Local online reviews site Yelp has come a long way in the United States, where it now competes head-on with IAC/InterActiveCorp’s Citysearch. Yelp launched in the UK earlier this year and recently rolled out functionality that gives business owners the opportunity to respond to reviewers.

I spoke with Laura Nestler, Yelp’s London Community Manager, to find out more about Yelp’s efforts in the UK, how Yelp can be used by businesses and where Yelp is headed.

How has Yelp’s UK launch gone? What sort of metrics are you seeing?

We launched Yelp in the UK January 2008 and have been extremely pleased with the progress thus far. Since then, in addition to myself, we’ve hired two Yelp London Community Managers, kicked off the Elite Squad and we’ve also begun partnering with great local events like Camden Crawl and Alternative Fashion Week.

While we don’t break out Yelp’s numbers by market, I can tell you that in the past 30 days we’ve had over 21 million unique users to the site worldwide.

In some of the largest US cities, you’ve built a strong brand that’s recognized by consumers and business owners. Are you seeing signs yet of that sort of traction in the UK?

Let me first explain Yelp’s approach to new markets. When we started, it was very important to us to be a useful and rich resource to consumers, but we knew that wasn’t something that could happen overnight. Unlike other review guides, we took the approach of making Yelp a mile deep and an inch wide. That’s why we focused our efforts early on in San Francisco and as our popularity grew, were able to move successfully into surrounding cities. But that also means when we enter a new city, we don’t expect the sort of brand recognition that we have in our larger markets. Experience has taught us it takes time to build that vibrant community.

Saying that before we launched in the UK, we were already seeing over 100,000 locals accessing Yelp as a resource; likely for their travels abroad to the States and that prior awareness has helped in terms of engagement.

Yelp doesn’t (yet) have a UK office. Has that made it any more difficult to get Yelp UK off the ground? What sort of strategies have you employed to build the UK business from across the pond?

We don’t have a traditional office, but we do already have several Yelp employees based in London. The Community Managers and myself are tasked with interacting with the Yelp community both online and off, write the Weekly Yelp, and many other marketing activities. I actually used to be the Portland Community Manager and was brought out to help get us off the ground. I helped lay the groundwork as well as continue to make sure that key attributes of Yelp’s brand are woven into the Yelp UK experience.

Yelp just launched public comments for businesses. The relationship between reviewers and businesses has always been a subject of interest for obvious reasons. Tell me a little bit about how Yelp approached developing a means for business owners to respond and what sort of feedback you’ve received.

Since Yelp launched in 2004, we’ve been consistently asked by business owners for a way to have more of a voice and personality on the site. In April of 2008, we launched a free suite of tools, Yelp for Business Owners, that offered businesses a way to “unlock” their Yelp page, update information, add photos and engage with yelpers via Private Messaging.

Given the positive response, we continued to roll out additional features including a separate page for “About this Business”, which allows businesses to provide insight on the owners, specialties and recommend other businesses as well as the ability to offer announcements, sales and specials.

Over the past year we noticed that savvy business owners have used the Private Messaging feature effectively and in many cases were able to open a dialog with their customers that otherwise might not have happened. Of equal importance, they didn’t abuse the feature.  We’ve long since considered adding the Business Owner Comments to the site but wanted to do it in a thoughtful manner so as not to upset the balance within the Yelp community.

We’ve been very pleased with the roll out of this feature and have found that business owners have been happy to clarify or correct wrong information that may be posted in a review (menu items, hours of operation, etc.). We see this as a benefit both for consumers reading those reviews as well as the business.

What kinds of advice can you give businesses when it comes to responding to feedback and criticism they receive online?

We’ve developed an FAQ for all our free tools and we’ve also hired a Manager of Local Business Outreach who is responsible for engaging with business owners directly to solicit feedback and educate the small business community on the benefit of online resources like Yelp.

When possible we also actively encourage business owners to take their reviews with a grain of salt. Not everyone is going to love your business. While some reviews do warrant a private or public comment – perhaps as a thank you, an inquiry into a situation over service or a correction over a menu item – remember that most readers are likely to focus on the collective rather than just one experience.

Do many businesses respond to reviews?

