badyelpLast week, the East Bay Express published a lengthy story accusing Yelp of extortion. Among other things, the article charges Yelp of offering to take down negative reviews of businesses who agree to become “sponsors” and pay for advertising on the site. It’s not the first time Yelp has been the focus of controversy.

Last month, a Bay Area chiropractor sued a Yelper for defamation after the user posted a negative review of his business. Just a week later, a Bay Area dentist filed a lawsuit against a couple who posted a review on Yelp criticizing her treatment of their son. Then she filed a second lawsuit against Yelp itself, after the company refused to take down the review.

The East Bay Express article paints a picture of business owners who are terrified of Yelp’s enormous power, and it’s true that just one terrible review by a credible local can be like a tactical nuke. It’s also inevitable that a certain amount of fraud takes place on Yelp in the form of fake reviews – negative reviews written by competitors as well as raves written by businesses about themselves.

And I see a lot of one-star reviews that follow this template: “I’ve always had really great experiences at this restaurant… except this one time when something slightly annoying happened.” People don’t pull their punches when they write things on the Interwebs, and I feel bad for businesses when I see them being completely bashed for really minor infractions.

So a certain amount of fear and suspicion are justified. But it’s also clear that too many business owners have no idea how to handle negative reviews. When the dentist, Yvonne Wong, was asked whether she attempted to contact the couple who wrote the negative review before deciding to sue them, she said it never occurred to her to do so: “I would be very upset and would not know what to say to them.”

This is just bad customer relations, which brings me to my advice for businesses on how to handle any mud flung at them by way of Yelp. It’s super simple…

#1: Don’t Suck. Just accept the new world order, where customers are powerful. When you’re serving a customer, never forget the fact that they can Yelp, tweet, post on Facebook, etc. and know that the word will spread from there. It will be shared, and it will be Googled.

OK, I understand that no business can be perfect all the time, and customers can be downright unreasonable. So what should businesses do when someone bashes them, justified or not?

#2 Apologize. Even if you think you’re right, apologize. That’s it. Or… that should be it. But businesses – like people – are really bad at apologizing. Fortunately Seth Godin posted this very helpful guide that ranks different kinds of apologies on a 1-10 scale. Hint: Everything below a 9 is not a real apology.

And now my last piece of advice…

#3 Launch a preemptive strike. You have a website, right? If you don’t, then… um… do you know it’s 2008? Assuming you do though, then start a blog, get a twitter account and get naked. As in, transparent. You will be surprised at the good will you will create, and the kind of relationship you will develop with your community if you put yourself out there in an honest and straightforward way.

That’s it.

But I have some advice for Yelp too… in my next post.

UPDATE: I forgot to add that talking to each other worked for the Yelper (Christopher Norberg) who was sued by the chiropractor, and it sounds like they could have avoided mediation altogether:

Norberg replaced his post on Biegel’s Yelp page with an apology that reads, “A misunderstanding between both parties led us to act out of hand. I chose to ignore Dr. Biegel’s initial request to discuss my posting. In hindsight, I should have remained open to his concerns. Both Dr. Biegel and I strongly believe in a person’s right to express their opinions in a public forum.”

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