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February 23, 2012

How small businesses should use Yelp

Filed under: advertising, local search, yellow pages, yelp — Rakesh Agrawal @ 11:08 am

Although I’ve strongly criticized Yelp‘s business model in recent weeks, Yelp is an incredibly important platform for small businesses to be aware of and engage with. And unlike Groupon, which has almost no redeeming value, Yelp has created a valuable consumer resource. I consider it the best resource for ratings and reviews of restaurants, bars, and local retailers in the United States.

According to the review site’s S-1, more than 60 million people turn to Yelp each month for its ratings and reviews. Small businesses should pay attention, because Yelp has become an important tool in the consumer decision flow. Yelp provides businesses a lot of tools for free.

If you run a business that regularly interacts with consumers, I recommend that you do this on Yelp:

  • Claim your business page. This allows you to edit key business information. According to Yelp, more than 600,000 businesses have already claimed their pages.
  • Add hours of operation. This is especially important for categories like bars, restaurants and retailers, where hours of operation can vary dramatically. With Yelp’s “Open Now” filter, consumers can restrict their search just to businesses that are listed as open.
  • Add photos. Photos convey a lot more information than words. In many cases, ambiance is an important part of the decision-making process.

That’s the minimum.

If you have the time, I also recommend reading and responding to reviews. It may be tempting to dismiss Yelp reviewers as unrepresentative of the overall population of your business. Yes, some of them are entitled hipsters who think the world owes them something. But many of them are your target market. Regardless, their opinions shape buying decisions. Yelp provides a helpful guide on how to respond to both negative and positive reviews. It’s not necessary (or wise) to respond to every review. But if a review materially misrepresents your business or if you’ve changed something about your business since a review was written, it’s worth pointing out.

One way that people judge a business is by how it responds when something goes wrong. Any business, even a 5-star restaurant, will have an off night. Showing that you care about it and are willing to fix things goes a long way toward instilling confidence in your business. By reading reviews, you might also discover areas where you do need to improve.

Yelp is an important tool for small businesses in competing with chains and franchises. One of the important functions that chains provide is to de-risk purchase decisions. If I go to a Starbucks or Quiznos, I know generally what to expect. There’s a lot more variability among independent business — some can be outstanding, while others are terrible.

It’s unlikely that I’ll have a terrible cup of coffee at Starbucks — corporate works to prevent that from happening. When faced with uncertainty, people will often choose the consistent.

It’s also unlikely that I’ll have an outstanding cup of coffee at Starbucks. Yelp helps to de-risk selecting an independent business. Yelp’s reviews make it easier to pick out the 4- and 5-star places that provide great products. These can be much better values because they don’t have the overhead that chains have.

By providing more information, you’re making it easier for people to select your business. And you can do all of this without paying Yelp a penny.

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December 13, 2011

Scanning bar codes seems to be a popular holiday pastime

Filed under: local search, mobile, mobile search — Rakesh Agrawal @ 9:53 am

IDC’s 2011 shopper survey shows shockingly high usage of smart phone scanning tools to scan bar codes and QR codes.

Nearly 1/3 of those surveyed said they had scanned a bar code. A common use of this technology is to compare prices when at a retailer. That presents a significant threat to brick-and-mortar retailers like Best Buy, who now have to compete more aggressively with online retailers. This could put a lot of pressure on high-margin items like cables, which cost $80 in store when comparable cables online are $4 or less.

Although more than half hadn’t used the scanning feature, I consider these strong numbers for the technology’s adoption.

There was also high overlap among the scanners: 61% of bar code users have also scanned a QR code; 70% of QR code users have also scanned a bar code.

via Jonathan Gaw

IDC shopper survey

June 22, 2011

Virgin America knows how to make daily deals work

Filed under: advertising, airlines, groupon, local search — Rakesh Agrawal @ 10:10 pm

Virgin America cabinI admit it. I am in the bag for Virgin America. I have been since before they took off. (Literally.) I once live tweeted a flight to San Diego using their in-flight WiFi. Savvy travelers will recognize that the picture at right was taken on a Virgin flight.

Not only has Virgin set a new bar for in-flight service on domestic flights, they have done a terrific job of marketing their product to a young, tech savvy audience. Among their methods has been running daily deals:

All of these deals sold out. All 500 of today’s Loopt u-Deals sold out in less than an hour.

