The influence of customer involvement and engagement on co-creation of services, satisfaction, and loyalty: The case of Software as a Service

Abstract

Software as a digital product has been shown to improve companies’ performance and efficiency. One product that is now at the core of many businesses is Software as a Service (SaaS). By utilizing cloud computing platforms, SaaS is a method of providing applications as a service. SaaS applications have unique characteristics that can be customized to meet customers’ needs. Hence, SaaS has become suitable for companies of all types and sizes, including small- and medium-sized enterprises. The purpose of this study is to examine the effect of customer involvement on the development of SaaS applications and the impact of customer engagement on the co-creation of services, satisfaction, and loyalty, with the co-creation level used as a moderating variable. Data were collected from responses to an online questionnaire by 282 users of a SaaS application in Indonesia who were the decision-makers of the selected SaaS provider. The data were then analyzed using structural equation modeling. The results show that customer involvement in developing SaaS applications significantly positively affects the co-creation of services, satisfaction, and loyalty (t-value > 1.645). Moreover, the level of co-creation was proven to strengthen the impact of customer involvement on the co-creation of services with an interaction Standardize Loading Factor (SLF) path of 1.36. Hence, the findings indicate that higher customer involvement promotes collaborative activities with service providers, and the optimum level of co-creation raises customer satisfaction.