Behold the Power of Yelp
Yelp, the recommendation site, is a powerful tool for driving customers to your business. How powerful? Well, now we know. From Harvard Business School:
In just six years, Yelp.com has managed to crowdsource 20 million reviews of restaurants and other services by creating and leveraging an impressive social network of people who enjoy writing reviews. But can a bunch of amateur opinionators working for free really transform the restaurant industry, where heavily marketed chains and highly regarded professional critics have long had a stronghold?
To answer this question, HBS professor Michael Luca combined Yelp reviews with revenues for every restaurant that operated in Seattle, WA at any point between 2003 and 2009. Applying a new method to tease out the causal effect of reviews (separate from the effect of underlying quality), the study shows that a one-star increase on Yelp leads to a 5 to 9 percent increase in revenue.
Yet Yelp doesn't work for all restaurants. Chain restaurants —which already spend heavily on branding —are unaffected by changes in their Yelp ratings. This suggests that consumer reviews present a new way of learning in the Internet age, and are fast becoming a substitute for traditional forms of reputation.
This certainly confirms my experience. I use Yelp a lot -- mostly on the phone, to get map data and contact information. But I notice the stars. And I'm sure they have a subtle effect on my choices.
This seems like a very good thing. If a good reputation online can drive customers into a business, then maintaining that reputation will be as important as, say, advertising in a more traditional way. And, naturally, there will be an attempt by some businesses to game the system with phony reviews and paid-for recommendations. But Yelp may self-correct for that kind of thing:
...consumers respond more strongly when a rating contains more information. Consumer response to a restaurant's average rating is affected by the number of reviews and whether the reviewers are certified as "elite" by Yelp, but is unaffected by the size of the reviewers' Yelp friends network.
I'm a total junkie for this kind of research, especially when it involves web-based behavior. This really is a new phenomenon -- the ability to source and crunch so much data, so quickly, and with such granularity. We're all adjusting our decision-making processes to each new waterfall of data. I'm not sure I know what an "elite" status reviewer is on Yelp, but I'm certain that over the next year or so, I'll be influenced by several of them.
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Comments:
Re: Behold the Power of Yelp
Living in a city, I use Yelp on a near daily basis. If I'm meeting up with friends for a meal in a neighborhood I don't know well, I'll Yelp the restaurants in the neighborhood, and choose one of the top rated spots. I hardly ever go to a place that's rated 3 stars or less.
It's not just restaurants, though. I found both my church and my doctor on Yelp.
Apr '11
Re: Behold the Power of Yelp
Just curious Diane and Rob, have either of you given a review or have you just been the recipients of others.
Re: Behold the Power of Yelp
I've written five reviews. Two today after being inspired by Rob's post.
Aug '10
Re: Behold the Power of Yelp
Rob Long:
I'm a total junkie for this kind of research, especially when it involves web-based behavior. This really is a new phenomenon -- the ability to source and crunch so much data, so quickly, and with such granularity.
This is why I tell my grad students they need to learn a scripting language. Most of them don't.
Jul '10
Re: Behold the Power of Yelp
Yelp; Never heard of it. But if it's like RateBeer and other sites like it, it's practically worthless. There are tons of beers that many folks like that I hate. Hopslam being one of them. Most folks tastes prefer sweetness in a beer on a scale that I would call Cloyingly. Thankfully there's an "against the grain" option on ratebeer. For a place like Yelp, I would probably find that most folks prefer a style of cuisine I would call Ostentatious, Bland, or Greasy.
To counter the superficiality of a site like Yelp, I find the most worthwhile advice from message boards of like minded individuals. Ones where you've built up enough interaction with folks that you understand where they're coming from and come to value their opinion over time because of shared experiences. For example, if one of my mates on advrider.com said a restaurant, beer, wine, or shop was great, then I would believe 'em.
Apr '11
Re: Behold the Power of Yelp
"As a consumer review Web site, Yelp is so big and influential that it has given rise to a small, semi-underground group of entrepreneurs who, for a fee, will post a rave about your company. Others will post a negative review about your rivals."
“Our job is to find and filter out fake reviews,” he said. “At the same time we let our audience know that this system isn’t perfect. Some legitimate content might get filtered and some illegitimate content might sneak through. We’re working hard at it. It’s a tough one.”
It might be getting tougher. Unlike Amazon, which strives to keep Mechanical Turk spam-free, a handful of sites let users boast freely of Yelp-gaming prowess.
Among them is Fiverr.com, where people advertise tasks they are willing to perform for five bucks. A recent ad posted by “Katmoney” — many job seekers use pseudonyms — offered to write convincing negative reviews posted to a Yelp page of your choosing."
http://www.nytimes.com/2011/05/22/your-money/22haggler.html?src=recg
Apr '11
Re: Behold the Power of Yelp
fiverr
I will write...
http://fiverr.com/gigs/search?query=yelp&x=9&y=5
Nov '10
Re: Behold the Power of Yelp
I've never used it, and doubt I ever will, since I don't pay attention to restaurant reviews either. I much prefer wandering around, checking posted menus, and just dropping in on anything that looks worthwhile. That works particularly well in strange cities. The other method I use for finding new places is just recommendations from friends. In unfamiliar cities, it's also rather fun to ask strangers that look interesting where are good places to eat.
Dec '10
Re: Behold the Power of Yelp
I'll sign you up for a month of Ricochet for $5.
