Social media is becoming an increasingly powerful force that business owners – especially small business owners – cannot afford to ignore. There is an increasing body of work suggesting that online mentions and discussions about a particular business can meaningfully affect the business’s revenues. For instance, studies have shown that chatter on Twitter about a movie can effectively predict its box-office revenue and that online activity can predict sales of books.
Arguably, the most important resource for consumers is the online review site Yelp. The popular site allows visitors to view and create reviews for almost any type of business. And Yelp allows anyone to create a listing for your business. Anyone who steps foot through your door, passes by you on the street, or reads your name in the paper can create a business listing. Given how easy it is for others to start posting reviews about a business and the significant economic consequences of these reviews, it is crucial for business owners to embrace Yelp.
Specifically, here are three reasons why Yelp matters:
1. It contains authentic reviews
While as many as one out of every four Yelp reviews are fake, the rest are authentic. In other words, the majority of Yelp reviews are from actual customers who are sharing their actual experience with your product or service. After reading through all the reviews you will be able to decipher what your customers like about your business and what are the areas of improvement. This information is extremely valuable and, best of all, is available to you at no cost or effort. While its most obvious use is to make adjustments that will improve customer satisfaction, it can also be used in other ways. For instance, it can help identify your outstanding employees so that they can be rewarded.
2. It strongly predicts intention to buy
According to data released in June of 2013 by Nielsen , 82% of users consult Yelp reviews when they are ready to make a purchase. This means that Yelp is the top searched site when it comes to product or service reviews. Greater than that, 93% of consumers always, frequently, or occasionally purchase from a local business after visiting it on Yelp and 89% make that purchase within a week.
3. Yelp users are, in many ways, the ideal customers
Yelp users are ideal candidates for many industries. 57% of Yelp users have a college degree and the mean household income for users is $68,000. This audience mix is an ideal target market in many regards. The consumer is educated and has disposable income to spend.
To harness the power of Yelp, entrepreneurs should frequently check their business’ reviews. These reviews are an opportunity to build customer engagement and show potential customers that your business strives to satisfy its customers. A good place to start is to reach out to customers that have written positive reviews about your business. A simple thank you note emailed to each customer is a wonderful way to show them that you value their business and the time they took to write a review about their experience.
(The next post in this series will discuss a more challenging issue: how to respond to negative reviews.)
Written by Katie Nino and Dr. Atul Teckchandani
Note: This is the first of a series of posts about the importance of Yelp and other review sites and how entrepreneurs can manage their presence on these sites in a manner that increases their firm’s reputation and sales. It was co-authored with Katie Nino, Social Media Adviser for the Imperial Valley Small Business Development Center and graduate of the Entrepreneurship program at CSUF (class of 2011) and Dr. Atul Teckchandani, Assistant Professor of Management at the Mihaylo College of Business and Economics, California State University, Fullerton.
[Image: Street Fight]
Yelp Series: