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Yelp lawsuit is a wakeup call for small businesses

Rochester Business Journal
April 18, 2014

“The Internet has changed everything.”

Yes, it’s a cliche.

But for small businesses, it’s absolutely true. A lawsuit filed in Virginia against Yelp, claiming that unfair or fraudulent reviews harmed a small business, is evidence of how the Web has altered relationships between small businesses and their customers.

Before the Web and social media, customer interaction was largely a private exchange between the business and the customer. Now it’s much more public. Users share their experiences via social media, customer review sites and online forums. All online information is now available to customers—current and potential.

That has indeed changed everything for small business—for better and for worse.

Consumers expect every business to be social on social media. If a small business doesn’t have a presence on social media and social media icons on its website, it looks a little weird—as if it doesn’t know what’s going on. Small businesses need a Facebook page, Twitter page and Google+ profile. And these need to be actively managed.

Before the Web, a customer might think to tell a friend about a great meal at a local restaurant or describe a terrible experience with a dry cleaner but have little chance of affecting the business’s reputation or bottom line. Now consumers share their experiences and opinions with a much larger group of people on the Web. What consumers say online about your business can help or hurt. A flattering review is a great marketing tool; a bad review can keep customers away. The smart business owner monitors the Web for comments about his or her business and has a strategy for responding.

Customers expect information now. That doesn’t mean a small-business owner needs to answer the phone 24/7. But it does require a website with easy navigation and details about products and services, as well as a “Contact us” form so people can reach out when a business is closed. An instant acknowledgement via email is increasingly expected. Such responses are nearly always expected when consumers contact small businesses using social media.

Before the Web, there was almost no chance that a small business would be known to anyone outside its local community. Now an incident at a small business can get mentioned on Twitter or Facebook and go viral. People tweet everything, and if a business owner or an employee does something amazing, horrible, rude, kind—anything out of the ordinary—the story can spread like crazy. Search for “Rocco’s Little Chicago Pizzeria” on Google and see the media coverage it received for its response to Arizona Senate Bill 1062.

A tiny shop in a tiny town had no chance of serving anyone but the locals until the Web came along. It requires search engine optimization and other online marketing techniques to obtain good rankings in search results. But with those rankings, a local small business can be found by—and sell to—consumers anywhere in the world.

Once upon a time, a small business could put an ad in the phonebook and call it a day. There was no interaction between the ad, the consumer and the business owner. There was no data on the ad’s performance in terms of leads and conversions. By contrast, online advertising has the capacity to be interactive and is completely measurable. A small-business owner can know when a consumer has clicked on a specific ad and arrived at his or her website. A business owner can know when a specific ad has prompted a consumer to call. Once a consumer clicks through to the business owner’s website, that owner can use a pay-per-click retargeting campaign to increase opportunities to convert the Web surfer into a customer. These data and tools were previously available only to large enterprises. Used effectively, they can significantly increase a small business’ sales.

These fundamental changes to the relationship between small business and consumer have all happened quickly. The changes continue. Small businesses that understand and master these changes—or hire firms that do—will continue to gain a significant advantage over the competition.

Chad Hill is CEO and co-founder of HubShout, an online marketing firm with an office in Rochester.

4/18/14 (c) 2014 Rochester Business Journal. To obtain permission to reprint this article, call 585-546-8303 or email service@rbj.net.



What You're Saying 

Kathleen Hoey at 12:38:43 PM on 4/23/2014
Good article, but it would have been helpful to include just a bit about the current status of the lawsuit. Are there any lawsuits where businesses successfully litigated against Yelp or other social media sites? Just wondering. Love RBJ !!
Rob Parker at 2:55:04 AM on 5/18/2014
Excellent article! All one has to do is read the difficulty some businesses have had with Yelp to realize the power of positive or negative feedback online. Those small businesses who are not online are missing out. Their customers are looking for them online, yet unable ...  Read More >

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