Small business owners that I work with continue to have mixed feelings about Yelp today. Many wish it would die off along with online reviews, but it seems that Yelp and customer reviews are here to stay. Yelp had over a 60% increase in traffic in 2009. Furthermore, the recent rumors of a potential acquisition (Google and Microsoft) along with a $25 million new investment have provided greater validity to its business model. Inc. magazine recently published a great article about the Yelp model, along with its benefits and challenges included. In addition, with AT&T’s announcement of Buzz.com (soon to be released consumer site that allows customers to create favorite places and share positive, brief comments with friends via their social circles, like Facebook), the world of online customer reviews will continue to grow as well. Forbes just provided some greater insight here. Buzz.com is set to launch in the next couple months. Small businesses must continue to stay on top of their reviews and continue to encourage new ones in order to properly manage their online reputation. Yelp has had a very busy couple months. Here are some of the key points: 1. New Capital. January was an exciting month for Yelp. Rumors at Techcrunch were of a new Google acquisition for around $550 million, but it sounded like the deal quickly fell apart. And now Business Week has reported they passed on Microsoft for $700 million! Wow. Apparently, Yelp had already lined up a new investor as part of their backup plan and they were able to announce a new investment of $25 million cash to start with Elevation Partners and willingness to invest up to $100 million if needed. Yelp is saying they will use this additional capital to:
- Double their sales staff from 200 to 400 and add more cities (currently 35 cities with community managers.)
- Mobile Product Development: Yelp knows the value of mobile local and will continue to add enhancements to compete to get broad usage on consumer’s phones. Read below for some of the mobile enhancements.
- Cash out for many vested employees.
2. New Mobile Features: Here are the new features that Yelp has just added to their iPhone app. This is from their blog:
- Yelp Profile: Not only are you able to log into your Yelp.com profile (v.3), but now you will also be able to see and interact with your Yelp profile as you would on Yelp.com.
- Yelp Friend Finder: You can now see and invite friends from your iPhone's address book to join you on Yelp. If you've connected with Facebook, we'll also let you know if any of your FB friends are yelping, too.
- Yelp Check-ins: We've now added the ability for yelpers to "Check-in" to businesses. This includes being able to broadcast your whereabouts and send Quick Tips to your friends on Yelp, Facebook and Twitter who, if they opt-in to these updates, will be able to see your location both via "Push" alerts, as well as on a map. Active users of this feature may receive "Regular" status of highly-frequented businesses. This means they are part of an active group of people who patronize a business and this moniker will appear next to reviews and tips and on business pages in the app, as well as on the business listing on Yelp.com.
- Sharing via Facebook Connect and Twitter: We've taken another online feature, offline. Yelpers now have the ability to share their check-ins and Quick Tips via Facebook Connect and Twitter while on the go.
- Updates to Monocle: In addition to seeing reviews nearby in Monocle, Yelp's Augmented Reality feature, you can also see which businesses your friend's have "checked-in" to as well as a new "map" in Monocle view that will move with you.
Certainly, the most interesting in our opinion are the check-ins and the social media integration with FB and Twitter. The checkin features are certainly a defensive play that competes directly with Foursquare’s mobile app, which provides a competitive game for customers to “check-in” to their favorite places and earn points (and hopefully discounts) at some point. Foursquare has grown to over half a million users, but Yelp’s addition of this feature may cause them to lose ground and may leave them in the dust due to Yelp’s popularity. The tie-in to social media allows Yelpers to quickly brag about their social status as well, using word-of-mouth to create even greater awareness. It will depend on the customer experiences of each, but with Yelp’s sales force, they will more likely be able to get businesses to offer discounts and prove the real value of becoming a “regular” after all. This could be a great lead generator and certainly a way to reach out to your regulars. You should definitely keep your eye on this feature. Yelp has grown to over 29 million unique users per month (that’s over 60% growth in the last year) and has over 9 million total reviews. Yelp may have proven success in their model so far, but how will it go as they start to expand into smaller cities and less tech-savvy markets. What do you think? Were they crazy to pass up $700 million from Microsoft? Is it possible they can become the next great Internet Brand as big as Facebook or Twitter? Who’s going to win the local battle between Foursquare and Yelp? How long until the same feature is added to Google Maps??? What do you think?