The Pitfalls of Ignoring Yelp and Yelpers

YelpIn this virtual, crowd sourcing community we all live in now, with “like” buttons and “share” buttons and hundreds of new best friends, news travels fast with Yelp. Bad news travels even faster. A 140-character tweet can destroy a career or decimate a business. And as businesses operating in the 21st century are learning, a negative review on a user review website can result in lost profits and damage to your business reputation. Businesses, no matter how small, cannot afford to ignore the growing prominence of user review sites, such as the king of them all, Yelp, as well as Citysearch, Yahoo and Google Places. Yelp and now Google, are integrating social networking and promoting online communities of reviewers and “friends” to drive traffic and generate millions of reviews. And businesses need to jump on board.

These legions of “elite” Yelp reviewers even get together in the real world for meetups and sponsor events with local businesses. The once anonymous souls who posted, oftentimes, bizarre screeds on review forums have come out in to the light. They are now your neighbors, real customers and potential customers. And if they feel aggrieved, they feel empowered to yelp at the top of their lungs.

The Birth of Yelp

Yelp was launched in 2004 by a couple of former PayPal founders. The San Francisco based company now operates internationally in Canada, Germany, Austria, the Netherlands, Spain and France, providing millions of user reviews of restaurants, shopping, entertainment venues and services. The company earns the bulk of its revenue from display and search ads. Yelp is growing exponentially. It boasts 17 million total reviews, and adds 700,000 new reviews every month.

Yelp Spurning Google

Yelp’s growth and success caught the eye of the search engine Google, as a potential suitor. But in the end, Yelp spurned Google’s advances that offered to buy the company for $550 million. Since then, Google has retooled its slow performing, dull user review site Hotpot and rolled it into Google Places. The site is now taking a page out of Yelp’s book, by encouraging reviewer interaction, promoting a reviewer community and integrating social networking concepts to drive user reviews and traffic to Google Places.

However, Yelp is still the leader in profiting from the innate yearning we all have to make a difference, have a say in the world and to belong. The company promotes and pays its most prodigious “elite” reviewers as “community managers,” to go out in to the local community and stage social events to attract additional reviewers.

Yelp and Social Networking

The website Search Engine Land reported on a recent study authored by Zhongmin Wang, an economics professor at Northeastern University, examining the social networking aspect of user review sites entitled “Anonymity, Social Image, and the Competition for Volunteers: A Case Study of the Online Market for Reviews.” Wang found that Yelp’s reliance on social networking is successful, because ordinary people gain prestige and a “positive social image.”

Yelp and Questionable Reviews

Yelp is not without its critics. Last year two law firms filed a class action lawsuit against Yelp, accusing the company of engaging in extortion by bombarding businesses with high-pressure sales tactics. Yelp sales people promised the removal of negative reviews in exchange for forking over $300 a month for a paid subscription, according to the lawsuit. Yelp denied the charges, but since then, the company has become more transparent in how, and why it may remove some reviews.

Still, there is always the sense that some of the reviews are not based on first-hand knowledge. And someone with an ax to grind, or a business competitor can always post a scorching negative review. The subject of the negative review can always ask for it to be removed, if the business believes it’s fraudulent and defamatory.

But the best strategy is for a business to become proactive in the local reviewing community of yelpers. Embrace the “elite” Yelp reviewers and “community managers” who rack up dozens of reviews each month.

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