October 7th, 2011 • Posted by KitKat • Permalink
A
new Harvard Business School study determined that boosting your restaurants Yelp rating by one star can lead to a 5-9% increase in revenue. In addition, the study reveals that it's particularly true for independent restaurants because consumer reviews have become substitutes for the perceived reliability and consistency of chain restaurants. This means consumers are increasingly using review sites to determine the quality of your restaurant long before they ever walk in your door.
The study also revealed that Yelp provides more comprehensive reviews than similar sites. The research focused on government data, tracking revenue of Seattle restaurants between 2003 and 2009. The study found that Zagat and the Seattle Times each had reviews for only 5% of all local Seattle restaurants while Yelp's consumer rating penetration was 69% for the same geographical area.
This is all true unless your restaurant has done a Groupon, which has been shown to actually diminish your Yelp rating. Add this to the growing list of reasons not to do a Groupon.
"Daily deals site Groupon could be the big loser from the study: computer scientists found recently that businesses tend to see their Yelp rankings decrease after offering a Groupon deal, according to the Technology Review." - Blanka Bosker, One-Star Bump On Yelp Leads To Big Revenue Boost, Study Finds
Important implications for your restaurant:
- Your restaurant's Yelp rating can have a big impact on it's bottom line.
- Managing your consumer reviews has never been more important.
- Doing a Groupon can diminish your Yelp star ratings and therefore have a significantly negative impact on your business.
- There is a direct relationship between Yelp's penetration in a geographical area and the independent restaurants' share of that market.
- Yelp's strong standing in a market will swing revenue from chains to independent restaurants.
