Friday, September 23, 2011

Yelp through the Value axis

VPEC-T is a thinking framework, useful for teasing out different perspectives between stakeholders/participants in a "system". Not necessarily a computer system (in fact many of the thinking models are expressly about the non computer parts of a system). The V (Value) filter helps in understanding the value of the desired outcomes to both the individual and the business.

Applying that filter to some of the more interesting pure-playweb properties (illustrated with examples from yelp and Groupon), we can look at some of the value offered and value received, helping us peer into the business models.

First, yelp. Yelp is a restaurant review site - the slogan being "Real people. Real reviews". The idea being that people like you and I can visit places, and review them - from a non-professional perspective. A nice idea indeed, but really to what purpose - especially what business purpose?

Yelp allows businesses to sign up and somehow advertise.  The purported value proposition being, "yelp has all of these people reviewing places, do you want to make sure that your establishment is properly placed?" There may be other models too. But I suspect that isn't where the real value lies. So let's look at yelp from the perspective of the individual "yelper".

A person signs up with yelp. Has to provide an email address and a (small) number of demographic details. A yelper then interacts with the site by chatting with other yelpers, or reviewing service providers - mostly, but not exclusively restaurants. In other words it is social media for the eating out crowd. Yelp provides inducements (elite status) to provide aspirational goals, and an air of exclusivity for its most prolific posters.

So for the privilege of belonging to a social media site - centered around people's favorite thing to do (giving opinions) yelp is able to collect a large amount of quite well targeted data, that can then be used/sold on or whatever for targeted advertising. Knowing that I travel a bit, which restaurants I eat at, buy certain kinds of furniture, etc. is the most valuable asset of all. It is self reported information, where there is no reason to lie with a very precise perspective on my behavior.

The Value exchange in the relationship is that the yelper gets a strong social group in exchange for letting yelp have great insight into the yelper's habits. Is this appropriate? Absolutely, but you always have to understand what value you are exchanging with another entity when you sign up. Similarly a company like yelp has to make the value proposition enticing enough, so that it can attract the mass it needs in order to sustain a valuable advertisement based business model.

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