Find out how Yelp helps businesses.
This fact sheet demonstrates data and hard facts that lead to the following actionable conclusions:
Yelp is important for marketing & sales
- Yelp users are a valuable demographic to sell to
- Yelp users span all ages, though they trend younger than average
- Yelp helps small businesses compete against larger competitors
How businesses drive marketing & sales results using Yelp
- Your business needs 4.5 or 5 stars on Yelp just to be considered above average
- Your business needs higher Yelp star ratings to drive more revenue
- Your business needs more Yelp reviews to make your star rating credible
Yelp is important for marketing & sales
Factual evidence and stats show that Yelp is an important driver of marketing and sales success for small businesses in the United States.
Below this Yelp fact sheet highlights the statistics and evidence that show Yelp helps US small businesses compete against much bigger national chains for a consumer demographic with higher-than-average incomes and discretionary spending budgets.
Yelp users are a valuable demographic to sell to
Yelp users have a lot more income to spend than most, making them a valuable market to sell to.
Here are the stats and facts….
Over 74% of Yelp users in the US make more money than the median personal income in the US, which is just over $32,000.1,2
In fact, 50% of Yelp users in the US make more than 3 times the median US income!1,2
Here’s the income distribution for Yelp users according to their own corporate fact sheet:1
And here’s the median personal income in the United States:2
Yelp users span all ages, though they trend younger than average
Yelp is not just a platform for a younger demographic. In fact, Yelp users span all ages.
Still, when comparing the corporate Yelp fact sheet to US demographic data, the average Yelp user is more often between the ages of 18 to 34 (an age range with high discretionary income) and less often age 55 years or older (a more cost conscious demographic).1,3
Yelp helps small businesses compete against larger competitors
Yelp has “leveled the playing field” so that small businesses can now earn consumer trust without the big advertising budgets of big businesses.
Here are the conclusions from an in-depth Harvard Business School study:4
Small businesses get a much more significant revenue boost from higher star ratings than larger, nationally recognized businesses.
Small businesses have been gaining market share from larger, nationally recognized businesses since Yelp was introduced, as a direct result of Yelp helping small businesses compete more effectively against big businesses.
That’s because big businesses control their reputations mostly through big budgets in advertising and marketing, not through Yelp ratings. So big businesses have not benefited from Yelp as much as small businesses.
Yelp star ratings boost the reputation (and revenue) of small businesses without requiring the big budgets of big businesses.
How businesses drive marketing & sales results using Yelp
Factual evidence shows that small businesses experience a significant boost in revenue when they have a high number of stars in their average Yelp rating and a high quantity of Yelp reviews.
This Yelp fact sheet shows evidence below of the connection between Yelp’s star ratings, review quantity, and small business sales.
Your business needs 4.5 or 5 stars on Yelp just to be considered above average
For you to get more sales from Yelp, you need to beat your local competitors. And on average, that means that you need an average Yelp star rating of 4.5 or 5.0. For more advice on how to accomplish this goal, see our guide on how to get Yelp reviews.
half-star
An average Yelp rating of 4.0 stars or less is typically not competitive.
That’s because the average business on Yelp has a 4-star rating based on an overall average of 3.78 stars which gets rounded up to the nearest half-star for the overall average Yelp rating of 4.0 stars.1
Here’s the exact breakdown of star ratings based on the official Yelp fact sheet:1
Therefore, any business with fewer than 4.0 stars is below average, any business with exactly 4.0 stars is just “average,” and only businesses with 4.5 or 5.0 stars are above average and therefore competitive at attracting the lion’s share of sales.
Your business needs higher Yelp star ratings to drive more revenue
The fact is that Yelp’s average star rating directly impacts sales.
An extensive study by Harvard Business School found that a 1-star increase in Yelp rating can lead to a 5% to 9% increase in revenue.4
Another study by UC Berkeley economists found that a half-star rating increase on Yelp from 3.0 stars to 3.5 stars results in a 19% greater likelihood of restaurants filling all available seating capacity during peak dining times.5
So your local business’ average star rating is not just a “vanity metric.” It has a very real direct monetary impact on your sales and your bottom line.
Your business needs more Yelp reviews to make your star rating credible
As important as your average star rating is, you can’t rely solely on it to drive sales. You also need a high quantity of Yelp reviews to lend credibility to your high average star rating.
In fact, Yelp has a 20% greater impact on consumer buying decisions when a business has at least 50 reviews versus only 10 reviews.4
Sources
- Yelp Factsheet (as of 2019)
- US Census Bureau data via St. Louis Fed (as of 2016)
- Henry J Kaiser Family Foundation (as of 2017)
- Harvard Business School Working Paper “Reviews, Reputation, and Revenue: The Case of Yelp.com” by Michael Luca (as of 2016)
