Yelp Launches Revenue Estimator Tool For Merchants
Yelp has been best known to small business for its extensive user ratings and reviews.
But a major focus now for the company is to provide more insights and benefits for these small businesses. So Yelp is launching a new Revenue Estimator for merchants to get a sense of how much money they are making from leads through Yelp.
With the new dashboard, available to both advertising and non-advertising merchants, Yelp counts all the leads that a merchant gets through Yelp. This includes many user actions, such as when someone: clicks to see a menu, makes a reservation through OpenTable, checks-in from inside the restaurant, uploads a photo from the business, clicks to view the company website, clicks for directions to get to the restaurant, or clicks to call the business on the Yelp app.
Yelp plots those leads over time. Then it multiplies that by a certain dollar amount per business–a figure provide by Boston Consulting Group–to get a monthly revenue estimate through Yelp. “Small businesses are always trying to figure out how to close the loop with ad dollars and what customer revenue they’re actually getting,” says Matt Halprin, vice president of revenue and analytics at Yelp.
There are some caveats to this dashboard. First, not all the leads–such as clicks to the company website–that are counted would necessarily all turn into revenue. Halprin acknowledges this, but also notes that some leads through Yelp are not counted, such as when someone reads about a business on Yelp and doesn’t click anything else on the business profile but still goes to buy something there.
To make it easier for businesses to get an accurate estimate of the revenue from Yelp, the dashboard includes the ability for merchants to change how much each lead generates.
This is a first attempt at addressing this problem of connecting merchants with hard data about their online customers–”closing the loop.” It’s a problem that others such as Groupon and smaller loyalty startups like Belly have tried to solve. However, Yelp likely has more regular interaction with a merchant’s customers than Groupon. “One of our big themes in 2013 closing the loop on ROI for advertisers,” Halprin says.
Yelp actually has much more data about demographics of users, location, and the like. Though for privacy reasons Yelp would not give out this information to merchants–unless perhaps it could figure out a way for consumers to opt-in in order to get some kind of specials. Still Yelp could in the future provide broad anonymized information to merchants about the users who are interested in or interact with their profiles.
Yelp also recently commissioned a study from Boston Consulting Group that found that business that have a free business account with Yelp saw an average of $8,000 in additional annual revenue. It also found that those businesses that advertise on Yelp saw $23,000 more in revenue.