5 things business owners should know about Yelp

Google pretty much any local business, be it a restaurant or body shop, and chances are one of the top search results you’ll see is a Yelp review. This is no coincidence. Since its genesis in 2004, Yelp has quickly grown into a powerhouse in the space of crowd-sourced reviews, giving a voice to millions of people all over the world.

The empowerment of the customer is a very scary reality of the modern economy. Customers whose influence was previously limited to the friends in their phonebook now wield a megaphone that can reach customers all over the world. More than 83 million reviews are floating around Yelp, and every one of them can be accessed by anyone with a computer or smartphone.

While Yelp can be detrimental for businesses that consistently draw negative reviews, it can also catapult businesses that earn good reviews to unprecedented levels of success. At the same time, Yelp’s business practices, which strongly push customers to purchase ad space, have been the subject of a great deal of controversy.

So, as a business owner, what should you know about Yelp?

No opt-out capabilities

The toughest thing for business owners to accept is not being fully in control of their Yelp page. The most they can do is “claim” their business, which enables them to update their page with information, track new customers and respond to customer reviews. Since businesses don’t register their pages (Yelp does that itself by purchasing information from third party providers), they are not able to delete their page.

Pay to Play?

Yelp hopes that since you can’t change the rules, you might as well embrace them. And the best way to embrace them (and give your business an edge) is by lining Yelp’s pockets with ad purchases. The U.S. Court of Appeals for the Ninth Circuit recently ruled that not only are Yelp’s business tactics legal, but the review site could actually lower or raise the rating of a business depending on whether it advertises.

The almighty star system

Is a lower rating really that big of a deal? According to studies, yes. Yelp ranks businesses on a scale of 1-5 stars. Studies show that a one star bump on Yelp can increase revenue for a business by 5-9 percent, while a mere half star increase can trigger a 19 percent surge in sellouts at restaurants. While higher ratings lead to more purchases, evidence shows an even greater correlation between negative reviews and not purchasing.

Can my competitors review my page?

Yes, but chances are their reviews will be weeded out. Yelp has taken measures to protect the integrity of its review system, most notably with a new algorithmic filter designed to stamp out fake and malicious reviews. This is a critical step, as studies show up to 25 percent of reviews may be fraudulent.

What should you do?

The first thing you should do is claim your business. While Yelp’s practices might be somewhat unscrupulous, the site can be boost your bottom line even if you don’t advertise. Studies show that businesses with positive Yelp scores average around $8,000 more per year than their competition, while businesses that do advertise make up to $25,000 more per year. Yelp is here to stay. You might as well buckle in and put your business in the best position to succeed.