Three things small business owners need to know about Yelp
Jeff ToisterWhat do you think of Yelp? Some business owners love it while others hate it. But like it or not, your customers are using consumer rating sites like Yelp to make decisions about your business. They’re filling out their own customer service surveys for the world to see, and other customers are deciding whether or not to give your business a try on the strength of those reviews.
If you are a small business owner, you should understand three things about Yelp.
#1 Yelp Drives Business
I was recently chatting about Yelp with Tara Julian, the owner of Hair Play, while she gave me a haircut. She mentioned that if you Google “best men’s haircut in San Diego” the first search result directs you to a Yelp page with Hair Play Salon at the very top. Tara joked that she didn’t know if she truly gave the best men’s haircut in town, but she knew she did a good job and works hard to take good care of her clients. Yelp was how I had found Hair Play myself, and I’ve certainly found Tara deserving of the five star rating so many clients have given.
Good reviews drive business. A 2011 study by Michael Luca at the Harvard Business School estimates that a one star increase in a Yelp rating generates a 5 – 9% increase in revenue for a small restaurant. (Read the study here.) While his study was limited to restaurants, consumers turn to Yelp to decide where to get their hair cut, find a garage door repair service (thanks Up and Down Garage Doors!), or find a housekeeping service (thanks Pure Cleaning Agency!).
What’s the best way to earn good reviews on Yelp? Make sure you consistently take great care of your customers. Which leads to #2…
#2 Yelp Provides Feedback
The beauty and bane of Yelp is the unvarnished, public feedback that customers post alongside their reviews. Some business owners feel that people only write reviews on Yelp to complain or support their friends’ businesses, but in between the flowery praise or angry rants are often some very useful points of feedback. Look at the most consistent comments made about your business, both good and bad, and you’ll see a fairly accurate picture of what your company looks like through your customers’ eyes.
For example, if you look carefully at the comments reviewers have made about Pure Cleaning Agency, you’ll notice people who give them great reviews tend to really like the person who cleans their home. My wife and I are definitely in this boat and have relied on the same terrific house keeper for a couple of years. The bad reviews are typically written by someone who had a bad experience on their first visit. Clearly, success at Pure is linked to making a positive first impression.
What’s the best way to use customer feedback? Act on it! Which leads to #3…
#3 Yelp Can Help Solve Problems
Feedback that consistently points to a similar problem should prompt small business owners to make necessary improvements to improve service. For example, Pure may want to look for ways to make sure the first visit with each new customer is spectacular. If this is their achilles heel, then getting better in this area will help them convert more first-time customers into long-term fans.
Individual reviews can also provide an opportunity to rectify specific customer service issues. Yelp allows business owners to respond to customer comments, and savvy owners take advantage of this feature. A best practice is to reply to an upset customer, apologize for their poor experience, and offer to contact them privately to discuss a solution. One caveat here – avoid turning a customer service response into a customer confrontation. It’s always bad to argue with a customer, but it really looks bad when that argument takes place via a website that’s accessible to the public.
Reader Comments (7)
I love this! I have debates with managers all the time about how they feel Yelp is not valid because people are offered goods/discounts for a positive review. However, it IS something people look at, myself included. I think the bad reviews are pretty accurate, and service had to be bad enough for someone to take the time to write it up. It is great to hear there is a study correlating ratings to profits. I will definitely share that!
Herrminator - interesting comments about managers discounting reviews on Yelp. Good idea about sharing the study!
Hi Jeff,
I like the idea of Yelp as a feedback tool, though hopefully most companies are soliciting that feedback in other more personal ways. And it does provide an opportunity for service recovery.
What I question with Yelp is the universality of its importance. I would love to see more industry breakdowns as time goes on. Non-chain restaurants seem to be an obvious area where it can matter. But does Yelp affect the traffic at the local Olive Garden? Or a gas station that owns a good corner?
I think all of your points are dead on, and no doubt, Yelp is here to stay. As time passes, hopefully it will be more clear where it has an effect and where it doesn't.
Good stuff!
Thanks for your insight, Adam. Good point about there being many factors besides Yelp that can drive a customer to (or away from) a business.
Great article Jeff! I use Yelp all the time, and we're always checking our reviews here at the club. Nice work!
I run into owners and senior managers all the time who say that customer review sites like Yelp or TripAdvisor have not had any significant impact on their business. What they don't understand is that their perception doesn't count. All that counts is the customer's perception. I attended a presentation by author and sales expert Michael Angelo Caruso and this stuck with me: "If I say something nice about my business that's advertising. If someone else says something nice about my business, it's The Truth." And numerous surveys have confirmed that customers believe review sites like Yelp, as well as Facebook rants or raves, more than any advertising. I am convinced that their significance in affecting customers' buying perceptions will explode in the next few years. Businesses who "get it" will thrive. Those who nay-say customer opinion will perish. (Are you listening Best Buy?)
And with the tipping point in mobile phones now upon us, the significance of these customer review sites will be game changing. Many people will certainly download the Yelp app before they clutter their phones with 101 apps from individual local businesses.
More importantly, it is critical for businesses to listen to voices like yours. Too often managers live in a silo and have no real idea of what people are saying about their businesses. Living here in Detroit, I believe that the auto industry collapsed because senior management simply looked out their windows onto the parking lots filled with their SUV's and pick-up trucks and while driving home only saw American cars on the road and in their neighbors' driveways. They never saw or heard what was happening beyond their professional comfort zone until it was too late. I am convinced the customer voices from blunt, uncensored Yelp reviews along with people like you who bring knowledge of customer trends and alternative perspectives would be much, much more valuable than an internal "Emperor's clothes" review process. Your perspective in this post should serve as a starting point for a critical discussion in customer engagement.
Thank you for sharing. Looking to learning and seeing things differently via your insight in future posts.
Bill - thank you for your comments. You make a good point about the difference between the business owner's perception and the customer's perception. As a gross generalization, it seems that businesses with great reviews like Yelp. Those will less stellar reviews are not big fans. That definitely goes to your comment about perception vs. truth.
Paul - I took a peak, and your Yelp reviews look good overall. Still, it says something about your commitment to people's experience that you look at the reviews and try to find ways to improve!