So why do I think that Virgin America’s daily deal marketing is brilliant when I think they are bad for many businesses? Economics, plane and simple.

  • Introductory offer on new routes. Many of the deals have been for new routes. These routes don’t have existing demand on Virgin to displace. (Today’s deal was different in that it was targeted at Virgin’s home base.)
  • Lock in on new routes. Whenever a carrier like Virgin launches in a new market, legacy carriers will dump extra capacity onto the route to keep their share and make life harder for the new guy. By having people pre-purchase these vouchers, it creates a powerful reason to try Virgin instead.
  • Higher purchase price. Although the deal price may be effectively 65% to 75% off the voucher value, you have to spend a lot more to use it. A SFO-LAX roundtrip on Virgin will cost you $158 plus taxes. The Loopt voucher saves you 40% at best. On a SFO-IAD flight, the savings drop below 20%. Virgin sometimes gives away 20% off vouchers, so this isn’t that much different from their regular marketing.
  • A lot of restrictions. As with many travel deals, Virgin’s daily deals come with a lot of restrictions. You can’t use them on First Class, Main Cabin Select or refundable fares. You can’t use them during the peak of summer demand. The restrictions on the Loopt deal are longer than this blog post. All of these serve to reduce cannibalization and try to drive incremental traffic.
  • Caps and cheap publicity. The deals are capped at relatively low numbers, but generate a fair amount of press coverage. This is especially important on new routes.

August 19, 2010

Heading toward the Facebook recommendation engine

Filed under: facebook, lbs, local search, maps, yellow pages, yelp — Tags: — Rakesh Agrawal @ 9:13 am
Image representing Facebook as depicted in Cru...

Image via CrunchBase

There’s an interesting thread over at Mike Blumenthal’s blog on the effect of Facebook Places on the local reviews space.

My view is that reviews and updates will coexist, much as blogs and Twitter coexist. People who were less committed to reviews will migrate their activity to Facebook Places updates. But Places could lead toward the ultimate recommendation engine.

In the local space, there’s really only one review site that matters: Yelp. They’ve got a strong set of tools and an active and engaged community. New restaurants and bars, which are often of the most interest, will have a dozen reviews on Yelp a year before they even show up on many Yellow Pages sites.

There are three big challenges with Yelp:

  • It’s been too successful. Many restaurants have hundreds of reviews. Although Yelp provides great tools for analyzing the data, it can still feel overwhelming. It also discourages participation from more casual users. In the early days of Yelp, I was an active reviewer. That’s tapered off substantially — what’s the marginal benefit of me writing the 426th review of a place?
  • These aren’t my real friends. I don’t know how compatible their tastes are with mine. It also affects the propensity to write reviews. People are more likely to do something that helps their friends than something that helps a generic audience.
  • Skewed demographics. Yelp primarily caters to a young, urban demographic. If you’re a mom in the suburbs, its value is more limited.

Facebook Places lowers the bar to participation and ties it into real-life social networks. Instead of writing out a long review, a few clicks is all it takes. Combine that with Facebook’s large user base on mobile devices — its monthly uniques on mobile devices is 4x Yelp’s monthly uniques on the Web — and we’ll see a tsunami of local data. (For more on importance of massive amounts of data, watch Google’s Peter Norvig’s talk.)

While each blip may not be as rich as the data in Yelp, you could build a recommendation engine to infer a lot from that data.

If I see that a place I am considering visiting is regularly frequented by my friends with families, I can infer that it is good for kids. Positive reviews can be inferred by friends going back to a place regularly. There are some friends who I have negative taste relationships with. If I know that they’re regulars somewhere, I know not to go there. Facebook can also make recommendations based on places I’ve visited and the overlaps with places my friends have visited. Facebook also has real demographic information which could be used to tailor recommendations.

Status updates in the social network also prompt discussions. Even if the original poster doesn’t write a review, it may be followed up by “hey, I was thinking of going there. what did you think of it?” Facebook could also close the loop by prompting people to add star ratings, Like or add comments a few days after a check in.

When it comes to restaurant reviews and recommendations, most people are looking for “good enough”. While you could spend hours reading every Yelp review of several restaurants and possibly get a better answer, a recommendation based on your friends’ activity is probably nearly as good. Facebook has done really well with good enough; Facebook Photos dominates online photo sharing, despite many functional weaknesses when compared with flickr.

