Why Yelp Scares Businesses More than the Taxman

Does Yelp Help Business

Posted on August 25, 2015

Over the last few years, Yelp! has become one of the most hated companies by business owners.  As a digital marketing consultant, I’ve spoken with more business people who say they’ve been damaged by Yelp than helped.  Many business owners fully believe the Yelp corporation employs strong-arm sales tactics while being cordial with users who spin reviews for personal gain.  Does Yelp help or hurt your business?  This article will provide insight on how to handle your company’s relationship with the Yelp service.

Billion Dollar Bully?

Of all user-generated review websites on the Internet, none draws more ire than Yelp.  The indignation towards Yelp is so intense it prompted Kaylie Miliken to produce a documentary, titled Billion Dollar Bully.
https://youtu.be/l2dkJctUDIs

Why is Animosity Towards Yelp so strong?

https://youtu.be/s1lJuu44cJA
Of all Internet review sites, merchants are quite emotional about Yelp because of the way they run their business.  It feels like a shakedown.  In 2013, the Washington Post investigated Yelp’s powerful influence on local economies and its “detestable” reputation of pressuring merchants to advertise in exchange for better ratings.  

The Good, the Bad and the Ugly

As a third-party observer, I can corroborate that several of my own clients experienced questionable behavior from the Yelp organization and specific reviewers.  The following is what’s publicly known about Yelp, however rarely discussed…

Yes, Yelp! Knows Many Reviews are Fake

Genuine-Yelp-ReviewsIt’s become accepted in the digital marketing industry that a significant portion of Yelp reviews are, in fact, fake.  Why?  For several reasons, such as… There are online reputation management firms that generate fake positive reviews for their clients and negative postings on their clients’ competitors in order to influence the local marketplace. There are also fake reviews produced by real people for ‘social justice‘ purposes, such as targeting the man who hunted Cecil the Lion. Harvard Professor Michael Luca determined that as much as 20% of 2014 Yelp reviews are fake.  Corroborating Professor Luca’s findings, Yelp has acknowledged that they believe as many as 25% of their reviews are ‘suspicious’.

Yelp’s CEO Actually Admitted They’ve Paid for Reviews

It is true.  Yelp has confessed that they have performed the questionable practice of paying for reviews in the past.  In a 2008 New York Times article, the CEO admitted to paying people to write reviews in metro areas they were entering.  However, Yelp now claims they no longer pay individuals for reviews.

Obscured Yelp Identities Provide for a Criminal Environment

Yelp’s practice of not associating real names with postings emboldens enough reviewers to publish whatever they please; whether it’s truthful or not.  Certainly, most reviewers would not publish scathing diatribes if their full name was published with a byline. Some reviewers even take the act of critiquing businesses to the next level.  These individuals are legitimate customers; and, what they do is write poor reviews with the intent of extorting freebies, discounts or coupons from a merchant. Yelp-reviewers-emboldened-through-anonymity This ugly scam usually goes along the lines of something like this…  The reviewer first patronizes a business and then writes a bad Yelp review. Once a merchant corresponds with the reviewer to remedy any wrongs, the reviewer makes demands and offers to provide an improved revision of the review once the demands are met.  In order to avoid a poor rating average, the merchant reluctantly gives in to the demand – especially if it requires less expense and resources than contesting the review with Yelp.  This scenario unfolds regularly on Yelp. Many of these suspect reviewers create publicly accessible digital histories with an obvious pattern of amending poor reviews for personal gain.  Yelp says such behavior violates their Terms of Use, and merchants should report such violations to Yelp.   The challenge for most small business owners is that they’re preoccupied managing their own business.  They, frankly, don’t have time (and shouldn’t be obligated) to be an unpaid participant of Yelp’s editorial fact-checking staff.

Yelp Advertising

Yes, Yelp sells ad space.  And, their sales people aggressively pursue customers.  Their aggressiveness may be good for Yelp’s bottom-line, however their approach tars their own reputation.  If their ads are so great, then why aren’t merchants clamoring to sign up? Yelp’s advertising programs are not cheap.  They start at several hundred dollars per month. The big question business owners always ask… “Will Yelp ‘unfilter’ my good reviews if merchants advertise?” Yelp claims they won’t.  A Yelp salesperson, however, can expedite the internal reassessment of filtered reviews that may be legitimate or bad reviews suspect of violating Yelp’s guidelines. The fact of the matter is, I’ve seen good reviews become ‘unfiltered’ within a short time after a client signed up for one of Yelp’s advertising programs.  Was it because the salesperson asked for an internal review of certain postings?  Or was it because advertisers on Yelp received preferred ratings?  I just don’t know.  I do know, though, 84% of my client’s reviews were again filtered once the advertising campaign ended.

“We put the community first, the consumer second and businesses third.”

– Jeremy Stoppelman, Yelp’s chief executive, as quoted by the New York Times in 2008

There are more advertising choices for businesses now than at any other time.  So, does it really make good business sense to advertise with a venue who’s mantra is to place businesses third?  …behind the consumers who regularly criticize the advertisers?