You can thank those customers who have reviewed your business using the Private Messaging feature. In general your best bet is to keep it simple and positive, keeping in mind that these are your most vocal customers. While you might be tempted to lash out at a reviewer who has left a negative review, remember this was one of your paying customers. Tempting as that may be, we see that backfiring in some cases as the Yelp community may up the ante and engage by spreading more negativity.

In this day and age of transparency, try to remember that great customer service is the most effective form of marketing. The old adage of “the customer is always right” rings louder than ever before.

What sort of role has Yelp taken in trying to promote honest feedback while preventing the types of reviews that business owners might claim are false or libelous?

Yelp is all about real people with real reviews. We actively encourage our users to post their real name and photo and fill out profile questions about themselves. Additionally, we actually have an extremely vibrant offline component where yelpers can meet in a social setting whether it be a bar or restaurant to cupcake tasting or local volunteer opportunities that again, are a great way to see and meet the community in-person.

We’ve long since had a review filter that looks for suspicious activity (like those anonymous rants and raves you see on other sites). Reviews that are caught in the filter will be suppressed from that business listing but will always appear on that user’s page.

Does this mean legitimate reviews occasionally get pulled down?

Yes, and we understand that this can be frustrating to users. But we believe that it’s extremely important to protect the integrity of the site for consumers (who might come across a shill review from a business owner) and businesses (who might be the subject of a fake negative review from a competitor or disgruntled employee).

You have a sponsored search product that gives business owners better placement and the ability to highlight a favorable review. This has generated a bit of controversy in the past. How are things going with sponsored search and what sort of results are businesses seeing from it?

We currently offer two advertising products to small business owners. The majority of our advertisers purchase our impressions product. For $300 – $1000 a month advertisers select the number of impressions (aka sponsored search ads) that they want to appear in Yelp search results. Example: search for “Pizza” in “NY” and Yelp search will return a list of organic results.  The search ad will appear at the top of the list in a yellow shaded box and labeled “sponsored result” – much like Google.

The other ad product allows a business owner to enhance their listing with a photo slide show, the ability to select a favorite review to highlight at the top of their page (which is clearly marked as such) and ensure that other competitors are not able to advertiser on their profile page.

Once a business becomes part of the program they also get an Account Manager that goes over the program again with them when they first join to ensure they are clear on all aspects of what they are getting and moving forward they are always available for questions.

We’ve seen a really positive response from businesses that are in our sponsorship program. We consistently hear that Yelp has played an integral part in creating buzz and driving traffic through their door for sponsors and businesses that only leverage the free tools, alike.

What are some of the ways businesses can leverage Yelp to drive customer acquisition, customer loyalty, etc.?

We absolutely would encourage you to first and foremost claim your Yelp page for free and also familiarize yourself with the FAQ on Do’s and Don’ts. Yelpers appreciate constructive feedback and if you show you’re invested in their feedback, it demonstrates both to current and potential customers that you value their business.

Like many sites these days, Yelp has an API that lets developers build their own applications using the data you collect. What sort of uptake have you seen with this thus far?

We’ve definitely seen a strong amount of interest in our API from a number of brands and industries such as The Los Angeles Times, Sears, GOBYO, and many others.

Thanks to the global recession, consumer spending is down in both the US and UK. Have you noticed any trends that are indicative of this on Yelp?

Yelpers have always use the site as a resource to make smarter spending decisions; however, most recently, we’ve noticed users using some of the social media functions like Talk more actively to solicit support via the community due to the tough climate.

Additionally, there’s a great budget resource that’s part of our free suite of tools for businesses called: “Sales and Specials Near You”. It allows business owners to create announcements on their page whether it be a Happy Hour, 2 for 1 deals, discounts or similar and then also feeds into Yelp’s homepage. Not only is it a wallet-friendly option to still indulge yourself in life’s little luxuries and get to know your neighborhood creatively, but it’s also a great way for businesses to drive clientele through their doors despite the recession.

Yelp raised $15 million in early 2008, is now in the UK and Canada and, as mentioned, has a sponsored ad product. What’s next for Yelp as a business?

We plan to continue to focus our efforts on the cities that we’re currently in as well as on mobile. We launched our most recent iPhone application – Yelp for iPhone – just a few weeks ago and you can also expect us to roll out richer applications for other devices in the near term.