) also mentioned that the relationship between
companies and customers in social media are both in
need each other. The relationship should be
maintained well to create the best outcome.
With huge proportion number of internet users in
Indonesia, younger age users have attracted many
businesses. As Indonesia has been dubbed as social
media nation (Lim, 2013), the social media roles has
definitely affect the way Indonesian interact with the
e-commerce platform. This study investigates the
Social CRM strategy in small business in Indonesia
especially when dealing with young age internet
users. The study investigates a multitude factors that
influence the implementation of social CRM by small
businesses and how these small businesses
understand how to maintain a long-term relationship
with customers with the help of social media.
Through this study, we hope to further develop an
understanding of the constructs used in social CRM
in Indonesia. To this end, we provide details of an
empirical study to 51 small businesses that are
actively engaged with social media and what are the
key success factors in using social CRM.
2 THEORETICAL
BACKGROUND
In general, CRM is defined as a strategic, customer-
centered action that focus on important aspects of
sales and marketing to increase revenue by improving
customer satisfaction, loyalty, and retention. With the
birth of the internet, CRM evolves into eCRM. With
eCRM, the five phases of internet online shopping
(Nour & Fadlalla, 2000) i.e. research/browse,
ordering, post-purchase service, delivery, and online
payment, are being taken care with the help of
internet technology. Customers’ experiences are
captured in the eCRM system. As everything are
logged in eCRM, company is able to analyze and then
able to improve its services, recognize the transaction
pattern, reducing operational risk, and predict
customers’ need in the future (Kalakota & Robinson,
2001). eCRM has helped many companies to have
significant advantages as it is able to deliver value
added services that responses to customers’ ever-
changing needs and successfully created recurring
customers (Peltier et al., 2009). eCRM is founded on
the top of commitment-trust theory (Morgan & Hunt,
1994) that explains a long-term relationship is built
on the foundation of mutual trust-commitment to
make loyal and recurring customers (Kim et al.,
2008). However, the eCRM strategy needs to find
values which often intangible or available as tacit
knowledge. The adopted strategy of eCRM usually
focuses on the responses collected to manage the
customer (Baird & Parasnis, 2011). Unfortunately,
many companies were trapped and focuses only on
the technology side of the eCRM. The successfulness
of eCRM depends on the interaction of people and
departments within company where each of them
supports one another (Day & Van den Bulte, 2002).
In a world where more businesses rely on internet
for many parts of their business, well-established
theory such as theory of planned behavior (Ajzen,
1991) applicable only when customers do not have
full control over their online transactions. Hence, it
only measures perceived behavioral control and trust
as critical factor. However, with social media,
customers are often in control. It’s easy for customers
to reward or punish company with rating system
and/or via social media shares.
The rise of social media in Indonesia is
undoubtedly create a new horizon in social relations
and social networking (Lim, 2013). Social media has
become a hub, a place where customers are
congregating and businesses want to be. Woodcock et
al. (2011) explained that today customers are trusting
more towards friends and colleagues than they are to
TV advertisement or corporate communications.
Consumers spent their online activities to interact to
each other like never before.
Social media, just like other places such as café or
public space, holds many types of conversation and
interactions where some conversations might be
serious or fun while some others are not. With social
media, the story where customer is in passive role in
his or her relationship with a company just like in the
old days are gone (Malthouse, 2013). We see a new
era where customer might even dictate what
companies should do as customer’s power through
social media is increased (Baird & Parasnis, 2011).
Customers value companies from their service
quality, product quality, price fairness (Kim et al.,
2008). These factors can increase perceived value and
build trust which later can create a long-term
commitment or loyalty to the company. This has been
intensively discussed by Kim et al. (2008), when they
proposed framework for e-CRM from the customer’s
perspective as explained in Figure 1.

Figure 1: Framework for e-CRM from the customer’s
perspective (Kim et al., 2008).
Customers can make a brand of a company to
improve, but at the same time, if customers are
unhappy, they can spread negative messages of the
company and can seriously damage company’s brand
(Gensler et al., 2013). As a consequence, companies,
especially those with huge number of social media
users like Indonesia, should have more focus on
social media than ever before. With social media,
company are no longer able to control in a one-way
relationship model with the customer as customers
are in power and drive the conversation. Company
can experience both unprecedented growth and crash
overnight with the power of social media. This
condition has definitely challenged the traditional
notion of CRM.
The situation marks the birth of a new strategy
known as Social CRM (Mohan et al., 2008). Social
CRM recognizes customer instead of controlling
them. The focus of Social CRM is to facilitate the
collaborative experiences of customers. It emphasizes
more on how to understand customers value as
exhibited in the social media platform.
