Is Yelp a Boon or Bust For Small Business?


The a-ha moment behind Yelp came courtesy of a persistent cold. Co-founder Jeremy Stoppelman came down with a cold he couldn’t shake, and couldn’t find a recommendation for a Bay Area doctor. He knew that his friends and neighbors must have opinions, and in seeking a way to harness their advice like a natural resource, Yelp was born.

Part online guide to local businesses, part social network, Yelp has built an incredibly loyal user base since its launch in 2004. The 21-city network has emerged as one of the most visited review sites on the Internet, with 13.5 million unique hits last month, by Google (Stock Quote: GOOG) analytic’s count. A large part of Yelp’s appeal comes from the way users, who call themselves Yelpers, can interact and create online identities through the site. “When you think about what makes Yelp special, I think that from the outset, it was that we focused on the user,” says Stoppelman, Yelp’s CEO. “As we built out Yelp we thought about it as this soapbox for people who had opinions that they wanted to share.”

For the small businesses reviewed by Yelpers, those many soapboxes can be both a boon and a burden. While Yelp may serve as a default web page for businesses without their own Web site and offer great exposure, the terms of use can feel stacked in Yelpers favor when proprietors receive negative reviews.

But Yelp is starting to recognize the need for small businesses to address claims. In April, Yelp created a special type of account for business owners, giving them a way to communicate with users privately, so as not to publicly fan the flames of a negative review. Then in June, the company purged a group of user accounts suspected of being set up only for the purpose of promoting friends and colleagues’ businesses. Still, some business owners have been left feeling like targets, lacking public recourse when they’re slammed online.

Linda Derschang, the owner of four restaurants in Seattle, Wash., says that she and her employees have been attacked several times over the past few years in Yelp reviews that took on a personal edge. “Too often, it’s just mean things,” she says of some of her reviewers. “I wish I could write something about how they do their job and post it somewhere their boss could read it.”

Recently, a customer visiting Seattle from New York left a one-star review of Derschang’s restaurant Smith, accusing her of ripping off the interior and menu from Freeman’s Alley, a popular New York City joint. While Derschang was able to email the customer and explain that she had been opening restaurants in that style since 1994, far pre-dating Freeman’s, the customer’s response was not apologetic, and the review remains online. “I don’t want people reading it and saying, ‘Oh that’s where Linda got the idea for Smith,’” she said. “It’s just not true.”

Stoppelman acknowledges that while the majority of the reviews on Yelp are positive, these negative and even badgering reviews exist. “In the world of consumers, there are a certain number of customers no one can satisfy,” he says. And, he adds, when negative reviews aren’t overtly mean-spirited or crazy they can actually help owners strengthen their businesses and better understand the customer experience.

Stacy Levy, spa director at Exhale, a day spa and yoga center in Chicago, IL, agrees. “Yelp has been really interesting in terms of giving our guests a voice,” Levy says. “Any business is going to have positive and negative reviews, but it’s given us exposure and a great way to know where to improve.” She also notes that Exhale is in an out-of-the-way second-story location, and Yelp helps make up for lacking foot traffic.

The user-centric model that attracts so many Yelpers to the community is intended to function as a review filter. “The biggest thing we ever did [to ensure high quality reviews] was to make your own identity central to the Yelp experience,” Stoppelman says. That includes “having photos of yourself and having all your reviews easily accessible so that you can find out the reputation of that user within Yelp.”

Looking at the negative review that upset Derschang, Yelp spokesperson Stephanie Ichinose points out that the critical user has no friends on Yelp, no picture posted and it’s her only review. Additionally, Derschang's restaurant has over 100 reviews to contrast the one in question. “You look at this page and [Derschang’s restaurant] has three and a half stars, so they’re doing something really good here,” says Ichinose. “Then you get down to this one review that’s making this pretty outlandish claim, and this is all that she’s done, she has one review and no other information about herself. Most users will just dismiss that right off the bat.”

“No,” Derschang says when learning about the way readers might be able to distinguish between different types of reviews. “That’s not a comfort to me. It’s just the world we live in – there are going to be unpleasant things written about you and you just have to let it go.”

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