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TECHNOLOGY: Yelp Launches New ‘Revenue Estimator’ For Direct-Pay Doctors and Small Businesses

By Michael Tetreault, Editor-In-Chief

APRIL 1, 2013 –  Yelp is announcing a new feature intended to highlight and quantify the value that the listing and review site provides for direct-pay business owners and other small businesses.

A company spokesperson told me the feature is important for two reasons. First, it helps business owners understand the impact that Yelp is already having on their revenue. Second, it gives them a baseline from which to judge the success of their advertising campaigns — it’s one thing to see an increase in page views or reservations after a campaign, and another to put a dollar value on the new business generated by those ads.

To make its estimate, Yelp separates customer leads from page views — those leads can include things like bookmarking a Yelp business listing, mapping directions to the business, placing a phone call from the Yelp app, purchasing a Yelp deal, making an OpenTable reservation, and more. (That’s information Yelp already provided in monthly reports.) Then, using a recent study from the Boston Consulting Group, it estimates the average spend per customer in a given business category. (Businesses can also enter their own estimate for the value of a lead.) Finally, it takes the total leads and multiples it by the average value of each lead, giving businesses a sense of the total revenue generated by Yelp.

revenue_estimator_screenshotExplained this way, it seems pretty simple, but a Yelp spokesperson said it’s pulling from a lot of data to determine what a lead is, and it would be hard to pull off without all the user data that the company has collected. (They added that the company had 100 million unique visitors in January.) This feature will be available for free to all Yelp businesses, though it’s available initially for those in the United States and Canada.

The spokesperson added that this is just the first of a number of simple tools that Yelp plans to offer small businesses for calculating return on investment on ad spending.

In its most recent earnings report, Yelp said there are now 39,800 active local business accounts, a year-over-year increase of 68 percent.

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