Yelp reviews and businesses with small volumes of customers ...

Yelp is getting lots of attention these days. A DC remodeler is suing a Yelp user who posted a negative review that the remodeler asserts is libelous. Personally, I don?t recommend any company take this sort of action (Yelp actually?has some great suggestions for companies who receive bad reviews), but I do think this dispute raises some valid points that Yelp could address in a positive and useful way.

The truth is that Yelp isn?t working well for the building, remodeling, and home improvement industry or its customers. What follows are some of my thoughts on their service, where it is working, why they aren?t helping either residential construction companies or the clients they serve, and how Yelp could improve.

First off, the positive stuff:

Yelp works well for prospective customers seeking feedback about businesses with a large volume of customers. Restaurants (their biggest market) may serve hundreds of people in a day. With a very large volume of customers, over time a business will attract a meaningful number of reviews on Yelp. This is good for customers, and it?s also good (in the long run) for elevating professionalism in the restaurant industry. It shines a spotlight on great restaurants, and makes it tougher for less-than-great ones to attract customers.

How many customers does it take to generate a review on Yelp?

I don?t know the exact answer to this question, but I can make an informed guess.?My favorite lunch spot in Atlanta is Urban Pl8. It?s tiny, serves a little more than 200 covers on a typical day (according to the host), and boasts an impressive 211 reviews on Yelp (about 100 of which are from the last 12 months).

Let?s do some math with those numbers: Urban Pl8 is open six days a week and serves 200 people a day. In a year, they?ll serve about 62,500 covers, and that will result in about a hundred reviews. That?s one review for every 625 people served.

Yelp filters reviews for lots of reasons

Of note, Yelp ?filtered? (i.e. hid) another 43 of Urban Pl8?s reviews ? that?s about 1 in 6, or 17%. Yelp filters out reviews for a lot of reasons ? some known, many unknown. Though I?m definitely not a Yelp insider, I do have some ideas about the major reasons Yelp would filter a review:

1) Yelp seems to filter out reviews from infrequent Yelpers or those who provide a very low number of reviews. This means that if someone creates a Yelp account specifically to share a review of an experience they just had, then that review won?t stay unfiltered for long unless or until the Yelper prolifically reviews other businesses as well. This is also why business owners don?t get anywhere by asking customers to provide a review on Yelp; if the customer isn?t already an active Yelper, they?ll have to create an account, and even if they do and then post a review, that review won?t stay visible for long because Yelp?s filtering algorithm doesn?t view them as a credible reviewer.

2) To really drive home that point, Yelp actively?discourages businesses from asking customers to provide reviews, and will filter reviews that they suspect to have been solicited. I don?t know how they enforce this, but they claim they do.

With 17% of Urban Pl8?s reviewed having been filtered, my guess is Yelp errs on the aggressive side.?These policies are designed to strengthen Yelp?s community, discourage flagrant review falsification, and diminish the influence of fair-weather Yelpers. In the long run, their policies probably have a net-positive impact on the reliability of reviews for those businesses with large volumes of customers ? like restaurants.

How likely is your building or remodeling business to receive a Yelp Review?

But what about companies with a smaller volume of customers? If Urban Pl8?s numbers are a guide (1 published review for every 625 customers), then very few remodelers, homebuilders, and home improvement contractors will have any reviews, and those who do are likely to have only a small handful.

I checked out some of the giants in our industry: Even with thousands of customers every year, Thompson Creek Window Company (in Maryland), has received only two Yelp reviews in the last twelve months.?John Wieland Homes (in GA, TN, NC, and SC) has been in business since 1970, has hundreds of homebuyers each year, and has zero reviews on Yelp. Quadrant Homes (in Washington state) is among the largest homebuilders in the Pacific Northwest, has been in business for 40 years, and also has zero reviews. With nothing happening on Yelp for those giants, you can imagine how little is happening for the long tail of our industry, like the remodeler with 30 clients a year, or the?custom builder with only 10.

So is Yelp not relevant to our industry?

Yelp does a lot of good things, but for most of our industry they have no relevance. No reviews = no relevance. But in the case of remodelers and homebuilders who do have a review or two, Yelp is likely misleading people. When John Wieland Homes finally gets a review from a Yelper, what will someone draw from that? If it?s a five star review, they might buy a home from Wieland. If it?s a one star review, they might choose to skip it. Reviews definitely have a huge impact on buyers. So is Yelp helping that prospective buyer by sharing that one opinion (out of the many, many thousands of actual customer experiences)?

Likely as not, there are very bad companies on Yelp with a single good review and nothing else. Likewise, there are very good companies on Yelp with a single bad review and nothing else. In these cases, Yelp is inadvertently promoting bad companies and punishing good ones. And with only 1 out of 625 customers sharing a review on Yelp, it?s going to be a long long long long time before that second, third, or fourth review rolls in. So when should a prospective client start paying attention to the average? When there are five reviews? 10? 20? The reality is that prospective clients don?t think about that. They see the negative or positive score average, read the reviews, and think that they?ve become informed.

A good place for Yelp to start:

Push hard on providing context. Educate the Yelp community and your site visitors on the relative meaninglessness of a single review. Let them know how statistically insignificant a single review is, and share stats about how many customers a business must have in order to attract a review on Yelp.

Of course, doing something like that would require that Yelp admit a fundamental deficiency in how their service works in industries like ours. Given the way Yelp operates, businesses who have a relatively low volume of customers simply won?t get reviewed by a meaningful number of customers, and customers who are influenced by that minuscule data sample are very likely to be misinformed about the actual service record of the company.

Ultimately, I don?t think Yelp can solve this problem without dramatically changing their business. But, they?re not alone. Yelp, Google, Angie?s List, and others all face the same problem: they way they gather information and communicate quality is inherently biased in favor of businesses with large volumes of customers and against those with small volumes of customers.

Source: http://www.guildquality.com/blog/2013/01/17/yelp-reviews-small-customer-volumes/

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