Yippie! / by Isabelle Ringnes

For our second project I was teamed up with Ray Lou. Our assignment was simple: 

Yelp wants to create a new app or feature within their app that emphasizes ‘flash mob’ group discounts at select restaurants.

Where did we go from here? Well, we came up with Yippie, a new social feature for Yelp that would enable dining customers to redeem group discounts if enough people checked in to a restaurant. We did extensive customer research to identify a market need, and based on the research we developed a wireframe and mockup for our initial MVP (minimal viable product). 

Following is the conclusion from the project:

Based on our market research and quantitative analysis of over 135 responses from our consumer survey we have reason to believe that it is worth moving forward with our new product feature.

A vast majority of our responses came from people within our target age segment (16-34) and proved that this age group are heavy restaurant goers, with nearly 50% reporting to dine out 2-4 times a week. It also showed that when deciding on a new restaurant, 43% typically resort to apps in order to find a new venue, with over 60% of respondents reporting that they use the Yelp app for restaurant recommendations and/or booking.

The survey results are available here.

More than half of our respondents report that they have checked into a restaurant using an application in the past, and nearly 70% reported that they would be willing to check into a restaurant if it gave them a discount.

Our qualitative research further validated our assumptions. People typically use apps to find new restaurants, and the majority used Yelp as their go-to application. They also reported that they were intrigued by discount sites and would use them sparingly, and not surprisingly the deciding factor not to use them was the awkward gesture of having to present a coupon to a server who might not be informed of the deal.

From speaking to multiple outside resources in the discount-app industry at various meetup events we started to recognize a trend. Coupons are becoming less popular because the behavior associated with it has a negative connotation. The process is not seamless and seems too much of a hassle. The “Uber of everything” is the new standard, and if discount features aren’t incorporated seamlessly they are far less likely to be used.

There is therefore reason to believe that our feature would be valuable to both consumer and business. On the consumer side because it would allow them to enjoy the discounts without having to pre-purchase a coupon and awkwardly present it to their server. They would be able to check in through the YELP application, and given that enough people dining at the restaurant do the same, they would be prompted to present a code to the server who would apply the discount directly to their bill which they would be given the opportunity to pay for through the app or using a traditional payment method.

Businesses would enjoy earned social media attention and recognition on their Yelp page and thus attract more diners to their venue. Now that businesses have access to their Yelp page to better manage customer relations and inquiries, restaurant owners have more control and value because they understand their customer base and can communicate directly with them to get feedback. The added value of gaining a deeper understanding of  their customers profile is valuable for marketing. Because the discount diners are already interacting with the Yelp app in terms of checking in at the restaurant they will also be more likely to leave a review, which due to the discount will hopefully be positive. As a result the restaurant will be able to build it’s Yelp reputation and gain social validation which will pay off in the future.
 

Market Research

Our market research also indicates that there is curiosity and intrigue about this new feature. Even people who reported to never check in at restaurants said they would do so if they received a discount. Research also shows that they are likely to dine out more often if they receive discounts at the venue.

There are other popular competitors such as FourSquare who have similar features that have proved popular within our target audience. All though their market share is significantly smaller, Foursquare provides personalized venue recommendations based on prior behavior and friends preferences, constantly pushing suggestions to users phones if they target their location close by. Yelp is a highly recognized brand and had an average of approximately 139 million monthly unique visitors in Q3 of 2014, with over 67 million local views. In comparison, Foursquare has 30 million users.

Our target audience also aligns with Yelp’s current user base. Nearly 40% of our users are within the target age group that this product would be marketed to.

Target Market

The new feature, Yippie, will be launched in Beta in New York City. This is due to the fact that out of all US cities it has the highest number of millennial citizens which is our initial target audience. The city is also known to have a vibrant dining culture and due to it’s citizens busy and tech-savvy lifestyles they find and choose restaurants using apps “on-the-go”.

According to Yelp’s statistics, the millennial audience makes up the largest demographic of the app.

Market Sizing

  • US Population: 316.1 million (2013)
  • Number of Millennials (18-34) in the US: 80 million (25%)
  • Number of millennials who use apps to find restaurant: 35.2 million( 44%)
  • Millennial Yelp Users in the US: 139*0,39= 53,1 million
  • Based on our Survey results 60% are interested in deals. This accounts for 31.86 million potential users.


Recent statistics report that 64% of Millennials across the US eat out more than once a week.

 

Key numbers

  • Population in New York City: 8,406,000
  • Restaurants in Manhattan: 10275
  • Restaurants listed on Yelp in New York City:  50144
  • Restaurants currently offering a deal on YELP in New York City: 302

Competitive Analysis

There are currently no other significant competitors that offer an identical product. There are multiple coupon sites and apps on the market, but none that offer the real-time group-sale feature for restaurants.


Key Discount Competitors include

Groupon

Get anywhere from 50-90% off the daily deal in cities across the United States.

Living Social

Find a deal each day with a value of up to 90% off.

Gilt City

Social buying website with discounted deals from local merchants.

HomeRun

HomeRun features deals to various locations at 50% or higher.

CrowdSavings

CrowdSavings: get deals on local purchases. Deals range from 50-90% savings.


Due the different purpose of use for Yelp and the mentioned discount sites, we do not consider these services our strongest competitors. The increasingly mobile usage (64% of Yelp searches in the US come from a mobile device) leads us to view our strongest competitors as other restaurant recommendation services that offer mobile first, quick and timely restaurants by filtered by neighborhoods. We have also validated this assumption with our interview subjects, as they all reported the following services as primary apps to find restaurants. Strongest competitors include:

  1. Urban Spoon
  2. Foursquare
  3. Urban Daddy
  4. Open Table

This is because they offer similar features and have a strong audience. Users tend to shift between these products even though they have similar functionality.

 

All though some of these services offer savings and discounts, none currently offer a real-time flash-mob sale for “on-the-go” consumers.