You've Been Yelped

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The pitch has proved reasonably popular -- Grossman told me that a typical Yelp salesperson generates at least $8,000 in monthly billings -- but it has also attracted controversy. Some business owners have reported seeing their Yelp ratings fall after they declined to buy advertising. The rumblings came to the surface in a 2009 article that appeared in the East Bay Express, a weekly newspaper in Oakland, California. The article, "Yelp and the Business of Extortion 2.0," suggested that Yelp salespeople, like Mafia foot soldiers, were threatening businesses with bad reviews if they did not buy a sponsorship package. Stoppelman denies the charges.

But the suspicion and anger are symptomatic of a larger problem, namely that Yelp's algorithm is a mystery to nearly everyone outside the company. Stoppelman says this is necessary to prevent business owners from hiring shill reviewers, but nearly every business owner I spoke with in reporting this story complained of being caught in the crossfire. "We've had some positive reviews suddenly disappear," says Laurie Lavy, the owner of an upscale home furnishings store in Phoenix. "They say it's the algorithm. But the whole thing is weird."

I met Lavy, and two dozen other business owners who had been touched in one way or another by Yelp, after traveling to Phoenix, which is something of a frontier for Yelp. Yelp plans to open a sales office in Phoenix later this year, but right now, the lone face of the company's Arizona operation is a community manager named Gabi Messinger, a compact, bubbly woman of 35.

As far as I could tell, being a Yelp community manager consists mostly of sending little messages of encouragement to users. Messinger has sent thousands of the messages, with bromides such as "cute pic" or "great review." "When I send a compliment, it encourages other people to do the same, and that creates the culture." Being a model Yelper for Messinger also means setting an example of openness. She has written reviews of two sex shops and two gynecologists ("There are not too many people I trust to go 'down there,' but Dr. Bartels and Dr. Webb are on that list!"). It also means engineering a seemingly endless series ofparties and outings.

One afternoon in November, I joined Messinger as she called on a number of businesses that had participated in a Yelp promotion earlier in the year, giving discounts on such things as haircuts and massages to Yelpers. Our first stop was the Root, a salon in downtown Phoenix. The owner, Lauren Hart, a 48-year-old with short black hair, took a break from wrapping a customer's blond locks in foil to tell me about how she came to love the Web. "Two and a half years ago, I didn't know how to turn on my computer," says Hart. "I thought the Internet was something for my kids."

Things started to change when a new customer mentioned to Hart that she had found the salon on Yelp. "When you're in a trend-driven business, if you're not keeping up with the trends, you're just going to get old with your clientele and die," says Hart. She lifted the ban on Internet usage in the office, took a basic computer class at the Apple Store, and showed up at one of the monthly meetings Messinger holds for business owners.

Today, the Root offers deals on its Yelp page -- anyone who mentions the site might get a free conditioning treatment -- to attract new clients, and Hart tries obsessively to avoid negative reviews. When a new client makes an appointment and mentions Yelp, Hart generally checks to see if the person has a profile on the site. If the Yelper has written bad reviews, Hart will make sure she personally cuts the customer's hair. Hart responds to every review -- which in 29 out of 30 cases has meant saying thank you.

Like every business owner, however, Hart cannot help focusing on the rare exceptions. "I've had one negative review," she says. "The customer called in and wanted the owner, and when she came in, I could tell she wasn't my type." The new client seemed edgier than Hart's typical clientele. Hart cut the woman's hair, and at 2 o'clock the next morning, Hart received an automated e-mail about a new review: two stars. She was devastated.

"The fact is, I can walk out this door and trip over salons," she says. "A bad review would be horrible. In this economy, good enough isn't good enough." But unlike Goodman, the bookstore owner, Hart kept her head. She composed an apologetic reply, and, using her Yelp account, sent a private message to the dissatisfied customer. Hart suggested a competing salon and offered to pay for a second haircut there. The result? The two-star review became a four-star review. (For more on how to respond to a bad review, see "Take a Deep Breath.") Hart told me that if a junior stylist were to get a review below three stars, she would consider firing the stylist. "My girls flinch every time we get one of those e-mails," she says.

And yet Hart loves Yelp. Amid a recession that has been disastrous for most retail businesses, sales at the Root have grown 148 percent compared with last year's. Meanwhile, the Yelp traffic -- Hart says she gets two or three new customers every day -- has allowed her to stop advertising in the local neighborhood newspaper, which had cost her $400 a month. Apart from the services and discounts she offers Yelpers, she hasn't paid Yelp a penny. "There are a lot of business owners who feel like Yelp reviews just happen," she says. "But it's not true. Responding to reviews, giving offers, maintaining your page -- it all makes a huge difference."

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Senior contributing writer Max Chafkin has profiled companies such as Yelp, Zappos, Twitter, Threadless, and Tesla for the magazine. He lives in Brooklyn, New York. @chafkin