Most Reviewers Tend to be Urban Millennials

Millennial-Generation-Yelp-ReviewsThe group of users who publish reviews and the group who only reads reviews on Yelp are of two disparate demographics.   According to Mike Blumenthal (a well-known authority on local marketing), the gravity of Yelp’s reviewers tend to be a less-conservative, more youthful and highly urban audience.   The opinions from this narrow segment of the population skews all Yelp users’ perception of local businesses.  Yelp has also suggested that their readership audience is more diverse and has more life-experience than the typical reviewer. Refer to Yelp’s explanation of the “1/9/90 Rule” and Yelp’s own stats page.

Yelp Can Metastasize a Small Business Glitch into a Colossal Financial Injury

Reasonable people understand that even great small businesses face hiccups, that can hinder a company’s service or product quality.  These dips are usually temporary and typically occur when a business is growing rapidly and can’t keep up with demand.  Or, when the owner goes on vacation.  Or, on a day when a key employee calls in sick.  It happens to all successful businesses at some point.  Unfortunately, these temporary glitches can trigger a slew of poor and mediocre reviews, damaging a company’s Yelp rating and revenue stream.  A 2011 business study by Assistant Professor Michael Luca, of Havard Business School, found that every one star rating leads to a 5-9% increase in revenue for restaurants (the second most popular business category on Yelp).

Develop a Long-term Plan for Dealing with Yelp

Make-a-plan-for-social-review-sitesWhether your company has a great Yelp rating or no reviews at all, be sure to have some sort of strategy ready for dealing with Yelp when you need to. Yelp reviews are primarily focused on consumer-facing businesses.   B2B reviews are rare; however, a quick quarterly check might be worthwhile just to see if your business is on their radar.

Should Your Business Advertise with Yelp?

If you’re a small business with $300 or $600 available in your monthly marketing budget, your money will probably be best spent elsewhere.  As a digital marketer, I usually don’t recommend Yelp’s advertising.  Every client of ours that has pursued Yelp advertising never realized a sales bump from the effort.

Yelp Reviewers Focus on Certain Business Categories

All small businesses should ascertain the likelihood for receiving Yelp reviews according to their niche.  Businesses falling in certain categories will encounter more active reviewers than other businesses.

(Click graph to enlarge)

Be Mindful of Your Company’s Customer Service

Of all things critiqued on Yelp, a company’s quality of service is the most written about.  A business with a mediocre product can easily achieve a 4+ aggregate rating just by providing superior service.   Although no company can completely satisfy every customer at all times, a great product is far less likely to overcome the deep passions ignited by poor service.

Acknowledge Your Customers

Prevention is the best medicine.  As a small business owner, your time is precious.  However, taking a mere fifteen minutes per week to acknowledge your customer online reviews (both critical and positive) will do a lot to inoculate your business’ long-term online reputation.  Thank the reviewers that rave about your company.  And, reply with grace and charm to those who publish a less-than-stellar monologue.  Chances are, you won’t get them to change their review; however, your Yelp audience will take note on how the situation was handled.

When Your Business is Hit by Critics

When-Your-Business-Gets-Hit-by-Yelp-CriticsIf your business is currently in the hole with a slew of mediocre reviews, just don’t react.  Act smartly. It may be time for investigation or self-reflection.   Who are the reviewers?  Do they look suspicious?   Are they legitimate grievances?  Every situation is different.  However, you may want to consider conducting a campaign to push for positive reviews with the clients that love you. Inc.’s online article provides one strategy on handling Yelp reviews.

Social Media Reviews are Here to Stay

Yelp’s concept of publishing business reviews isn’t new.  It’s just another incarnation of the old-fashion newspaper critic; whether it be the movie critic, restaurant critic or fashion critic. One positive aspect of these contemporary review sites is that businesses now have more influence in the review process.  While news columnists of the past could completely make or break a business with a single review, sites like Yelp now give businesses a second, third and fourth chance through an aggregate review system published over time. Accepting that these sites are here to stay, understanding how they work and adapting marketing efforts to this local-centric type of public correspondence is now paramount to every company’s success.  How you promote and guard your business’ reputation is unique to your business niche.  There is no ‘one-size-fits-all’ solution for online reputation management.  However, ignoring Yelp and other review sites isn’t a recommended business practice. Here is Yelp’s advice on responding to a bad review.

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Written by Peter La Fond

Having lived most of his life in Northern California, Peter consults for organizations of all sizes on Internet marketing engagement, strategy and execution. He regularly speaks on website design techniques and WordPress. Peter is a graduate from California State University, Sacramento, and practices the ancient art of eating sushi with nose-hair-curling wasabi.

About My Internet Scout

Based in Wilmington, North Carolina, My Internet Scout, LLC is an Internet Marketing firm for small- and medium- size businesses. We specialize in WordPress website design, marketing and related services that include e-commerce, event registration, maintenance, content creation and search engine optimization (SEO). We service a variety of clients across the United States.

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