If you’re a local business owner, chances are you know about Yelp! Yelp is a social media site that allows customers to describe their experiences with local businesses and rate them on a five-star scale. To date, Yelp users have written 61 million reviews of businesses ranging from hair salons to burger joints, and 138 million people in 29 countries visit Yelp monthly. Not surprisingly, Yelp reviews can have a powerful impact. In fact, a Harvard study revealed that a one-star drop in ratings can reduce a business’s revenue by 5 to 9 percent.
Yelp reviews, however, are an imperfect guide to customer sentiment. Although Yelp filters user ratings to weed out untrustworthy reviews, a study by researchers Michael Luca and Georgios Zervas suggested that up to 20 percent of all Yelp reviews are fake. Yelp has even begun to sue those who falsify reviews, recognizing them as a threat to its business model.
BAD REVIEW? NOW WHAT?
Clearly, businesses cannot afford to ignore bad reviews on Yelp. But, what is to be done? Yelp offers advertising to the same businesses that its users review — for a price. The price, however, may be too steep for some, and others may object to the seeming conflict of interest built into Yelp’s business model.
Luckily, there are tactics businesses can use to improve their Yelp reviews. One of the most effective is simply to provide excellent customer service. Businesses can even request satisfied customers to post reviews. However, the goal of providing universally excellent service is seldom attainable, and all businesses will eventually garner detractors. When they do, they should be aware that a botched response to negative reviews is often far worse than no response at all.
Monitoring and responding to complaints on Yelp quickly and tactfully is one obvious response, and it is sometimes effective. Genuine apology for mistakes is crucial, along with a clearly communicated desire to improve the customer experience.
Before responding, however, heed the cautionary tales of owners whose responses went abysmally wrong.
The most dramatic involves a California bookshop owner who responded to a negative Yelp review with a bitter, expletive-laced tirade. The tirade triggered yet more negative reviews, so the owner decided to resolve the dispute by going to the home of the customer who had left the first bad review. The owner ended up facing assault and battery charges.
THE MORAL OF THE STORY? BUSINESS OWNERS WHO CAN’T SAY SOMETHING NICE ON YELP SHOULD SAY NOTHING!
Some businesses have made the mistake of trying to head off negative reviews by requiring customers to sign various kinds of contracts before receiving services. For example, some businesses have tried to ward off negative reviews with non-disparagement clauses. This tactic is a bad idea.
For one thing, such clauses are legally problematic. California recently passed a law imposing fines on businesses that use this tactic, and more states are sure to follow. Moreover, the practice has generated consumer lawsuits. The online retailer Kleargear.com fined a customer $3,500 for leaving a negative review, claiming violation of a non-disparagement clause on its website. Kleargear.com then sent its claim for the fine to collection, causing the customer a variety of financial hardships. She and her husband sued Kleargear.com and received a default judgment of $306,750 for defamation and violation of the federal Fair Credit Reporting Act.
Non-disparagement clauses can backfire even when they don’t provoke lawsuits. Consider the experience of a New York hotel that threatened on its website to fine wedding party guests $500 for each negative review they posted. The hotel’s attempt to withhold the security deposit of guests who posted negative reviews created a social media furor, leading to 3,000 bad reviews almost overnight. Once again, a botched response to negative reviews proved far worse than no response at all.
Not only is the practice a public relations disaster if discovered, but planting positive reviews is also a deceptive trade practice and a form of false advertising. A cosmetic surgery company learned this lesson the hard way after being fined $300,000 for having employees post numerous positive reviews across the Internet. Posting negative reviews of competitors can cause even more legal headaches, leading to lawsuits for defamation and tortious interference with contractual relations.
A business owner’s best bet in dealing with negative reviews on Yelp is to develop a thick skin and work to provide consistently excellent customer relations. Try reaching out to a disgruntled customer in person before posting an online response, and post an online response only after running it by a disinterested and diplomatic editor. If you believe a review is a fake, reach out to Yelp and ask that it be removed. After all, fake reviews are bad for Yelp’s business, too. If you choose to sue negative reviewers, know that such lawsuits are rarely successful and sometimes trigger countersuits. Plus, they often don’t sit well with prospective customers. Unfair criticism is painful, of course, but deciding how to respond should be a business decision, not an emotional one.