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From Reviews to Revenue
By: Kaitlin T. Gallucci
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Once again, consumer-generated digital content is driving offline consumption. Say you’re looking for a restaurant. You check Yelp. You avoid the restaurants with the bad reviews and consider — or go to — the ones with good reviews. Yelp is an extraordinarily popular restaurant review and search engine; if only we knew exactly how much its reviews affect business! Well, now we do.
A Harvard Business School student, Michael Luca, conducted a study on the correlation between Yelp reviews and revenue generation. According to his research, “a 1-star increase in Yelp rating leads to a 5–9% increase in revenue.”
Like yesterday’s discovery that social media drives in-store traffic, this is further evidence that the gap between the online and offline worlds is getting smaller, and consumers wield a lot of the power. Brands cannot control social media conversations or Yelp reviews, yet they can have profound effects on business, literally generating tangible revenue. Online engagement drives more than just awareness; it influences consumer decisions in a measurable way.

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About the Author
Kaitlin T. Gallucci is a New York based direct and digital marketing strategist. She tweets here.
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