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Brand Advocates: Turning Enthusiastic Customers into a Powerful Marketing Force by Rob Fuggetta

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Chapter 8

Restaurants Cook Up Success with Advocacy

If you own or operate a restaurant, you're probably hungry for more positive reviews on Yelp, Urbanspoon, and other sites. Positive reviews and comments by delighted diners can boost your sales and reputation. On the other hand, negative reviews can kill your business faster than a salmonella outbreak.

Now, a new study by Michael Luca, a Harvard Business School assistant professor, shows exactly how much positive reviews on Yelp impact restaurants' sales. According to the study, each star rating on a Yelp restaurant review translated to anywhere from a 5 to 9 percent increase in revenues.1

In other words, a restaurant that increases its star ratings on Yelp from three to four stars could boost its business from 5 to 9 percent. Increase the ratings from four to five stars and boost your business another 5 to 9 percent. For a restaurant that does $1 million a year in business, increasing its Yelp ratings two stars could increase sales by $180,000. A restaurant that does $10 million a year could increase its revenues by $1.8 million.

This study underscores what restaurant operators and marketers have known for a long time: getting more positive customer recommendations is a fundamental key to restaurant success. Or, as one restaurant marketer put it recently: “Restaurant marketing success today depends not as much on what you say about yourself but what other people say about you.”

Power of Restaurant Word of Mouth

Word of mouth ...

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