Yelp Offers New ROI Tool for SMBs

Yelp logoYelp has introduced a “revenue estimate” tool for SMBs. The new ROI calculator aims to show or prove Yelp’s value to business owners.

It’s free for all businesses that have claimed their Yelp profiles. There are no additional features for advertisers right now. It will, however, show whether advertisers are receiving more customer leads — SMBs can compare lead volume as advertisers to the period before they became advertisers.

Here are the key things to understand about the tool:

  • Yelp is capturing a broad range of actions and defining those as leads (more on that below)
  • Yelp is using a default “average revenue per customer” figure derived from the Boston Consulting Group (BCG) study I wrote about last week. (BCG asked business owners to estimate how much an average customer was worth. Those values populate the tool [and vary by vertical] but SMBs can input their own figures)

Yelp Revenue Estimator

I asked Yelp what the were considering a “lead.” Yelp said all of the following are “leads” for purposes of reporting:

  • Clicks to the SMB website
  • Calls (from the mobile app)
  • Maps or directions lookups
  • Check-ins
  • Photo uploads
  • Deals sold
  • Open Table reservations (where they exist obviously)
  • Menu lookups

When I asserted to Yelp that the value of these numerous actions could be quite different from one another (Open Table reservation vs. a menu lookup), the company acknowledged this. Yelp originally considered weighting these lead types differently. However it decided that would introduce too much complexity into the system for SMBs. I agree.

I was also able to discover some additional information and background about the BCG study. Yelp didn’t pay for the study but in discussions with BCG (there are some alums at Yelp) there was mutual interest in a Yelp business-owner survey. So Yelp partly suggested the study.

As I mention in my Marketing Land post on this, some people and Yelp critics will be cynical about Yelp’s motivations in creating the ROI tool. Other than the variable quality of leads being reported in a uniform way — and perhaps Yelp can be more transparent about all the categories that qualify as leads — I think it’s useful.

What do you think?

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8 Responses to “Yelp Offers New ROI Tool for SMBs”

  1. mc kp says at

    Thanks for posting this Greg. Do you think Yelp is counting (or adding together) different types of leads from the same user, such that one use may be shown as generating up to 8 leads?

  2. Greg Sterling says at

    They said that a tiny number of users take “duplicate actions” (less than 5%) meaning that the same user would generate multiple actions that would count as leads for the same business. It’s a natural question though.

    I suppose the same user could generate multiple leads over time — i.e., I go to the same restaurant menu to order take out on a weekly basis. But then I’m generating business in that scenario so it’s fair to count me multiple times.

    Yelp argued that its methodology includes undercounting because they’re not capturing phone calls from PC lookups.

  3. Greg Sterling says at

    I’ve received a couple of emails today from people saying this is a misleading tool for SMBs creating the perception of greater value than actually being delivered. Do you agree? 

  4. Eli Chait says at

    The breakdown of activity (link below) is very useful, and they have had that for a while. Given the varying value of each of those activities, applying a single value for each “lead” is very misleading. Further, the default value is significantly higher than it should be, and will likely be rarely changed by merchants. 

    Breakdown of activity – http://copilotlabs.com/wp-content/uploads/2013/03/Yelp-Customer-Leads2.png

  5. Greg Sterling says at

    Yelp says the default values vary by vertical and come from SMB survey data. 

  6. Jane Purcell says at

    Thanks for the explaination. I’ve been reviewing Yelps revenue estimator and concluded it means nothing to me as a small business owner. The only thing that counts as a lead for me is a phone call or someone walking thru my door. It’s pretty to look and claims I have 29 leads. Don’t get me wrong I do see the value in Yelp just wish they were stickly counting unique users. I had a client tell me each time she called in me in one day she went to help. 5 phone calls in one day does not equal 5 new leads. Just sayin…

  7. Jane Purcell says at

    Dang auto correct I mean yelp not help 🙂

  8. Greg says at

    You raise an interesting point. One of the things that yelp could do is allow business owners to select categories of actions that they value and exclude others. However in your case yelp isn’t tracking calls from the PC. But they might also add that capability by working with a third-party which could use tracking phone numbers.

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