Yelp is a business directory
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for searching local services and businesses, from restaurants, cafes and bars to mechanics, dentists, gas stations, and more. It has the highest ratings and biggest profits. In this article you will learn: why this service has become so popular how to create your own business catalog like Yelp and monetize it.
Step 1: Niche and Target Audience
"Yellow Pages" is the collective name for paper catalogs of enterprises with advertising, in contrast to the "white pages" - a telephone directory without ads. Source of the image
When Yelp started back in 2004, its main competitor was not another site or application, but ordinary paper Yellow Pages
with a list of enterprises, their profile and contacts. Therefore, the creators of Yelp did not think about what niche they should work in. Now the situation is fundamentally different: there are tens of thousands of different online directories on the network that constantly fight each other for traffic, comments, likes and advertisers. It's not easy for beginners here.
And there are only two ways that startups can go to become successful in this business. The first involves the development
of an online listing, better than that of competitors, with the help of creative, unique features and a better user experience. It is difficult, expensive, long and does not guarantee success, but it is possible: the success of TripAdvisor, BBB.org and Foursquare is proof of this.
Another way is to occupy a narrow niche, similar to how Amazon (books), Google (search engine), Apple (PC) and TripAdvisor (hotel reviews) started at one time. This is the best option for a highly competitive market, since it allows you to create a website customized for a specific target audience
, which increases the effectiveness of design
and marketing. In addition, this way you can check the concept of your project for relatively little money.
Here are some promising niches for online business listings:
- A site like Metacritic (business only). Metacritic is a site that collects reviews and ratings from other sites about music albums, shows, television series, films and video games. A very useful service if you want to know the average rating of all services without scrolling through them yourself.
- Listing of luxury hotels. The network is full of listings of budget housing rental options (HostelBookers, LonelyPlanet and HostelWorld), but there are practically no online catalogs for the premium segment. Yes, those who are interested do not like to "light up", but the site can be made private, with access by invitation.
- Activities for small groups. Now such events, as a rule, need to be searched in Google, Facebook or ordinary online directories among other services. This is a long and dubious occupation, because not everywhere there is a normal rating system and honest real reviews.
- Specific service / scope. This may be a catalog of lawyers of a certain specialization, restaurants of a particular cuisine, services only for a small business or a certain group of people (parents, students, women, immigrants, owners of electric cars, extreme tourists, etc).
Step 2: the optimal business model
The original Yelp business model implied that it would be an online analogue of the yellow pages with referral links.
But investors didn’t like this business idea, so Yelp started looking for something else, and then the project team noticed that users didn’t use links to go to sites in the catalog, but the “real reviews” function. After that, the site was redesigned.
The new version of the site is a familiar catalog of enterprises (services) with an honest rating and comments (reviews)
that anyone could leave and see. And this idea shot: the number of reviewers on the site increased
from 12 thousand in 2005 to 100 thousand in 2006, and by the summer of 2006, one million people visited the site a month. Further, the platform’s popularity only grew.
The value propositions of the redesigned Yelp for its main user groups are:
- Local businesses. Restaurants, cinemas, car repair shops, spas, pawnshops, hairdressers and other businesses got the opportunity to increase online visibility, the possibility of direct interaction with customers, a channel for targeted advertising and other things that contribute to revenue growth.
- Content authors (reviewers). The opportunity to share your experience with other people, the impact on the quality of service, the chance to become famous and rich (popular authors earn hundreds of thousands of dollars). The best authors fall into the Yelp Elite group, which is encouraged by invitations to exclusive Evens and special Elite badges on the site.
- Ordinary users. An attractive and informative site for finding a business near them and tools to choose the best of the best among them. Also on the platform there are additional functions that simplify the use of various services: booking, rent, food delivery, etc.
Step 3: key platform features
The Yelp site works with three types of users: business (service providers), users (service consumers), and platform administrators. When creating your Yelp clone, you need to implement most of the original functions for them, relying on the following things:
. To improve the user experience, your site should support quick registration / login through accounts on social networks. In addition, it is important to create a verification algorithm for service providers that will weed out unreliable entrepreneurs and outright scammers. But, you should not go too far, as the essence of Yelp is in user comments and reviews. You can only evaluate the legitimacy of a business (registration, license), and not the quality of its services. This will be done by users using reviews and a rating system.
