Startup Growth Series: How to Launch in a Competitive Market
Case Study: Yelp
When I first heard about Yelp, I thought, “oh, review engine? but Google already has a platform for this.” If you thought the same, you are not wrong because the Google review site is one of the most popular. However, Yelp is still commonly used in the US as it boasts over 73 million new users on mobile and over 100 million unique users on the website every month. Those numbers make it highly influential and valuable.
…and we can learn one or two growth strategies if they still have those numbers after two decades.
How does it work?
It all began in 2004 when Jeremy Stoppelmen and Russell Simmons reconnected. Their idea for Yelp was a new consumer internet centered around local businesses online. But it was one of those ideas you think and talk about but keep sitting on because you aren’t so sure about it. Then that summer, Stoppelmen came down with the flu, and all the reviews he could see online about the best doctor or hospital to visit were mostly generic and unhelpful…that was when the ah-ha moment came “… review the site but make it social.”
Yelp became a social review site centered on local service-based businesses and restaurants. By 2013, they had accumulated 47 million reviews with an average of 117 million monthly visitors. They took the entire city by storm and left competitors like CitySearch in the dust; even Google Reviews, at some point, couldn’t match up.
What did they do differently? You are about to find out.
Five Growth Strategies from Yelp
#1. Make your strategy social.
Other review sites were waiting for anonymous reviewers to comment on their websites. Unfortunately, many of these reviews were unhelpful and lacked personality. Yelp changed the narrative by creating profiles and a network of friends and accolades. This was instrumental in their growth.
Remember that the entire idea of Yelp was to create a consumer review site. Hence, members had a public profile; they were allowed to chat online, evaluate each other’s reviews, and meet outside the site. It was like a whole community…which made every comment authentic and valuable.
It also made it difficult to have fake comments because the idea was to encourage users to create valuable and personal observations, and they got rewarded.
This brings me to number 2…
#2. Find ways to incentivize good “behaviors.”
People love receiving recognition for something they do.
Yelp encourages members to write in-depth and well-crafted reviews for these businesses, and in return, they get special recognition for giving something helpful about a business.
They also found a way to reward users who are the first to review a business and let other users react to the reviews.
See Wang’s study reports:
While only 4.8% of users on CitySearch and only 11.1% on Yahoo Local contributed six or more reviews, the vast majority of Yelp users (65.8%) have contributed six or more reviews. By contrast, most CitySearch (71.2%) and Yahoo Local (56.4%) users left only one review, while just 9.2% of Yelp users contributed a single review.
This disparity is so because of how much Yelp encouraged members to be generous with their reviews which helped them create an impression that they were more knowledgeable, public-spirited, and cool, making them gain more Yelp friends. The company described the Yelp Elite Squad as a way of recognizing and rewarding yelpers that are active role models and evangelists on and off the site. The elite-worthiness was based on several things, like well-written reviews, great tips, active voting, and a detailed personal profile. They often reward elites with RSVPs, swags, food, and more. Some of them were even selected to be Community Managers for the community.
Idea Bank — if you are a food tech company or a restaurant, you can invite your customers to create reviews of their experience on their profile and use your branded hashtag. You can randomly feature the best reviews per month, giving incentives like access to private sessions at the restaurant, branded items, coupons, and more. It is an excellent way to get user-generated content.
#3. Put the users first, always.
This is not about “the customers are always right.” It just means that you value your users and will always consider features that put them in the spotlight.
For many other platforms, the spotlight was on businesses and a case of whoever has the most money wins. But for Yelp, they put the users before the business. So whatever the users say work works…regardless of the amount of ad money you pay. If you have shitty customer service, even if you spend a million dollars, if Yelp users say your service is terrible, you are not getting anything from that ad money.
This also made Yelp create a guideline so that there is no favoritism. As long as the review is within the guidelines, it works, making it difficult for businesses to take down negative reviews.
This stance was difficult for Yelp because many businesses didn’t like that after paying so much for ads, Yelp still values the users over them. But staying true to its users and community helped Yelp build a loyal community and a place to get authentic and unfiltered information about local businesses.
#4. Offer something people want.
When Yelp came to San Francisco, everyone was looking for a website that could help them decide the best way to get a service. They had other review sites but had to deal with unauthenticated comments or very few comments that couldn’t help anyone make a good decision. So they created their product in a way that fostered engagement and drove community.
#5. Know when to pivot
When Yelp started, it mostly encouraged users to ask their friends for recommendations. The idea was painfully spammy because who wants to wait a few minutes to recommend someone. But Yelp returned to the drawing board and thought of a way to say the same thing differently. So they launched “write a review,” which was like night and day. People got addicted to it because they gave those reviews based on their experience; it wasn’t because Joe asked for a recommendation.
Another area that didn’t work so well for Yelp was paying for content…because Yelp was a prominent evangelist of authentic content, it was difficult to tell people to pay to give content. So now Yelp focuses more on the quality of the content than the quantity and prefers the social perks as the incentives.
Summary
- Make your strategy social
- Find ways to incentivize good “behaviors”
- Put the users first, always
- Offer something people want
- Know when to pivot
Even though Google Review is probably the first review site that comes to mind, you will agree with me that Google has found ways to implement these growth strategies making them stay top-of-mind.
