What is One Half A Star (1/2 star) On Yelp! Worth To Your Business?
If your business has three stars on Yelp! what would be your sales to move up to 3 1/2?
If you are at 3 1/2, how much more money will you make at 4 stars?
Previously, we could only speculate. And since many believed nothing could be done about the ratings (at least on Yelp!), it was considered a fools errand to ask about ratings and revenues.
But now, with new research, we have to open up the discussion again.
The study is around restaurants, and concludes that 19% MORE reservations may be had with only a 1/2 star increase in rating. This is largely due to the fact that Yelp! rounds the ratings to 1/2 point increments. So restaurants which may have nearly identical ratings, but fall on either side of the cutoff number – for instance 3.75, for 3.5 or 4 stars – will see markedly different results in their business.
From the study’s authors:
People who submit reviews to Yelp submit something which is 1, 2, 3, 4, or 5 stars. Yelp takes these together and aggregates them to create an average rating for each restaurant. Then, it rounds that average rating to the half-star level. So restaurants are displayed with 3, 3.5, or 4 stars.
The true average rating, of course, is continuous and could be any number between 1 and 5 – so for example there are some restaurants have true ratings of 3.74, while others have a true rating of 3.76. We might think these restaurants are pretty similar in terms of food quality, service, etc. – whatever people take into consideration when making a review, they’ve ultimately reviewed these two restaurants almost exactly the same. But because Yelp rounds its ratings, the 3.74 restaurant will be displayed as 3.5 stars, while the 3.76 restaurant will be displayed as 4 stars. By making comparisons like that, we can see where there are differences in reservation availability between two restaurants which are almost exactly the same in terms of how customers review them, but which look very different on Yelp. It’s these types of comparisons which let us say that the only “real” difference between these two restaurants is Yelp – and when we compare restaurants like these, we see that the restaurants which just barely get 4 stars sell out about 19% more frequently than restaurants which almost get 4 stars. This is what lets us infer causality.
And this effect is no doubt similar in other, non-restaurant, businesses.
The good news is a business can work to improve their rating, and if only a few hundredths of a point away from the cutoff number, they can see a whole 1/2 point jump in the stars.
Additionally, A Nielsen survey revealed that 82% of Yelp users visit the site when preparing to spend money at a local business, and a Harvard study found that a 1-star increase in Yelp rating can lead to a 5 – 9% increase in revenue for a restaurant.