Yelp user / business registration form is very simple
. Location-based utility is an important element of the Yelp service. First of all, we are talking about reducing the recommendations in the listing of services to those that are next to the user (20-100 km), as in Tinder. In addition, integration with the Google Map API (SDK or iOS Map Kit) allows you to link all the services in the recommendation listing to a location on the map and show it to the user, which is much better than an address in the form of text.
The principle of visualizing business / services on Yelp cards is the same as on Airbnb
Reviews and recommendation system
. This is a key element of Yelp and its analogues, around which the entire platform is built, so you need to approach its implementation with all bitchiness and thoroughness. Firstly, we need tools that make it possible for users to create interesting, creative reviews, not just text messages. Studies show
that on Yelp, users create more creative reviews than on other sites, and the project team encourages this.
Secondly, we need tools to evaluate reviews (points, stars, emojis), so that users encourage reviewers
who tickle their imagination. In addition, you also need some real rewards for the best reviewers (like on Yelp): special events, symbolic rewards or, possibly, real money rewards, like on Medium.com or other similar sites.
Thirdly, user ratings and ratings should influence the position of service providers in the listing of recommendations. Moreover, the system should also take into account the “usefulness”
of the reviewer. So, on Yelp at the top of the screen there are reviews of active reviewers with the largest number of positive ratings from other users. Whereas reviews from dubious accounts either appear on the second page or simply hidden.
Push Notifications, Newsletters
. On Yelp, this functionality works like on most other sites, except that notifications and newsletters are made based on data in the profile and past user activity. This makes notifications more personalized, which increases the effectiveness of advertising and avoids situations when vegetarians are asked to take a survey regarding restaurants that specialize in meat dishes.
Yelp sends users personalized recommendations based on their location
. Cloning this function with Yelp will not work, since many of its features and algorithms are hidden. Therefore, when launching your Yelp analog, you will need to develop a rating system from scratch
, taking into account the following things (of which we know for sure):
- Yelp reviews are never deleted. They can be hidden for viewing by users (not admins), but remain in the reviewer's profile.
- The rating of a business is influenced by many parameters. Traffic movement, activity and popularity of reviewers, users' assessment of specific reviews, business reactions to negative reviews, etc. are taken into account.
- The system uses various algorithms to identify “kickbacks” of a positive or negative rating. Now the search for “kickbacks” is carried out using conventional methods, but soon, most likely, Yelp will begin to use artificial intelligence for this.
. In 2018, Yelp introduced a tool called Collections. The new function uses artificial intelligence, which tracks the user's past activity (requests, reviews, ratings) and creates personal recommendations “for new sensations” on its basis. That is, Yelp AI recommends new restaurants, cafes, cinemas, spas and other services, as Netflix recommends new films
and TV shows to its users.
Step 4: monetize your business directory
Yelp Annual Revenue (December 31, 2018)
. According to the Yelp financial report for 2018, the company received 97% of its revenue from various types of advertising
on its site and partner advertising integrations. These are mainly the following services:
- Company profile. A set of several premium features that a business receives on Yelp through a subscription. For example, the presence of a call to action button, videos, slide shows, etc.
- Advanced profile. Prevent third-party business ads from appearing on business profile pages that have enabled this feature.
- Confirmed license. An icon in the shape of a blue shield, located next to the company name on some pages of the business company. This badge indicates that Yelp checked the license of the enterprise and confirmed its authenticity. This increases user confidence in the service provider.
- An ad on a search results page. Regular ads at the top or among the search results that work on a pay-per-click basis.
- Yelp Advertising Affiliate Program. Allows ad agencies to advertise their customers' businesses and manage multiple campaigns.
. Yelp has developed several tools and features to simplify transactions between service providers and their customers. In 2018, transaction income amounted to about 1% of the company's total revenue. Here are examples of such integrations:
- Yelp Platform. The platform allows its customers to make sales transactions on the website or in the Yelp application. This may be buying tickets, paying for taxi services, food delivery, etc.
- Partnership with Eat24 and Grubhub. In fact, these are referral programs that allow you to earn income by switching from Yelp to a website or food delivery service application.
- Yelp offers. The ability to create unique offers (promotions, discounts) for customers. Yelp receives income from each transaction made through such an offer.
- Yelp Cashback. Users get back part of the money from purchases made using links to Yelp, and the platform receives a small commission from each such transaction.