Positive reviews can go a long way for businesses that rely on word-of-mouth marketing. While services like Twitter and Foursquare have given customers a new sounding board, Yelp’s ratings still pack a powerful punch.

Berkeley professors Michael Anderson and Jeremy Magruder compared the Yelp reviews of 328 San Francisco restaurants, all of which see a high volume of nightly reservations. The duo found that a slight half-star improvement in ratings can increase a restaurant’s business during peak dining hours by 19 percent.

Currently customers can assign businesses up to five whole stars. Yelp then rounds up the scores to the nearest half star. For example, a restaurant with a rating of 3.24 will show three stars. But if that venue receives five more positive reviews for a rating of 3.26, it will then display 3.5 stars.

However, as the researchers noted, this data gives businesses (especially restaurants) a high incentive to manipulate their Yelp ratings by leaving fake positive reviews — something the service has come under fire for in the past.

Although there isn’t a surefire way to avoid fake reviews, it doesn’t do anything for your customer experience. False expectations set patrons up for disappointment. It’s better to focus your energy on creating a stellar environment for your customers instead of wasting time with fake reviews that will likely pale in comparison to the negative ones from people who have been duped.

[Via: Mashable, Image credit: lookslikeamy]