Re: Behold the Power of Yelp
Don't be silly. Yelp is helpful for services way beyond restaurants. EXAMPLE: Last week my laundry room drain plugged up. I called a rooter service I've used before. One hundred and seventy four dollars later they told me it couldn't be unplugged without a $600 hydrojet. When it backed up ten minutes after the guy left, he wouldn't even come back to try.
Had I not used them before, I would have looked on Yelp and seen dozens of complaints about this company and others with different names but the same 800 number. The plumbers work on commission and always upsell you. Called my regular plumber who turned me on to another rooter service. Seventy-five dollars later drain clear. I stopped the check to the other company and wrote a scathing review on Yelp, along with a plug for the good rooter service.
I've found sits like Yelp and Trip Adviser are most effective when reviews taken as a whole. Is there a common complaint? Or is there just one bad review from a grumpy person.
May '10
Re: Behold the Power of Yelp
Unlike Michael, I do like ratebeer.com, and also like urbanspoon.com. But I don't view them as the end-all-be-all for my decisions. I use them to guide my decisions. I go into it understanding that these are other peoples opinions, and they may not match my likes.
For instance, having spent many years in Texas, I know that on urbanspoon the local Georgia populace may have a different opinion than I as to what makes a good Tex/Mex restaurant. So I adjust accordingly. But there are usually some universal ideals of what makes a horrible restaurant. The same goes for ratebeer. It is usually these thing I look for.
If nothing else, these sites can help weed out the detritus, and assist you in making better choices.
I have not used Yelp, but perhaps I will give it a try...
Jul '10
Re: Behold the Power of Yelp
I take online reviews with a grain of salt.
Seriously, I may, may, start considering them when the reviewers have "skin in the game."
Jul '11
Re: Behold the Power of Yelp
I can tell you as someone who has managed restaurants for years that I hate Yelp (it may be better for people in other industries). I doubt that ten good reviews do a restaurant as much good as one bad review hurts, and complainers are more motivated to write than praisers. In my experience, most complaints are either not justified or are (seemingly) dealt with fairly at the time. For example, the woman who didn't think to ask what pancetta was, and then getting hysterical when she finds pork in her risotto. Even though she gets all or part of her meal comped with apologies (despite the fault being hers), she then rips you on Yelp, about how everything from the service to the management to the decor is terrible. And then the owner of the restaurant, who has not said a word of praise about your last dozen positive reviews, wants to call a meeting about the bad review "on that website." I should also mention the time I overheard a woman on the Subway talking into her cell phone about the negative review she gave on Yelp to try to get her waiter ex-boyfriend fired.
Apr '11
Re: Behold the Power of Yelp
I use yelp and rate places occasionally - usually places I like. I have friends who have had problems with negative reviews being posted by fired employees. For a restaurant with many reviews that might not be so bad. However, for a professional service with just a few ratings, a couple of phony one star reviews hurt.
I find Zagat much more useful if I am going to a new large town. However, Yelp's comprehensiveness makes it more useful for neighborhood joints.
So, ratings sites will probably come down to "curated" pay sites like Zagat for those who need reliability and free Yelp sites that are more comprehensive, but less reliable.
Like Ricochet vs all them free sites. We have fewer, but better comments.
Dec '10
Re: Behold the Power of Yelp
I sort negative first on user review sites. I disregard any that are petty, vindictive, or seem to have an agenda. However, the negative reviews are usually more telling than the gushing positive reviews. It's the negative reviews that are likely to list a deal breaker for me.
Nov '10
Re: Behold the Power of Yelp
Denise - any reason why you didn't call your regular plumber first? It would have saved a lot of headache. Maybe I'm just an antique, or maybe I've just spent too much time in small towns, but for problems I can't deal with myself, I first go to people I know personally for recommendations.
Grotiushug's post above indirectly raises an important issue - every critique (good or bad) of a service or product depends not just on that service or product, but on the individual making the critique. If you aren't familiar with the critic, how does one evaluate what they say?
Apr '11
Re: Behold the Power of Yelp
Alinskyite attacks work against politicians why wouldn't they work against restaurants?
I know some people in the restaurant business and they have had a great deal of trouble with online negative restaurant reviews which have been traced back to their competition.
That being said I have found both Yelp and Urbanspoon useful for restaurant information Urbanspoon has "Prime" contributors who may be worth noting.
"Urbanspoon Prime is our way of acknowledging the most active members of the Urbanspoon community. These are people who write tons of reviews, share new restaurants and fix mistakes for the rest of us."
Yelp is far larger and covers a much wider range of enterprises.
Apr '11
Re: Behold the Power of Yelp
First look at Yelp... Saw some places to try out that I'd not heard of. I'm wary of the reviews, though. There were a couple of spots accumulating 4/5 star reviews that I know to be dreadful. It's amazing to me what passes for fine food (and I'm not a picky eater).
May '11
Re: Behold the Power of Yelp
I find that many of the reviews on urbanspoon are deliciously pretentious. Some people are so in love with their opinions that their comments are hilarious. That happens on ricochet occaisionally but the feedback limits it.
Dec '10
Re: Behold the Power of Yelp
Fair enough. But I find that yelp and tripadvisor are great places to start. If you have never tried them its kinda hard to explain. The reviews aren't like movie or book reviews. I think I can count on one hand the number of times I have been disappointed by a top ranking place and can think of even fewer times I have been impressed by a low ranking place.
With literally hundreds of places to chose from I use the sites to help narrow down my options to something manageable.