I built a prototype of this when I was at AOL Search and even with a few users in the system, it worked really well.

More on: Facebook, local search, Yelp

See also:

July 30, 2010

Groupon personalizes the daily deal

Filed under: advertising, local search, marketing — Rakesh Agrawal @ 12:10 pm

Groupon announced a shift from its approach of the same deal for all email subscribers in a market to personalized deals in select cities. CEO Andrew Mason says that there is a backlog of 35,000 businesses waiting to be featured on Groupon and that 7 businesses are turned away for each that is featured.

Offering more deals makes sense for Groupon, for consumers and for businesses. It will lead to higher engagement among consumers, more revenue for Groupon and better results for businesses:

  • Higher engagement. As the novelty of the daily deal wears off, email open rates will decline. In my own usage, I’ve found that many businesses featured are outside the area that I’m willing to travel. If I know that deals are more local and more relevant, I’ll be more likely to open the email.
  • More revenue. Having multiple deals allows Groupon to capture revenue from more people because deals will be more relevant. The user data collected will also help with getting businesses on board — sales people will be able to say we have X thousand customers within a few miles of your business.
  • Better results for businesses. One of the concerns that small businesses have with offering big deals is attracting only deal chasers. The ideal customer is someone who will convert into a regular and pay full price. Someone who is willing to drive 30 miles to save $10 will likely have a low or negative lifetime value.

Mason says the first cut of personalization will be dumb, using limited data such as ZIP code, gender and age. While location is important, it does come with a couple of caveats:

  • Location is often directional. People living in Manhattan are much less likely to go to New Jersey for a deal than the reverse.
  • Its importance varies by business. People will travel farther to go skydiving than for a restaurant or bakery.

I’m not as convinced on using gender, age or other factors to target deals. Many of the deals have wide appeal and part of the value of products like Groupon is their serendipity.

July 29, 2010

Why small businesses are snapping up the daily deal

Filed under: advertising, google, local search, marketing, yelp — Rakesh Agrawal @ 1:05 pm

A sample daily deal from Living Social.

In recent months, we’ve seen daily deal sites like Groupon and Living Social grow like crazy. Groupon is valued at $1.35 billion. That’s more than 4x the valuation of the McClatchy Company, one of the country’s largest newspaper publishers. It also ekes out The New York Times Company. Others are scrambling to get into the business, including DealPop in Seattle and CrowdCut in Minneapolis. Yelp is also testing its own entry in Sacramento.

A while back, I wrote about why small businesses were reluctant to get online. So what changed?

Well, the daily deal providers addressed most of the challenges I laid out.

  • No one was asking them to get online; now they are. Groupon, Living Social and others are rapidly building up local sales forces to approach small businesses.
  • It’s a lot simpler. Bidding on keywords is beyond the experience level and time commitment most small businesses can afford. Putting together a special offer is much simpler and the daily deal sites are doing a lot of hand holding. Even Google has realized this, with simplified pricing for its Google Tags product aimed at small businesses.
  • There’s no upfront commitment required. Unlike most advertising products, businesses don’t have to spend hundreds or thousands of dollars on an ad and pray that it works. Instead, they get paid for the deals sold before they’re actually redeemed.
  • Results are evident and compelling. Businesses can clearly see how many people are buying their deals in real time. They can also see customers as they walk through the door with the coupons. It’s a lot more trackable than other forms of advertising.

On the consumer side, the daily deal sites have turned coupons from something that were looked down on to a fun, social thing. Friends who wouldn’t use coupons in the past are touting the great deals they’ve found online.

A big challenge for providers will be providing enough new businesses to keep the deals interesting. Many of the deals I see these days are too far to drive to; a metro area is too large a geography. As the novelty of the daily deal wears off, deals will have to be more targeted based on location to avoid becoming perceived as spam.

See also:

June 24, 2010

Checking in with foursquare at SFO

Filed under: audio, foursquare, geotagging, lbs, local search, maps, mobile, social networking, twitter — Tags: — Rakesh Agrawal @ 12:57 pm
SFO is a hotbed of foursquare activity

SFO is a hotbed of foursquare activity. Creative Commons image by Håkan Dahlström.

With the increasing use of mobile applications such as Yelp and foursquare, it’s becoming possible to pull ideas from thin air. Users of these apps can leave tips for others to find that are linked to a specific location.

