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Yelp, Other Review Sites Can Challenge Business Owners

When Rhassan Fernandez took over operational control of Sam’s Log Cabin, a diner in Albany, Calif., in 2010, the place had accumulated a string of poor Yelp reviews under the previous owners.

Fernandez chose to ignore those reviews, but he also unlocked the restaurant’s Yelp business page.

This lets a business owner respond directly to Yelpers who write reviews about their stores.

Rhassan Fernandez of Sam's Log Cabin

Rhassan Fernandez of Sam’s Log Cabin View Enlarged Image

Fernandez saw that his Sam’s got a low review, one out of five possible five stars. Even then, he resisted responding to a message after he logged onto his Yelp (YELP) for Business Owners account.

“I don’t feel comfortable doing that,” Fernandez said.

He has a different strategy. Rather than defend his restaurant against critics, he sends them digital gift certificates and invites them to give Sam’s another chance.

He understands how important Yelp is in attracting new customers. “Everybody checks Yelp before they go to a new joint,” said Fernandez. “I know I do.”

The new reality, in which a bad experience can be broadcast through cyberspace, has brought with it an equal and converse truism for small businesses: Many of them are aware of their online reviews, even if executives don’t handle them the same way.

That strategy helped convince the author of a particularly bad review of Sam’s to up his rating from one stars to two without even returning to the restaurant.

The reviewer also publicly praised Fernandez for his outreach and deleted his original commentary.

Fernandez’s low-key responses to online reviews stand out at a time when many restaurateurs have attracted negative attention by overreacting to amateur critics.

Such responses are understandable, given the power of sites like Yelp, Angie’s List (ANGI) and Google (GOOG) Reviews to determine the fortunes of small firms.

A 2011 Harvard Business Review study — “Reviews, Reputation and Revenue: The Case of” — found a one-star increase in the Yelp rating of an independent restaurant boosts revenue 5% to 9%.

The study’s author, Mike Luca, a professor at Harvard Business School, says his findings — which were based on a review of Seattle-area restaurant revenue during a three-year period before and after Yelp’s 2004 launch, along with the related Yelp reviews — should serve as a cautionary message.

“Managing (your Yelp presence) is good, especially early on when you don’t have much content,” Luca said. “You want to make sure you own your own reputation.”

He sees a fine line between managing and overmanaging. He says unlocking a business’ Yelp page is a good idea, as is incorporating positive Yelp reviews into a restaurant’s website. But “I would not recommend getting into heavy interactions with writers of negative reviews on Yelp,” he said.


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Mystic Maggie

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