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There's a really interesting article over at GOOD about the power that Yelp has on local businesses. It describes my behavior pretty accurately, and makes me realize just how crucial a tool Yelp has become in my own life; and also for the businesses I patronize.

(from roboppy on Flickr)

Of course, Yelp has been around since 2004, and the idea of rating and reviewing businesses is nothing new. What is new is that a significant number of people now have smart phones, iPads, and other devices that can access to Yelp whenever and wherever they want.

Recently I was thinking about the appeal of Starbucks. It's not a place I go very often for a cup of coffee, but I do visit occasionally. Imagine you're on a road-trip, and it's getting dark, so you decide to pull over at the next rest stop. Inside the food court there's a Starbucks and a place called Carl's Coffee. Which do you pick? This Carl might have the best coffee in America; but he also might serve some truly awful sludge. Starbucks, at least, is consistent and predictable. In other words, it's safe.

When I went to Virginia Beach in August, I was almost entirely unfamiliar with the city. Once at the hotel, I opened up Yelp on my phone and searched for nearby restaurants. I found a pho place within a mile that had great reviews. Once I was on the beach, I used my phone to locate a highly rated coffee shop behind the boardwalk and a seafood restaurant on Lake Rudee. If it weren't for Yelp, I might not have visited any of these places.

Today I logged into Yelp to look at my reviews, and noticed an interesting statistic in my profile. To-date, I've reviewed 127 businesses. My rating distribution skews positive. I've given a lot of positive reviews, some middle-of-the-road reviews, and just a couple of bad ones.

Maybe I'm just a generous guy and generally happy with the businesses I visit; but it also could be that I'm only going to businesses that I already know I'm going to like.

In that sense, Yelp has created a sort of selection bias. When I'm in a new city, I like to try new places, but I also want to minimize my risk. I don't pick restaurants at random, or rely on a hotel concierge, I choose them carefully based on popular opinion via Yelp.

This also demonstrates just how crucial maintaining a positive aggregate rating is to a local business. I ate pho in Virginia Beach because it had a positive consensus. If the reviews had been more mixed, I probably would have skipped it and ate elsewhere. Getting a lot of good reviews right off the bat can feed on itself. Getting some not-so-great reviews right away can put a business in an unfortunately downward spiral that's not easy to reverse.


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