Review sites like Yelp are in the news a lot lately because reviews are proven to impact a business. Unfortunately this is true even if they are unfair. But can we measure the effect that review comments can have on a consumer?
In this video, David Weil of the Transparency Policy Project speaks with Michael Luca of Harvard Business School on how Yelp.com and other consumer review websites are changing the way people make decisions.
In a nutshell, each ratings star added on a Yelp review translated to anywhere from a 5 percent to 10 percent effect on restaurant revenues. This is a significant number and can make the difference between success and failure for businesses that are close to the line when it comes to profitability.
Mr. Lucas qualified the figures by stating that they were true for independent restaurants and less so for large chains. Watch the video to learn more.