In most places there aren’t enough tips yet to make filtering an issue. San Francisco International Airport, with more than 57,000 checkins on foursquare, is an exception. It offers a glimpse of what we can expect as these services become more popular. The airport is the perfect petri dish for tips: it serves a technically savvy audience and people often find themselves there with plenty of time on their hands.

The SFO tips page contains dozens of notes including places to eat, complaints, ground transportation, wifi and power availability. Mixed in to all of this are ads, other spam and random observations. Some examples:

have a corned beef sandwich at max’s if you’re flying southwest. the best! well, really good

When you enter short term parking do it as far to the right as you can (lvl 2) & then immediately head to lvl 1. There is always parking next to gate and that is the lvl that connects to the terminal

Free wifi at the Continental lounge in Terminal 1- be warned, it’s located outside Security

Smoking hot brunette woman at gate 20. Stop by and smile at her. She is so lovely!

Bart to Millbrae gets you within 1 block of an in n out burger. Great for 3+ hour layover!

Heading to wine country? Take a moment to stop by St. Supery in the heart of Napa on Hwy 29. Mention this to get a 2 for 1 tasting.

Sorting through the volume of tips can be overwhelming. As the volume increases, we’ll need ways to filter them. Among the ways to filter:

  • Timeliness. Some of the tips, such as wifi at the Continental lounge, are evergreen. Others, like the smoking hot brunette are very timely. Tipsters should be able to flag their tips to self destruct. As I wrote earlier, being able to identify tips by timeliness would allow for new applications, such as sharing rides. (“Anyone want to split a cab to Moscone?”)
  • Social network. Among the tips were tips from people I follow on Twitter, including Danny Sullivan and Adam Lasnik. Being able to surface these would increase relevance.
  • Ads vs. not ads. Sometimes people want ads, especially if it can save them money.
  • Keyword search.

Places like airports are especially complex because they’re really collections of places, sometimes with other groupings and physical restrictions. Being able to filter tips by terminal would also be useful. But then maybe that’s best left to GateGuru.

June 16, 2010

Now we’re going Places

Filed under: geotagging, gps, lbs, local search, maps, mobile, social networking, twitter — Tags: — Rakesh Agrawal @ 1:59 pm

I’ve been writing about Twitter and location since my first post about Twitter in 2007. This week, Twitter launched Places, which allows users to add their location to a tweet.

Here’s a screenshot from 2007:

Twitter location 2007

Embedding location in a tweet the hard way in 2007

and today:

Embedding location in a tweet in 2010

In 2007, I used a third-party application from Where to include my location. Clicking on that link would take you to a map on Where’s site showing the address. (The link in the original post no longer works.)

With the launch of Twitter Places, the search is done within the Web browser (and soon in Twitter’s mobile applications). You can select where you are from a list of nearby places. Clicking on the place name brings up the map above and the option to view tweets about that place.

Although the difference between the two may seem subtle, they are significant:

  • Because the place is metadata, it doesn’t count toward the 140 character limit.
  • Place names are human readable, unlike addresses and latitude/longitude. Knowing the name of a place makes it much easier to find than just a street address, especially in dense metropolitan areas.
  • Places are unique to a specific venue. Doing a pure location-based search would return tweets from surrounding businesses or businesses that have since disappeared.
  • Integration in to the main Twitter experience means broad exposure and eventual standardization of place identifiers. That has been a longstanding challenge in the local space.

Twitter’s geo APIs have been available for several months and third parties like bing have created interesting applications like Twitter Maps. With the availability of places across the Twitter platform, we can expect to see more interesting applications including both real-time applications (ride sharing and ticket exchanges) and historical (restaurant reviews, past events).

Once Twitter allows owners to claim their Place and associate it with a Twitter account, we could see official tweets of announcements and offers incorporated into a Place’s search results.

When pictures are tagged to a Place (instead of a lat/long), we’ll have the ability to visually browse a venue in Twitter.

June 14, 2010

iPad puts on its business suit

Filed under: apple, foursquare, ipad, iphone, local search, mobile, social networking — Rakesh Agrawal @ 12:40 pm
An iPad used in place of a cash register at Sightglass Coffee. Photo courtesy Tony Conrad.

An iPad used in place of a cash register at Sightglass Coffee. Photo courtesy of Tony Conrad.

