Your business’s Yelp rating is a beacon that signals to potential customers.

A four or five star rating will encourage new customers to give your business a try. A three star or lower rating might send people to one of your competitors instead.

If you want that coveted Yelp rating, you’ve gotta earn it.

This post is the third in a three part series. The first covered five Yelp trends every business owner needs to know. (Hint: Yelp can be very good for business.) The second post laid out three steps for responding to negative reviews.

This post will show you how to use Yelp reviews to improve your business and ultimately earn higher ratings.

This post is intended to be educational rather than a critique of a particular business, so I decided to use San Diego’s Cucina Urbana restaurant as an example. They’ve earned an impressive 4.5 star rating on Yelp and are also one of my favorite restaurants.

Their Yelp reviews are also proof that even the best businesses get an occasional customer critique.

Here’s a step-by-step guide to using Yelp reviews to improve your business.

Step 1: Sort Reviews by Date

Yelp uses an algorithm to sort reviews, but you want to look at the most recent feedback. You can click on the “Date” link to sort reviews of your business from newest to oldest.

Step 2: Start a Check Sheet

The next step is to dig into your reviews to search for themes. I like to use a check sheet because it’s fast, easy, and visual.

Take a blank piece of paper and create five columns along the top.
Label each column 1 through 5 to correspond with the Yelp rating options.
Read through each review and write down key themes

Put a check next to each theme you encounter in subsequent reviews. For example, if one five-star review mentioned “friendly service” and another five-star review mentions “our server was really friendly,” I’d write “friendly” under the five column and put a check next to the word to indicate it’s been mentioned two times.

Here’s my check sheet for Cucina Urbana’s Yelp reviews post in June 2014:

Step 3: Look For Themes

Your check sheet should reveal a few themes that separate positive reviews from negative ones.

For example, Cucina Urbana’s check sheet immediately told me that people love this restaurant because they nail three important categories:

Food
Atmosphere
Service

There’s also a potential danger from their popularity. Many reviews, including positive ones, mention the need for reservations because the restaurant is so popular.

In fact, where things do occasionally go wrong, the problems are often connected to the restaurant being busy.

Step 4: Investigate

Once you’ve identified some themes, it’s helpful to investigate to get to the heart of the matter. Your biggest challenge is to separate outliers from icebergs.

Outliers are opinions that don’t match the norm. For example, a couple of three-star reviewers mentioned prices were too high. Does this mean Cucina Urbana should lower its prices?

Probably not.

Very few reviews mention that prices are too high. Other reviews mention that the prices are very reasonable. They also have consistently large crowds, which would indicate that they offer good value. And, the people who complained about price tended to be very price-sensitive in their reviews of other restaurants.

On the other hand, the way they handle crowds might reveal a few icebergs. An iceberg is a problem that’s much bigger and dangerous below the surface.

For example, a closer look at the reviews reveal that a couple of people complained of poor communication and rude treatment from the hostess. In both cases, the guests had reservations but didn't arrive at their designated time. (One arrived early, the other late.)

The 1 in 5 rule may apply here. This rule suggests that for every one complaint you receive, five people actually had the experience. It's a short-hand way of suggesting that the majority of customers don't complain about minor issues.

Using the 1 in 5 rule, it might be reasonable to assume that 10 or more guests in June were upset due to confusion over their reservation.

Step 5: Take Action

Now comes the most important part - doing something to improve your business.

The whole point of this exercise is to generate actionable insight. You want to be able to identify specific actions you can take to improve service and ultimately earn better Yelp reviews.

Here, I won’t try to offer any specific advice for Cucina Urbana because I’d only be guessing. Without the benefit of doing an investigation myself (Step 4), I might not land upon the right solution.

However, it may help them discover how to make guests feel more welcome when there's confusion over their reservation. The customers often bear some responsibility in these situations, but that won't prevent an upset and unreasonable customer from writing a negative Yelp review.

There are two important caveats here for all business owners.

First, resist the urge to jump to step five before you find out what’s really going on. Otherwise, your solution may be off the mark.

Second, getting angry at negative reviewers won't improve your business. Your goal should be to use their feedback to improve the experience for future customers.