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The Trouble With Yelp

The Trouble With YelpThe food service industry as a whole has had decidedly mixed feelings about Yelp, the San Francisco-based internet company that provides user-generated reviews about a variety of businesses, including restaurants.

As I wrote last year, Yelp had many owners suspicious because it seemed like the only way to get good reviews to display at the top of a restaurant’s profile was to shell out a monthly “advertising” fee.  The fee has been pushed hard by Yelp sales reps and can run anywhere from $300 to $1,000 a month.

Paying the fee allowed owners to choose the top five reviews for their restaurant to display.  It seemed most restaurant owners had one of two reactions: resignation at having to pay the fee to avoid bad reviews or outraged, stubborn resistance to being forced to pay to make bad reviews go away.

Over and over again Yelp has denied manipulating bad reviews in order to generate sales of their advertising packages to small businesses.  And still to this day the suspicion remains among many inside the restaurant industry and out that Yelp just isn’t squaring with the subjects of their reviews on how the process really works.

Yelp’s decision to walk away from a $550 million dollar offer from Google late last year didn’t help the company’s image any either.  The inherent trust most people place in the Google brand could have gone a long way towards clearing the air with Yelp’s small business customers.The Trouble With Yelp

The public relations problems that continue to dog Yelp seem to be a fix of their own making.  This is what you get for tangling with the strongest tradition on the internet: fostering the free flow of ideas and information.  Companies like Google, Wikipedia, and Facebook have succeeded because they opened up access to information and placed few filters on how that access was used and digested.

Yelp’s business model seems brilliant, even revolutionary on paper: collect user-generated reviews about local small businesses and then sell the opportunity to manage those reviews back to the businesses being reviewed.  But the approach flies in the face of what the internet has been all about since its inception.  It would be like Google selling celebrities “advertising” memberships to have bad stories about them pushed down in the rankings on search results pages.

Yelp’s leadership probably thought they were just following a Google-esque model: get businesses to pay for top search results.  After all, Google’s pay-per-click advertising is what has transformed that company into a multi-billion dollar operation.

But there is a key distinction here: Google’s paid listings come from a positive motivation – businesses wanting to sell products or be seen for specific keywords.  Yelp’s model comes from an inherently negative motivation: get people to stop saying bad things about you on Yelp.  No wonder they have an image problem.

The class action lawsuit against Yelp everyone’s buzzing about these days seems to be the natural culmination of a long-term problem the company has had dealing with its customers.  Regardless of how the suit turns out, the basic flaws of the Yelp model will remain.  And that is a lesson any business can benefit from.

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2 Responses to The Trouble With Yelp

  1. Morgan March 4, 2010 at 12:24 pm #

    I also cannot decide if I love yelp, or if I hate it. It is very useful when I am trying to find a good place to eat, especially if I am looking to support local businesses, which flourish on yelp. I dont like that you have to pay then money in order to have your restaurant/business show up first thing when people log on to the website, all you’re doing is paying for advertisement, and only showing the good reviews. The restaurant could have horrible service, but you would never know because you were only able to read the good reviews, not the bad. Also, another reason why I dont like yelp is that people can say whatever they want about the servers or the business. I had a co worker who was actually hurt by something a fellow reviewer said about her, and the reviewer happened to know her and was saying it because she wanted people to think this server was “evil and vindictive,” as the reviewer said on yelp. People can say whatever they want about the people who work there, or about the restaurant without attaching their name to it, and sometimes that can be extremely hurtful when people bring stuff like that into your workplace.
    In conclusion, I think yelp needs to moderate their comments more and only show the restaurants that actually get good reviews first, dont only show off restaurants and businesses because they pay you. Unfortunately, they have to make money as everyone else does. Maybe try and make your money a different way?

    Great post and good job with all of your research on Yelp.

  2. Harold (SMM) March 8, 2010 at 8:39 am #

    This is definitely going to be an interesting law case to watch. I personally don’t like the way that Yelp is apparently operating. It has the ability to be be misused or used as a weapon by a competitor.

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