3 DATA COLLECTION AND
ANALYSIS
In this study, 51 questionnaires were distributed to
small businesses entities (all are online sellers). The
respondent group ranged in age from 18 to 54,
consisting of 65% male and 35% female; 57% were
university graduates; and 44% of them has only been
using social media between 1 to 3 years. The
complete demographic characteristics are given in
Table 1.
Table 1: Demographic characteristics of the questionnaires.
Classification Frequency
(n = 51)
Percent
Gender Male 33 65%
Female 18 35%
Age 13 – 17 0 0%
18 – 24 22 43%
25 – 34 28 55%
35 – 54 1 2%
Level of
education
Less than or equal
to High school
18 35%
Vocational
Diploma
2 4%
University
Graduates
29 57%
Postgraduates 2 4%
How long
been in
business
< 1 year 15 29%
1 – 3 years 23 45%
> 3 years 13 26%
Experience
in social
media
< 1 year 16 30%
1 – 3 years 22 44%
> 3 years 13 26%
Measures
There are three constructs measured in this study:
Social Media construct, CRM construct, and
Customer construct as shown in Figure 2.
Figure 2: The proposed Social CRM Pattern Constructs.
The social CRM constructs in this study are
divided into three. The first one is the social media

construct. In the era of social media, customer
becomes focal point of CRM. Everything else
revolves around the customer. Businesses work
closely with customer to solve business problems.
Many customers are now sharing their online shop
experiences with others, which both directly and
indirectly impact the business entities. As there are
many social media platforms, businesses need to
understand, which platform that suitable for which
customers. The gaps between generations also create
different use of social media, and this need to be
studied well. Social media is not just a set of
technologies, but also part of the business strategy as
it can help companies to have more engagement with
customers.
The second construct is the CRM itself. In recent
years, CRM has transformed itself into social CRM
(Nitu et al., 2014), but this does not mean that it
changes the basic concept of CRM. To understand the
concept well, this study needs to observe how the
CRM concept has been used to maintain the
relationship between sellers and customers, and how
it can achieve the objectives from the
implementations.
Last but not least is the customer construct. In the
traditional notion of CRM, customer is in the passive
part of the CRM. In traditional CRM, the system
relies on the data and information that been collected
from the customers, which then are entered into the
CRM system that allows company to better target
customers. In the era of social media, the interaction
between customers and business entities has changed.
It no longer in a one-way communication as presented
in the traditional CRM. Two-ways interactions are
becoming a norm. Hence, it is also important to
understand how the customer landscape is presented
in the era of social CRM.
4 RESULTS
4.1 Social Media Construct
With the number of users accessing social media
reaching 97.4% of total internet users in Indonesia,
there is no doubt that social media influences a lot of
Indonesian. There are 54% of internet users in
Indonesia accessing Facebook. Yet the surprises
come from Instagram, where in 2013, the number was
not so significant, however in 2016, the number of
active users are 15% of total internet population in
Indonesia (APJII, 2016). This is due the fact that
Instagram are more popular towards Indonesian
younger generation between 10-34 who are now
representing 42.8% of total internet users in
Indonesia. For small business targeting younger age
customers, having a campaign in Instagram is
definitely a must option.
The survey conducted by APJII (2016) also
aligned with what we found from our survey, where
small businesses tend to focus more on Instagram
than other social media platforms. On the social
media construct, Instagram has definitely dominated
the landscape of social CRM. Small businesses
actively engaged with customers or potential
customers via direct message feature or by replying
comments. Some businesses actively use view
insights feature to check impressions, engagement,
and reachability when they posted marketing material
on Instagram.
On social media platforms, the focus of the CRM
is to create powerful content by mentioning exactly
how much the price is of the item they are selling.
Few years back, it is common in Indonesia for online
shops to hide the price in an expectation that
interested buyers will contact the sellers directly via
BlackBerry Messenger. However, from what we have
found, it’s no longer a choice for most sellers.
Customers tend to choose online sellers that have
their item’s price published on social media. Sellers
also often use current issues in the marketing content
to increase their posts’ visibility.
We also found that timing is essential to create
higher interactions between sellers and buyers. With
younger generation as the captive market, 1pm to
8pm and from Monday to Thursday are the best time
to post content, this is due to the fact that the target
market are mostly students, who have free time after
school/class, but not on weekend where they usually
have lots activities.
Other than the content itself, on the marketing
strategy, online seller often provides a challenge with
prize or with a giveaway. This strategy is often
needed to increase number of followers on every
social media platform. These small businesses believe
that the higher the number of followers, the better
exposure they have, which by the end of the day will
improve their customer acquisition strategy.
4.2 CRM Construct
Even though most questionnaires returned with the
information that most sellers do not know what is the
definition of CRM, the practices performed by these
sellers are in fact has already adopted CRM strategy.
There are two important factors in implementing the
social CRM as explained in Figure 2 i.e. clear
objectives and good relationship.

