Week 2 Discussion: Yelp’s Advertising Strategy Boosts Result ✓ Solved

Week 2 Discussion: Yelp’s Advertising Strategy Buoys Results

Week 2 Discussion: Yelp’s Advertising Strategy Buoys Results (WSJ). Key phrases from the reading: 'driven by a bigger sales force and ending a requirement for business customers to commit to a fixed time period', 'opening up the sales funnel is bringing in a lot of new customers', and 'estimating the long-term impact on account retention'. Discussion prompts: What is the role of the Yelp! sales team? What are the impacts, benefits and costs of a bigger sales force on Yelp and Yelp’s customers? Why would opening up the sales funnel bring in more customers? What is the relationship between account retention and the sales force at Yelp? What did you learn from this reading and from exploring more about Yelp?

Paper For Above Instructions

Introduction

Yelp’s recent advertising results have been attributed by analysts and company statements to strategic changes including a larger sales force and a move away from fixed-term contracts for business customers (Wall Street Journal, 2016). This paper synthesizes those claims and explores the functional role of Yelp’s sales team, the impacts—both benefits and costs—of expanding that team, why widening the sales funnel can attract more customers, and how account retention relates to sales force structure. The analysis draws on industry reporting, marketing and sales literature, and company disclosures to provide a concise, actionable view for managers and students studying platform advertising strategies (Yelp Inc., 2016; Kotler & Keller, 2016).

Role of the Yelp Sales Team

The Yelp sales team performs several interlocking roles: prospecting and lead generation, consultative selling to local businesses, onboarding and training advertisers on platform tools, and ongoing account management to drive renewals and upsells (Yelp Inc., 2016). On marketplace platforms like Yelp, salespeople translate product value into local business outcomes (e.g., increased foot traffic or bookings), tailor packages to vertical-specific needs, and collect feedback that shapes ad product development (Zoltners, Sinha, & Lorimer, 2006). In short, the sales team is the primary human interface between Yelp’s ad product and small-to-medium business (SMB) customers, converting platform capabilities into measurable business value (McKinsey & Company, 2014).

Impacts, Benefits and Costs of a Bigger Sales Force

Benefits: A larger sales force increases outreach capacity, allowing Yelp to contact more potential advertisers and shorten sales cycles (Forrester, 2015). Greater coverage helps fill the top of the funnel with leads, enabling segmented targeting and geographic saturation—especially important for a local-ad focused platform (Statista, 2019). A robust sales presence can also improve conversion rates through better demos, tailored messaging, and in-person relationship-building that digital-only channels struggle to match (Kotler & Keller, 2016).

Costs: Expanding a direct sales organization is resource-intensive. Costs include salaries, commissions, training, management overhead, and associated travel/administrative expenses; these increase the company’s fixed costs and can depress margins if customer acquisition and lifetime value do not scale correspondingly (Reinartz & Kumar, 2003). Additionally, rapid hiring can dilute average salesperson quality and require longer ramp-up times, reducing short-term productivity (Zoltners et al., 2006).

Impacts on customers: For SMB advertisers, a larger sales team can mean faster response times, more customized campaigns, and improved post-sale support. However, increased sales pressure can also lead to mismatched expectations if sales incentives prioritize sign-ups over long-term fit, potentially raising short-term churn (Harvard Business Review, 2012). Yelp’s removal of fixed-term contracts mitigates this risk by reducing lock-in, but it puts greater emphasis on product experience and post-sale value delivery to maintain retention (Yelp Inc., 2016).

Why Opening Up the Sales Funnel Brings in More Customers

“Opening up the sales funnel” refers to reducing friction for potential customers to engage with Yelp’s sales process—examples include dropping mandatory commitments, offering trial periods, simplifying sign-up flows, and increasing outbound and inbound lead channels (Forrester, 2015). By lowering entry barriers, Yelp reduces perceived risk for SMBs and increases the number of prospects willing to test advertising. Economically, this leverages conversion-rate optimization: with a larger funnel, even modest conversion rates yield materially more customers (McKinsey & Company, 2014). Additionally, allowing short-term commitments often increases trial usage and provides data for iterative optimization; satisfied trial users are more likely to convert to paying customers and become advocates, which further fuels acquisition through referrals (Kotler & Keller, 2016).

