RatePoint taking aim at Yelp?
Customer reviews can be crucial to a small business, especially in a climate where consumers are trying to make smarter decisions about their purchases. It’s no surprise then that review sites such as Yelp, Local and Mahalo have flourished over the last few years.
RatePoint is the latest to attempt to cash in on the trend, having secured more than $20 million in funding since it launched in 2006. Recently the Needham, Massachusetts-based site got another $7-million from three local venture capital firms: Prism Venture Works, .406 Ventures and Castile Ventures.
Neal Creighton, RatePoint’s co-founder and CEO, insisted his company is not just another Yelp, noting RatePoint’s reviews come from actual customers and not just a community of reviewers that may have no connection to the company. It’s a subtle, but important distinction, said Creighton.
“There are a lot of emotional reviews on Yelp, where people had a bad experience, but they didn’t interact with the business,” he said, adding if a business gets a bad review on RatePoint, it’s encouraged to have a dialogue with the offended customer to try to work things out. “In our system when they have a chance to interact with the business, they feel completely different; you get a better and real picture of that business.”
Yelp is the current leader of review sites, attracting more than 30 million visitors a month and logging more than 12 million reviews since launching in 2004.
Creighton said the continued pervasiveness of the Internet in the day-to-day lives of consumers has caused businesses to adjust their marketing strategies to more fully take advantage of online reviews and social media. He said now 70 percent of people read a review online before buying a product. Additionally about 70 percent of the businesses RatePoint works with are using Twitter and Facebook.
“When Yelp started a lot of small businesses weren’t as aware of how your reputation could be affected on the Internet and what reviews could do,” said Creighton, noting every disappointed customer costs a business 10 others in bad referrals. “In the last 18 months we’ve seen a nice progression of small businesses getting online and being active and worried about their reputations.”
Creighton said RatePoint’s current client list sits in the mid-thousands and pay anywhere from $18-$120 to use the company’s customer review and email management system. When a business joins they receive a RatePoint ‘seal of approval’, similar to the Better Business Bureau logo – something Creighton said can cost a business as much as $4,000 a year to purchase. After five authenticated good reviews the business reaches “consumer approved” status.
“We’re going to triple this year from last year and next year we’re going to at least triple again, because the market opportunity is so large,” said Creighton about growing RatePoint’s subscriber base. “Our danger is not Yelp per se, but if someone delivers the service better than we do, because it’s something small businesses really need to have.”
Creighton, who previously co-founded and sold online payment processing company GeoTrust to VeriSign for $125 million in 2006, started RatePoint with $1 million in seed money and $16.5 million in two separate funding rounds led by Prism and Castile respectively.
“Our plan is just to continue growing the company and we think there are millions of small businesses that we can serve.”