August 18, 2008

Where Customers Go to Praise [or Bash] You

If you run a consumer business, chances are pretty good a few of your customers are posting their opinions about it on the dozen or so Web sites that review local businesses across the country. These sites attract tens of thousands of daily posts and position themselves as online destinations for consumers to offer or get an unvarnished take on a business -- to be both the critics and lobbyists. The largest of these sites, in terms of July monthly unique visitors, include YellowPages [roughly 18 million uniques], Yelp [roughly 17.8 million], Yahoo! Local (YHOO) [roughly 13.2 million], and Citysearch [roughly 10 million], according to Web analytics firm "These sites are going to become more important," says Matt Booth of Kelsey Group, a research firm that specializes in local search. "And there are going to be an increasing number of them."

In a 2007 study of over 2,000 Internet users by online analytical firm comScore (SCOR), 24% of respondents said they looked at an online review before making an offline service purchase in the three months prior to being surveyed. The study showed that local review sites are attracting new visitors at a rate four times as high as the rate at which overall Internet use is growing. It also found that more than three-quarters of respondents call online reviews "influential" in their purchase decision process.

Replying to Gripes Most of these sites let businesses monitor their company profiles and respond directly to reviewers. Usually for a fee, businesses can "claim" their listing on a site and then post photos or special promotions. On City Waboo, for example, businesses can reach out to frequent customers to offer them a coupon or discount. On MerchantCircle, businesses in towns with less than 1,000 people can set up company profiles, and customers can review the businesses -- some of which don't have Web sites. On Yelp, company owners can set up alerts so that every time someone reviews their business, they receive a message and can respond directly to the customer -- without either party having to give away an e-mail address.

The best way for small companies to track how this world of online critics is driving business is to do it the old-fashioned way: by asking customers how they found the business when they walk in the door. "That continues to be the most prevalent way [businesses] can track what's working for them and what isn't," says Yelp co-founder Jeremy Stoppelman.

Sites edit reviews differently. Some take a relatively hands-off approach, leaving comments alone unless they are indecent or defamatory. Citysearch doesn't alter the placement or wording in its reviews as a general rule, says Chief Executive Jay Herratti, and this can sometimes frustrate business owners. "Some owners are traumatized when they get negative reviews that they feel are unjust," he says, "but we try to give them a voice so they can reply to reviews and tell their story." On Angie's List, members pay a monthly fee to read and write reports on home service companies like plumbers or carpenters. As such, no reviewers can post anonymously, and the company's data department reviews all reports before posting them to ensure that they are accurate and valid. "The key is providing a trustworthy venue," says founder Angie Hicks.

Pay to Play Businesses that want to take advantage of these sites have to pay for it. Almost all sites offer businesses "premium" or "enhanced" features that give them ad placement priority [Yelp], the ability to join an ad network [Citysearch], or the power to track loyal customers. For instance,, a site that aggregates online restaurant reviews, recently launched a loyalty program that helps restaurants track repeat customers with a discount card. Advertising packages at Citysearch can range from $199 to $5,000 per month, say Herratti. City Waboo's premium features cost about $40 monthly. Before signing up for the various programs, businesses should know how much traffic a site attracts.

Considering that dealing with online critiques is becoming the new norm for local businesses, it behooves owners to know the sites, read the reviews and complaints, and, as Hicks of Angie's List advises: "Take them with a grain of salt."

For a look at some of the most popular sites, flip through this slide show.