The Influence of Service Quality and Digital Literacy on Customer Engagement at Limi Stuff in Palu

Abstract

This study analyzes the influence of service quality and digital literacy on customer engagement at Limi Stuff in Palu City. Optimizing the quality of interaction and utilization of digital channels is the key to the sustainability of modern retail. A quantitative approach was used with 50 respondents who are active customers and have used digital services when making transactions. Service Quality is measured through five dimensions of SERVQUAL (tangible, reliability, responsiveness, assurance, empathy); Digital Literacy includes the ability to access, understand, and manage digital information safely and effectively; while Customer Engagement is measured through cognitive, affective, and behavioral dimensions. The reliability of the instrument is very high (?X1 = 0.973; ?X2 = 0.849; ?Y = 0.960). The regression results show that Service Quality has a positive and significant effect on Customer Engagement (B = 1.091; t = 16.082; p < 0.001), while Digital Literacy has a negative but significant effect (B = -0.329; t = -2.667; p = 0.010). The negative effect arises because higher digital literacy makes customers more critical toward inconsistent content quality and security gaps in digital channels, leading to more selective rather than emotionally over-involved engagement. Simultaneously, both variables explain 90.2% of the variation in customer engagement (R² = 0.902; F = 216.514; p < 0.001). The findings confirm that service quality is the most dominant factor in increasing customer interaction, so improving service standards should be a priority to strengthen engagement in Limi Stuff's digital marketing.