Most of the discussion around Apple’s iPad has been about what a great consumer device it is. It’s a book reader, movie player, newspaper, photo viewer, RSS reader and more.

But the iPad has a lot to offer businesses as well. Sightglass Coffee in San Francisco is using an iPad, with Square’s payment system as a point-of-sale system. A restaurant in Australia is using iPads in place of printed menus and wine lists. Patrons can drill down on items that interest them for more information. Mercedes Benz is using iPads to allow customers to start their credit application while still intoxicated by the new car smell. The Plaza hotel in NYC will soon use them for concierge services and room service ordering.

As companies like Twitter, Groupon, Living Social, foursquare and Yelp focus on the small business market, it’s easy to see the iPad becoming an essential tool for small businesses.

I cringe every time I go to a business with a Groupon and see the clerk pull out a binder and manually cross out the Groupon on the list. An iPad app would reduce the transaction time and provide the business key metrics such as how many redemptions are outstanding and how much people are spending beyond the Groupon value. It would also reduce mistakes and fraud.

Other possible applications:

  • Reputation management with live feeds from Twitter and Yelp, with the ability to quickly respond to applications.
  • Check in information from sites like foursquare to show who is visiting right now and keep track of frequent customers. An alert could appear when the mayor/duke/etc. checks in.
  • Frequency programs to replace traditional punch cards.
  • Real estate agents could use iPads to show off alternative properties and keep track of reactions from buyers.

iPads could also interact with mobile devices such as iPhones to receive payments.

Of course, all of these things can be done with a computer. But the iPad offers a number of advantages:

  • It takes less space. All of this power takes less space than a computer monitor, much less a PC.
  • It doesn’t create a barrier between you and the customer. The tablet feels more collaborative versus using a laptop.
  • Fewer maintenance headaches due to viruses and malware.
  • It shows innovation and forward thinking.

See also:

May 11, 2010

Geo-enabled Twitter comes alive on Twitter Maps

Filed under: bing, geotagging, lbs, local search, maps, mobile, social networking, twitter — Rakesh Agrawal @ 8:56 am
Bing's Twitter Maps show you what's going on

Bing's Twitter Maps show you what's going on

I’ve been playing with Bing’s Twitter Maps lately and it’s one of the better implementations of Twitter’s geo APIs that were introduced last fall. It shows tweets within the last 7 days plotted on the map. Google Maps recently introduced a similar feature, but it seems to only show items that are fed through Google Buzz (including tweets that people have configured to send to Buzz).

Some future applications of geo-enabled Tweets:

  • Events. For last-minute party goers, a real time view of what’s going on around town, complete with pictures and real-time reactions.
  • Ticket scalping. Rather than walk around for blocks talking to scalpers about what they have, glance at a list of tickets posted. The information transparency would result in a higher price to sellers and a lower price to buyers than what scalpers typically offer. (In my experience at baseball games, scalpers usually ask at least 3x what they paid.)
  • Finding a place to go. When in new cities, it’s often hard to figure out where to go — what are the lively neighborhoods at night. By looking at a map of recent tweets, you could quickly discover where people are still awake.
  • Read reviews from friends. Geo-enabled tweets filtered by those you follow would provide socially relevant recommendations.
  • Offers from local businesses. These could be persistent or distressed inventory. Slow night? Tweet an offer to draw in customers.
  • News. Twitter has long been used for user-generated breaking news. With geo-enabled tweets, breaking news could be aggregated by location in addition to hashtags. The biggest stories could be identified by an increase of tweets from a location (versus normal) and retweet frequency. News from media outlets could also be plotted.
  • Construction and accident information. Avoid bottlenecks by seeing tweets from fellow drivers, DOTs and news sites.
  • Trip sharing. Find others at the airport headed your way, cutting costs and reducing pollution.

And, of course, there’s friend finding, which is the most talked about use of geo-enabled tweets.

So far, the percentage of tweets I see with geo information is tiny (>1% of those I follow). But as more and more geotagged data is put into Twitter, the key will be applications providing the right tools to filter all of that data. At a minimum, we’ll need the ability to filter by time of tweet, people we’re following, hashtag and application (e.g. foursquare).

Unfortunately, bing’s Twitter Maps doesn’t seem to be available where real-time information would be most useful — on mobile devices.

More on: geotagging, social networking, Twitter

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