Why Small Business Needs To Pay Attention To Yelp

Shel Israel believes it's time for small businesses to join the conversation on Yelp.
CEO, SI Associates
September 22, 2011

It all starts with a moving experience. My wife and I, for example, recently endured the exhaustion of moving households. Moving day was grueling. It started in one home at 6 a.m., and we were still slogging at 8 p.m. in our new home when we discovered we were both starved, with no food in the house and no knowledge of local restaurants.

I hopped online and did something I had never done before: I went to Yelp.

At the top of the list for affordable restaurants in our new hometown was Finnegan’s Marin, a local tavern. I found 98 reviews and an overall four-star rating. The place turned out to be almost exactly as Yelp reviewers had guided me to believe. We got burger based on Yelper recommendations and washed them down with cold, fresh pale ale from nearby Lagunitas.

The following day, I wrote my first Yelp Review. I consider myself on the tough side, but I gave it four stars. A couple of hours later, Henry Hautau, the owner, e-mailed me a thank you note. I was impressed that he considered Yelp so important and was watching so closely.

Since then, I’ve used Yelp to help me find other restaurants, a hair stylist, a car wash, a plant nursery and a dentist. I’m not as addicted to it as I am to Twitter, but I find it very useful in the same way I found Google Search, which recently bought a Yelp competitor.

My research for this column, as is true for all my OPEN Forum columns, started over on Twitter where I ask my followers for useful or interesting comments on my subjects. There I got hit with a curve ball. While I received several favorable comments from users and a couple of merchants, I also received several disturbing comments and links that challenged the legitimacy of the review service. Three of them gave me pause. I was told:

  • If you don’t advertise, good reviews get taken down.
  • If you do advertise, negative comments are made to disappear.
  • Yelp reviewers shake down local merchants for freebies to avoid negative reviews.

I took these questions to Darnell Holloway, manager of Local Business Outreach in Yelp’s San Francisco headquarters. He unequivocally denied them. “There has never been any amount of money you can pay Yelp to manipulate reviews,” he stated flatly.

Speaking at TechCrunch, Yelp CEO Jeremy Stoppleman also denied the charges, dismissing them as "conspiracy theories.” He pointed out that a class action suit related to these charges was summarily dismissed in court.

In speaking with several merchants about Yelp, I learned that all had heard these charges, but not one had experienced anything close to it. I contacted a couple of people cited in links on Twitter. Neither replied.

To further investigate, I turned to my first Yelp friend: Finnegan’s Henry Hautau who has been following Yelp for his restaurant since 2005. He told me that his high ranking after 99 mostly favorable reviews has brought him new business. He added that some criticism has been constructive and he has made changes partially based on them.

As far as the objectivity of reviewers, Hautau saw two camps. The first provides honest, balanced commentary. The second however, is people with axes to grind—such as disgruntled former employees. The latter group writes not to help other customers, but to damage a business reputation.

He said Yelp has been responsive when he has complained—not at a negative review, but ones that are intentionally misleading or written under aliases rather than the required real names. In six years he has complained about 10 times and Yelp has removed about half of the posts.

Hautau checks Yelp once or twice each day. He probably pays more attention to the negatives than the positives, looking for “legitimacy clues.” He checks to see what else a negative reviewer has written, how often and where. If he feels the panning review was authentic, he responds with an apology and an invite for a second try with a free dinner.

Finnegan’s position as Yelp’s favorite Novato restaurant is also clearly not influenced by advertising. He has never placed an ad. “I don’t see the ads when I go to Yelp. Maybe that’s because I’m just looking at what’s written about Finnegan’s,” he said.

Yelp’s Holloway seemed to argue that Hautau is handling negatives the right way. “You have to join the conversation,” she said.

To help merchants in this area, she said, Yelp provides tools to allow private conversations between merchants and reviewers allowing business owners to respond privately if they wish, which at times has certain obvious advantages.

Beside, the negative review issue may be overblown, from her perspective. She pointed out that about 80 percent of all Yelp reviews are or three stars and above meaning neutral or favorable. And she asserted that an independent study claimed Yelp reviews are generally more balanced than other review sites.

Holloway also observed that businesses tend to do online as they do in real life. “ We see that businesses who demonstrate the best customer service are the ones that always come out ahead.

I do not serve as an investigative journalist at OPEN Forum. But I do know that any venue visited by millions of people every day will be the target of some abuse. My talks with Yelp and a few merchants have persuaded me that the company is as vigilant as other major Web companies in preventing gaming, scamming and shakedowns that may—or may not—have occurred previously (just like Twitter and Google.)

I also believe that online reviews are already awesomely influential for local merchants. And with recent forays of Google and others to get into the reviews business, they will become increasingly important over time.

It is wise to pay attention and be responsive to anything said about you on Yelp. It is also legitimate—and a good idea—to tell a happy customer that a Yelp review will help. Like Holloway says, it's time to join the conversation.