Relationship Between Account Retention and the Sales Force

Account retention is jointly determined by the quality of initial sales interactions, onboarding success, ongoing customer support, and product efficacy (Reinartz & Kumar, 2003). The sales force influences retention in several ways: first, through accurate expectation-setting—good salespeople align buyer expectations with likely outcomes, reducing disconnects that cause early churn (Zoltners et al., 2006). Second, sales teams that maintain relationships post-sale can identify upsell opportunities and flag service issues early. Third, incentives and handoffs between sales and customer success determine whether customers receive consistent care; misaligned incentives can hurt long-term retention (Harvard Business Review, 2012).

Yelp’s strategic choice to remove fixed-term contracts shifts retention responsibility from contractual lock-in to product and service quality. That elevates the strategic importance of a sales organization that not only closes deals but also supports initial adoption and provides a bridge to customer success teams (Yelp Inc., 2016). Thus, retention becomes a cross-functional KPI where the sales force’s role is critical during the early customer lifecycle.

Lessons Learned from the Reading and Additional Exploration

The WSJ reading highlights that platform monetization often requires investment in human sales capital to convert complex ad products for SMBs (Wall Street Journal, 2016). From exploring Yelp’s investor materials and market analyses, several lessons emerge: first, sales expansion is a scalable but costly lever—its ROI depends on customer lifetime value and operational excellence (Statista, 2019; McKinsey & Company, 2014). Second, reducing contractual friction can dramatically increase trial and adoption rates, but requires complementary investments in product usability and customer success to preserve retention (Forrester, 2015). Finally, aligning sales incentives with long-term customer outcomes (rather than one-time sign-ups) reduces churn risk and supports sustainable revenue growth (Reinartz & Kumar, 2003).

Conclusion

Yelp’s improved advertising results can plausibly be traced to a larger, more effective sales organization combined with policy changes that lower barriers to trial. A bigger sales force amplifies customer acquisition reach and personalization but raises fixed costs and demands better onboarding and post-sale support to protect retention. Opening up the funnel increases the top of the funnel and, with proper follow-through, converts into more customers. Ultimately, account retention at Yelp is not solely a customer success metric; it is an outcome shaped heavily by how the sales team sells, onboards, and supports customers. For platform companies pursuing SMB advertisers, coordinated investments across sales, product, and support are necessary to convert expanded acquisition into sustainable lifetime value (Kotler & Keller, 2016; Harvard Business Review, 2012).

References

  • Forrester Research. (2015). The Buyer’s Journey and Digital Sales Funnels. Forrester Research. https://www.forrester.com
  • Harvard Business Review. (2012). How to Fight a Price War. Harvard Business Review. https://hbr.org
  • Kotler, P., & Keller, K. L. (2016). Marketing Management (15th ed.). Pearson Education.
  • McKinsey & Company. (2014). The Productivity of Sales Forces: How to Boost Performance. McKinsey & Company. https://www.mckinsey.com
  • Reinartz, W., & Kumar, V. (2003). The Impact of Customer Relationship Characteristics on Profitable Lifetime Duration. Journal of Marketing, 67(1), 77–99.
  • Statista. (2019). Yelp: Advertising Revenue and User Metrics. Statista. https://www.statista.com
  • TechCrunch. (2016). Yelp's New Approach to SMB Advertising and Revenue. TechCrunch. https://techcrunch.com
  • Wall Street Journal. (2016). Yelp’s Advertising Strategy Buoys Results. WSJ.com/Tech. https://www.wsj.com
  • Yelp Inc. (2016). Investor Presentation and Quarterly Report. Yelp Investor Relations. https://investors.yelpinc.com
  • Zoltners, A. A., Sinha, P., & Lorimer, S. E. (2006). Building a Winning Sales Force: Powerful Strategies for Driving High Performance. AMACOM.

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