The New Face of Local Businesses: A Conversation with Yelp

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In the local media and commerce sectors, we continue to see rapid product evolution as well as maturation in the companies that deliver those products. But as that unfolds, we’re also tracking another evolution: that of local businesses themselves. How are they advancing in terms of marketing and operational software adoption?

There are many factors at play here, says Yelp SVP Chad Richard, with whom we recently sat down to unravel this topic. One is simply a longstanding replacement cycle as older proprietors retire and younger digital-native franchise leaders and local operators phase into the business-owner ranks. This has been underway for decades.

But the pace of that cycle has accelerated due to one big factor: Covid. In other words, the pandemic advanced some local businesses’ retirement. In many cases, they decided to simply treat it as an early exit. This led to new businesses that sprouted up in their place, which has been a force multiplier for tech adoption.

“Any business started in 2020 or 2021 was energized and ready for battle,” Richard said. “They were not casually entering this new business. They tended to be younger, and they tended to be digital natives.”

This applies to SMBs as well as franchises and local operators of multi-location brick-and-mortar stores.

Fire Tested

But it’s not just about age, says Richard. Local business owners and operators that didn’t retire came out of the pandemic more fire-tested and battle ready. They developed new technological muscles that will continue to be exercised in ongoing tech-forward behavior. The tools they picked up in the Covid era aren’t being put back down.

What are those tools? We’re talking everything from curbside pickup to e-commerce to virtual service fulfillment (think: Yoga Studios). Many of these functions helped local businesses scale and reach long-tail and moving customers… adoption that would have otherwise taken a decade to happen, says Richard.

This importantly merges with another key trend: the rise of multi-location SaaS. Central to Localogy’s core coverage and thesis about the local media and commerce, it’s not just about marketing anymore. Beyond helping local businesses acquire customers, it’s about helping them serve and keep those customers on operational levels.

Perfect Storm

Beyond new tech adoption, it’s also about using existing tools. Local businesses that used Google and Yelp were suddenly forced to do so with greater frequency. That’s simply due to the early Covid dynamism that forced communication with customers about everything from hours of operation to mask policies.

“The need to communicate was greater, so we saw businesses logging in more often. That was a muscle developed during the pandemic,” said Richard. And just like the new-tech adoption noted above, many local businesses kept exercising those muscles, raising the competitive stakes across the segment.

So if you add it all up, there’s a convergence of factors that have changed the face of the local businesses. Adding to all the new variables noted above, there are constants that provide a solid foundation for transformation. We’re talking multi-location SaaS maturation and the high-powered computer in every local business’ pocket.

“We have these evolved SaaS systems that aren’t 3 years old… They’re 10 and 15-year-old thought-out systems,” said Richard. “You also have technology on your body to communicate on the go, a pandemic that accelerated adoption, and digital natives who cycle in as business owners. It’s a perfect storm.”

Darwinistic Dynamics

The remaining question is how local commerce players like Yelp are optimizing their offerings given all these new factors. One answer is to pivot their product road maps to align with shifting demand signals as well as increasingly-adaptive and savvy local businesses. The product development playbook itself has shifted.

“To date, most of the voices on Yelp are users,” said Richard. “We want to give local businesses better tools to be heard and get messages out quickly to customers. It’s all about product evolution to enable businesses to get stuff done. It’s a different product mindset and it’s been a big area of focus.”

Mike Boland has been a tech & media analyst for the past two decades, specifically covering mobile, local, and emerging technologies. He has written for Street Fight since 2011. More can be seen at