Is Yelp! Helpful or Harmful for Small Businesses?

By Mary Tablante

Every day, people use Yelp to decide where to eat, where to go shopping or where to go to the doctor. The company, which provides reviews and ratings for businesses, passed 100 million unique visitors this year.

Although the company helps consumers make decisions and allows users to share their experiences, the website has also garnered criticism, particularly from some small business owners who feel like Yelp take advantage of their clout with small businesses.

The effects of Yelp reviews are not to be ignored: Michael Luca, a Harvard Business School professor, found a correlation between high Yelp ratings and revenues. Although he only focused on Seattle restaurants, his study found that every star in a review correlates to a five to nine percent increase in revenues.

Harry Zhang, 27, is an example of one of the millions of people who use Yelp to look at reviews. He said the website influences where he goes to eat based on good ratings.

“I wouldn’t mind trying out anything with at least 3.5 stars,” Zhang said. “Anything less than that is fishy.” The highest number of stars a business can receive from a reviewer is five.

Margaret Kim, who is president and chief operating officer of Allcare of Maryland Urgent Care Centers, which she runs with her husband, has had her share of negative experiences with Yelp. She said Yelp representatives have regularly contacted her to pay for advertising in exchange for the removal of bad reviews.

Kim is not alone. Websites like “yelp-sucks.com” and a Facebook group called “We Hate Yelp” have started within the past few years, and small business owners use these outlets to share their experiences.

When Kim asked a Yelp representative if an old review could be removed, the representative said that if she paid Yelp money, “between me and him he could try to make it go away.”

“It made it sound like a personal favor,” she said.

However, Yelp’s frequently asked questions section on their website states, “You can’t pay us to remove or reorder your bad reviews — it’s just that simple. It’s worth pointing out some additional checks and balances that we build into the system: among other things, we separate the revenue side of our business from the content side of our business, just as a newspaper might put a firewall between their advertising and reporting functions.”

Kim added that bad reviews can “cripple a business, especially a small business like ours.”

Allcare of Maryland is a full service provider; they see patients who just come in once from out of town as well as regular patients, and provide services such as weight loss and spa treatments. Kim said they are also the only local community-based provider in the area and they are facing a large amount of competition from other urgent care centers, many of which opened in the area only recently.

Yelp uses a filter software to hide reviews that look questionable. In the FAQ on their site, Yelp admitted that the filter is not perfect and it will hide some legitimate reviews, but the filter is constantly picking up new information and readjusting which reviews it filters.

“I understand they’re trying to weed out fake reviews, (but) at the same time what if it’s not fake?” Kim said. “I’d much rather they show all the reviews; that’s the only way that’s fair. If they want to cover themselves, put a tag somewhere saying, we have no means to verify the reviews as to their authenticity.”

In the past, Kim asked patients to post reviews on Yelp, but she some of her patients told her that their reviews were not posted on Yelp.

“We gave up and stopped asking them a year ago,” she said.

Although Zhang uses Yelp to get recommendations for where to eat, Zhang reads online reviews with skepticism.

“I feel like it’s usually people with a strong opinion that writes these things,” he said, adding that he also does not use Yelp exclusively, but will check other review websites, such as UrbanSpoon.

“Experiences differ depending on time of week, day (and) who serviced you,” he said. “One bad review does not discredit the rest. Even my favorite restaurants have off days.”