Yelp, QR Codes, and Verified Purchases

One of the most common complaints that local businesses have about Yelp is the existence of unfair, or even worse, completely false reviews. In the current Yelp ecosystem, any user can write a review for any local business at any time. Thus, it is possible for a user to review a business that they interacted with many years ago (what if their recollection of their experience isn’t entirely accurate at this point?) or to review a business they never even actually used (what if the user’s personal bias leads to them leaving a one star or five star review even though they were never even an actual customer?).

Yelp attempts to mitigate this issue by automatically filtering out reviews that don’t meet a certain standard. By its very nature, any filtering algorithm will yield false positives (reviews that are genuine but where mistakenly filtered out) and false negatives (fake reviews that were not filtered and left on the site). In order to improve such an algorithm, it is vital to constantly feed useful data to the underlying model. Useful data is data that is known to show a high correlation with bad reviews (so the algorithm is more likely to filter the review) or with good reviews (so the algorithm is more likely to not filter the review).

A new piece of useful data, and a new input for the filtering algorithm, can be the concept of verified purchases. If Yelp somehow knew that for a fact, on a given date X, the user made a purchase at the local business for the amount of Y dollars, this piece of information would be invaluable. One way of achieving this product functionality is to partner with local businesses in order to have them add QR codes to the receipts they give their customers. Upon scanning the QR code with a user’s Yelp app, the application will automatically have access to:

  • The business name
  • The date of the purchase
  • The total purchase amount

For example:

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In order to evaluate the usefulness of such a feature and to be able to estimate whether or not it will be adopted and eventually succeed, one needs to consider what value such a feature brings to the table for the key parties.

Why would users use this?

  • Access to more deals and access to better deals. Since the local business knows that you’ve already spent money with them (and exactly how much), they are more likely to give you deals to keep you as a customer. Loyalty counts. The Yelp platform will allow any local business to have a loyalty program that has the potential to be as game-changing as the Starbucks Gold Card.
  • Giving more weight to your reviews. As a user, it feels great to know that the site that tracks the reviews considers my review as an important one because they know it comes from a verified purchase.

Why would local businesses do this?

  • More customer engagement. As a business, you know a lot of your users love Yelp. If you can give your users a way to stay engaged with you as a business while channeling that love through Yelp, why not? From your end, you can use the Yelp platform to offer deals to customers who scan the QR codes and check-in or write reviews and tips on Yelp.
  • More data for local businesses. Many small businesses know they are sitting on heaps of data pertaining to the habits of their customers, but they really haven’t done anything smart with the data. Yelp can serve as the platform that leverages this data and makes smart recommendations to the local business as to how best to keep their existing customers engaged and loyal.

Why would Yelp do this?

  • More Yelp engagement. This gives users another reason to use the Yelp product. This aspect is especially vital in new cities where Yelp is building a treasure trove of new user content from the ground up.
  • More data for Yelp. This gives an opportunity for Yelp to build out features (some free and some paid) for local businesses using the purchase data to see how customers are reacting to the business’s promotions.
  • More accurate reviews and a better Best Match algorithm. When a user uses a QR code to draft a review, Yelp has two important pieces of data. First, they know that this user actually completed a transaction with this business – this is a verified transaction. Second, they know how much money the user spent for this transaction. This is important because Yelp can then tweak their review algorithms to give more weight to verified purchases as well as give even more weight to purchases of higher amounts.