The goal of applying social CRM approach is to
make recurring transactions from customers, increase
revenues, and improve engagement quality. From the
distributed questionnaires, it is found that customers
usually make repeat purchases when they received
good services, fast responses, and positive
testimonials from other customers. Recurring
purchases means that customers are highly satisfied
with the services given by the online sellers. As
presented in Figure 3, 77% of the online sellers has
experienced repeat purchases from customers after
positive feedbacks.
Figure 3: Recurring Purchases.
Other than recurring purchases, one of the key
factors found towards successful CRM
implementation is a good communication. A good
communication ensures a good relationship. To
communicate well, most online sellers use special
greetings so that customers feel respected and not
being intimidated. In Bahasa Indonesia (the language
of Indonesia), most sellers use word ‘kak’ (short from
kakak (kakak means older sister/brother), or sis (short
word from sister) as a polite greeting and salutation
before engaging in conversation.
According to the survey, these subsequent items
are the best way for online sellers when
communicating with customers:
a. Greetings. First impression last. Salutation is
always important for Indonesian people.
Customers tend to feel comfortable when they
receive greeting.
b. Conversation. All conversations should be to the
point with short sentences, good articulation, and
easily understandable
c. Responses. A fast response is always expected in
Indonesian market, where people won’t hesitate
to move on to other sellers if he or she thinks that
the online sellers does not cooperate/respond
well
d. Regular service. Small business should have
special time to interact with customers i.e. office
hour to make sure that conversation will always
happen
Even though Instagram dominate the social media
platforms used by both online sellers and customers,
other social media platforms or other communication
channels are also being established. In Indonesia, it is
very common for millennials to have Line messenger
installed on their smartphones. And they have used it
intensively to engage with each other (Situmorang,
2017). Hence, it’s just make sense for businesses to
also engage on this platform as well. In overall,
responsiveness is important factor to gain customers’
trust.
4.3 Customer Construct
The fact that the internet connection in Indonesia is
getting better affects the way customer interacts in e-
commerce platform. Many online sellers are
experiencing online haggling scenario, as previously
studied by Terwiesch (2005). People tend to do
haggling as they did not experience intermittent or
bad connectivity that will hamper their online
communication. The online haggling experience is
mostly happened with customers from Java where
65% of Indonesia’s internet users reside and also
where the internet connectivity is good. A good
internet connection makes customers and sellers have
more privilege to make the bargain. Customers have
more time to do research on items before they decided
to buy. And also, younger age customers tend to
perform online haggling as part of their online
shopping experience as they themselves have limited
income. From the conducted survey, most online
sellers targeted market are youth on age range
between 18 to 24 as illustrated in Figure 4. Hence,
online haggling activity is very understandable.
Figure 4: Customers’ Age Range.
The survey also obtained the fact that customers
who are close in proximity (not far from the online
sellers) tend to have their transaction finished longer
than those who live far away from the sellers. Most

customers who are in close distance to the sellers tend
to ask lots of questions and far more selective before
making transaction.
Just like the CRM construct, a good
communication is the key to build the trust
relationship. Online sellers expect a good outcome
from the electronic word-of-mouth on social media
platform that is built up from this trust relationship.
However, even though trust relationship has been
built, according to APJII (2016) report, only 70% of
internet users in Indonesia feel that online transaction
is safe. This also affects method of payment done by
customers.
Figure 5: Method of Payment.
Unlike many other developed countries where
most of users browse and buy from the online shop
directly, in Indonesia, 26.7% online buyers pay via
ATM and 14.2% of online buyers prefer to have them
by cash on delivery (CoD) method (APJII, 2016).
Hence, no wonder that the number of ATM payments
(45%) and CoD (36%) methods are also being
reflected in this survey as shown by Figure 5.
5 DISCUSSION AND
CONCLUSION
The results indicate that social CRM plays a
significant role in younger age market in Indonesia.
This study proposes three main constructs affecting
the successfulness of the social CRM implementation
namely Social Media construct, CRM construct, and
Customer construct. There are implications for the
finding. First, social media is really something that
cannot be left out by small businesses as their survival
kit. Social media has become a game changer in
Indonesia. It has proven that it is able to help gaining
CRM objectives to maintain long-term relationship.
To survive, small businesses should have good
communication and equipped with marketing
strategy to increase the number of followers on their
social media accounts. This study has some
limitations that can be addressed in to complete the
research. First, the number of study participants
businesses are still small and limited in Java Island
only. However, even though the number of internet
users outside Java are not as many as those in Java,
they are also potential market of online shop market
as their number is increasing fast (APJII, 2016).
Second, the constructs in the framework need to be
measured with more instruments e.g. revenues and
regulations. Finally, the research finding is collected
from small businesses that are already have at least
basic engagement with social media. A comparison to
other business entities that have not used social media
intensively can validate the results.
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