{"id":2106,"slug":"luca-hbs-yelp-one-star-revenue","title":"Luca HBS WP 12-016 — one-star Yelp = 5-9% revenue (regression-discontinuity, the causal anchor)","kind":"reference","scope":"business","status":"current","audiences":["kevin","candid-team"],"topics":["review-revenue-causal-evidence"],"reference_body":"**Claim:** Michael Luca, Harvard Business School NOM Unit Working Paper 12-016, \"Reviews, Reputation, and Revenue: The Case of Yelp.com\" (2011, rev. 2016), using a **regression-discontinuity design** on Washington State Department of Revenue data (exploiting Yelp's rounding thresholds):\n\nVerbatim: \"**a one-star increase in Yelp rating leads to a 5-9 percent increase in revenue**... this effect is driven by **independent restaurants**; ratings do not affect restaurants with chain affiliation.\"\n\nThis is one of the few **causal — not merely correlational** — findings in this whole research domain.\n\n**Source:** Luca 2011/2016, HBS NOM WP 12-016. **Non-vendor / academic.**\n\n**Confidence:** Verified (peer-reviewed-grade causal). Caveat: Seattle restaurants; generalization to other verticals is inference. The paper remained an influential working paper rather than a journal article under this title.\n\n**Why this matters for Candid:** The single most credible causal datapoint in the entire research domain. The \"independent restaurants\" finding is especially relevant — most Candid SMB clients ARE independents, not chains. This is the strongest single piece of evidence behind any \"invest in your reviews\" recommendation.","rationale_body":null,"metadata":null,"links":{"outgoing":[],"incoming":[{"slug":"research-brief-smb-widget-market-difficulty-june-2026","title":"Research brief: SMB widget market difficulty — six ranked factors (June 2026)","kind":"reference","scope":"business","link_type":"relates-to"},{"slug":"proximity-and-reviews-dominate-local","title":"Factor 2 — Proximity + review prominence dominate LOCAL markets","kind":"reference","scope":"business","link_type":"depends-on"},{"slug":"reviews-as-conversion-moat","title":"Factor 5 — Trust/review moats (conversion, not just ranking)","kind":"reference","scope":"business","link_type":"depends-on"}]},"created_at":"2026-06-23T19:16:04.239Z","updated_at":"2026-06-23T19:16:04.239Z"}