I suppose it depends on who you talk to but there always seems to be a healthy bit of controversy surrounding Yelp and how much value it actually brings to businesses.  Often times, when I’ve asked businesses about their relationships with Yelp, they struggle to identify first-hand negatives but, more often than not, they know someone who knows someone who went out of business entirely due to Yelp and its “shenanigans”. 

I mean, it’s totally Yelp’s fault that the business had 100 negative reviews, right? But I must digress; you’re not here to read my opinions and, to be honest, I’m not here to discuss whether or not folks get a fuzzy feeling in their stomach when someone mentions Yelp.  I’m here to discuss the cold hard facts about online marketing referrers (specifically Yelp) and how much they actually contribute to businesses in terms we can all understand, dollar signs.

The Meat and Potatoes

ryan bar

Meet one of our favorite customers, Ryan Barr - Owner of Excel Home Painting, a painting contractor in Seattle.  Besides his regular Yelp Business page, Ryan does NOT currently advertise on Yelp.  He installed our Beta Marketing Analytics software in March 2012 and here’s what we’ve found.

Welcome to the Bizible user dashboard.  Once inside, customers have access to a treasure trove of information.  Keep in mind, Ryan closes ALL business offline, we’ve simply connected the dots between online referrers and offline customer revenue.

*This is real and verified information from Ryan’s business, Excel Home Painting, from the last 12 months.  He has given us permission to showcase his data. 

bizible marketing analytics

Yelp Revenue – Quick Facts

  • In the last 12 months, Yelp is responsible for sending 32 paying customers to Ryan’s website, which translated into exactly $123,040 in revenue, which constitutes almost a third of his total online revenue.
  • Next to direct visits, Yelp is the 2nd best revenue producer for Ryan’s business plus the highest relative Revenue Per Click (RPC) at $109.37/click.
  • Although Yelp customers only constitute 8% of Ryan’s total web traffic in the last 12 months, when we compare it to Google’s 17%, we find that Yelp referrals are much more valuable – meaning visitors are ready to buy.

During our beta period, we’ve been able to validate that this is NOT one-off data.  We’ve seen similar trends across the board with our customers. Trends where Yelp sends less, but more eager and ready to buy, potential customers to their sites.  For instance, here’s a glance at the data behind a company specializing in home security systems (7 months).


Ya, ya, ya… But how much are Yelp reviews worth?

Great question.  Much like Google, Yelp’s exact ranking factors will probably never be public knowledge.  We can, however, dust off our proverbial guessing darts and take aim.  For now, let’s concentrate on the two most obvious ranking contributors, 1) number of reviews and 2) quality of reviews (measured in stars).  It’s widely believed that a business with a multitude of unfiltered 5-star reviews will outrank businesses of the contrary.  With that in mind, let’s take a look at Excel Home Painting’s Yelp page.  With 20 reviews and a solid 5-star average, Ryan is ranked #1 when someone searches for “house painter” in Seattle, WA (FYI, the company ranked #2 has a 4 out of 5 star rating and 5 reviews).  If we look at the data from the last 12 months and divide Ryan’s total annual Yelp revenue by 20 (number of reviews), we can assume each Yelp review could very well be worth $6,152, right?  Well, it might not be that easy.

excel home painting yelp

I’ll admit, even though revenue down to the review is fun to think about, it may not be the best way to break it down.  The truth is that rank, as it relates to number of reviews and quality of reviews, generally depends on your industry and competition.  For instance, if Ryan owned a bar, 20 reviews just wouldn’t cut it.  His rank would be lower which means lower traffic and lower revenue numbers.  The truth is that there are many factors that contribute to the exact amount that each review may be worth.  For example, since Ryan is ranked #1, if he got an additional 5-star review he would remain at #1 but the figure above would be reduced. 

So… What now?

bizible revenue yelp

Instead of concentrating on the possible value of each review, I urge businesses to focus on how much your ranking may be worth and what it takes to improve or sustain your current rank.  In Ryan’s case, in the last 12 months, his high rank is worth exactly $123,040.  Keep in mind, this kind of revenue may not be consistent with other industries.

The moral, you ask?

Applying what we know to Yelp is just the beginning.  Matching offline revenue data back to its online source on a keyword level has never been done before with this kind of precision.  This data allows us to apply a tangible dollar amount on what exactly each online marketing channel is worth.  Yelp can be painful, but ditching it all together could be a costly mistake as your competitors are likely “Yelping” as we speak.  At first, like many business owners, Ryan was reluctant to join Yelp.  Care to guess what he thinks about it now?