Next to Google, there's probably no more important site for small businesses than Yelp. Yet perhaps no other site is as poorly understood. For instance, is it a good idea to encourage your customers to give you good reviews on the site? Does Yelp pay for reviews? How do you go about countering bad reviews?
Since Yelp is such a juggernaut, it's important to get the facts straight. With that in mind, take a look at these 10 things you may not have known about the service.
1. Most of its traffic is from its homepage. You might think that in 2012, most people would be accessing Yelp from their smart phones, but that's not the case. Sixty percent of searches are from desktops, and the company's mobile apps are used by about 7 million people. Yelp.com gets 78 million visitors per month. However, like other social media companies, the trend is definitely favoring mobile.
2. Restaurants aren't the biggest category. Shopping reached parity with restaurants in September 2011, but has since surpassed that, says Darnell Holloway, Yelp's manager of local business outreach. Though Holloway says that perception still lingers; he believes that restaurants have a natural advantage because they get so many customers compared to, say, a dentist. Says Holloway: "If I'm a diner, I'm probably going to see more people coming through the door."
3. Encouraging customers to post reviews is a bad idea. It might seem like closing a sale with "don't forget to tell people about your experience on Yelp!" is smart marketing, but Yelp discourages this practice and other forms of review coercion. "We recommend that people focus on awareness rather than asking for reviews," says Holloway, "because then it becomes an arms race." But wait, shouldn't Yelp want more reviews? After all, more reviews equals more traffic and, in theory, better reviews if you believe in the wisdom of crowds, right? Not according to Yelp. The company believes in quality over quantity. Moreover, "We don't believe that consumers necessarily want to be seen as a promotional vehicle."
4. Those 'People Love Us on Yelp' stickers? You've gotta earn them. The Yelp sticker seen around town is a genuine accolade designed to be akin to a high Zagat rating. That means that you can't order a "People Love Us on Yelp" decal for love or money. Instead, the company doles them out twice a year to companies that get overall high ratings.
5. Yelp provides free signage via Flickr. Though Yelp discourages merchants from bugging customers to write reviews, it is a proponent of more subtle means of persuasion. For instance, the company provides downloadable signage via a Flickr stream. Holloway also recommends putting a Yelp link in your email signature and on your business card.
6. Yelp has paid for reviews in the past. Though Yelp strives to maintain the purity of its reviews, the company has in the past paid people to write them. CEO Jeremy Stoppelman told The New York Times in 2007 that "there was a time in our earlier days where we experimented with paying for reviews directly in cities outside of San Francisco to help get the ball rolling in our otherwise empty site." However, the company has not done this for at least four years.
6. Customer service appears to have the strongest effect on reviews. Yelp's research has found that a customer whose review praises "customer service" is more than five times as likely to give a five-star review than a one-star review. Similarly, nearly 70 percent of those who trash a business' customer service wind up giving a one-star review. In a May blog entry on the topic, Yelp featured a word cloud of terms that popped up in positive reviews. Obviously, it seems to pay to be friendly, nice and helpful.
7. Every Star in a review leads to a 5-9 percent jump in revenues. A study by Michael Luca, a professor at Harvard Business School, found that there was a correlation between a high Yelp ranking and revenues. Luca just looked at the restaurant industry in Seattle, but his findings were a ringing endorsement for Yelp. Among other things, it found there were far more Yelp restaurant reviews than there were from Zagat or The Seattle Times.
8. Yelp tends to favor independent businesses over chains. If you're a McDonald's franchisee, don't waste any time worrying about your Yelp reviews. According to Luca's study, Yelp's effect on chains is "statistically insignificant and close to zero." Luca also found that when Yelp penetrates a market, "there is a shift in revenue toward independent restaurants." This is not by design, but based on the fact that reviewing a McDonald's in St. Louis is a rather absurd exercise since it will likely be very similar to a McDonald's in Kalamazoo, Mich., or Newark, N.J.
9. Business owners can dispute reviews on Yelp. If someone trashes your business on Yelp, you don't have to sit back and take it. In fact, Holloway recommends business owners go on Yelp and dispute. The reviewers can then answer the business owner if need be.
10. Legal threats for bad reviews can trigger 'The Streisand Effect.' Yelp reviews operate in a gray area between journalism and customer service. If you're a business owner and see a scathing review that is completely incorrect, you may consider it akin to slander and be tempted to call your lawyer. However, Yelp cautions against this. In an FAQ on its site, Yelp evokes "The Streisand Effect," in which an action has the unintended consequence of drawing more attention to the problem. (The term got its name from Barbra Streisand, whose attempt to suppress photos of her home backfired.) As Yelp counsels: "Far from being cowed, recipients will sometimes go public with them as a warning to others not to patronize your business. Second, beware of lawyers who are quick to file lawsuits without telling their clients that it can cost them dearly. Last, take a step back: if you find yourself insisting that a review is obviously untrue, there's every reason to think that your customers will draw the same conclusion as you. Even if they don't, Yelp's review filter is always on the prowl, and it may be able to put enough pieces of the puzzle together over the long-term to filter out the bogus review." Photo courtesy Yelp.com