Academic study reveals listing a business on Yelp can increase revenue

Small businesses are the heartbeat of local communities, and they look to platforms like Yelp to help attract customers and drive revenue. A new study published by the National Bureau of Economic Research analyzed how small businesses’ online presences correspond to business revenue by looking at restaurant and bar businesses on Yelp. The researchers found that establishing an online presence on Yelp leads to a revenue increase of about 5% on average. The study, conducted by Michael Luca of Harvard Business School,* Abhishek Nagaraj of the University of California, Berkeley and Gauri Subramani of Lehigh University, looked at administrative tax data on establishments serving alcohol in Texas from 2007-2017 and proprietary Yelp data during the same time period. 

Key findings from the study in connection with restaurant and bar businesses in Texas on Yelp during this time period include:

• The overall effect on revenue when businesses are added to Yelp is notable, ranging from 5-10%. The effect on revenue is dependent on how the business is added to Yelp, when by a customer, by the business or by Yelp. (Businesses can claim their page for free on Yelp to update their business information, receive and respond to messages and respond to reviews.)

• When frequent Yelp contributors, referred to as “super adders” in the study (i.e., the top 1% of Yelp community members who add the most new business listings), add new businesses to Yelp, revenues for those businesses increase by 8.9% after the Yelp listing is created.

• Businesses that are listed on Yelp are generally located in more urban areas, have been in business longer, and tend to be larger than those that have never been listed on Yelp. 

To estimate the effect of being added to Yelp, the researchers looked at the timing of when businesses were added and examined how their revenue changed relative to other businesses. No matter how the business was added, the results found that establishing an online presence on Yelp can be helpful for businesses. 

Yelpers who add businesses to Yelp are doing more than informing their communities—they’re ultimately helping to increase businesses’ revenue. If you’re a business owner and are interested in starting, growing or advertising your small business, visit Yelp for Business to claim and manage your business page. 

*Michael Luca has previously performed consulting work for Yelp. Yelp did not commission or participate in this study.