"The aim of marketing is to know and understand the customer so well the product or service fits him and sells itself." ~Peter Drucker 
Yelp is hiring a Director of Local Business Marketing and challenges this person to use outbound marketing tactics such as direct mail, Search Engine Marketing and enhanced tools for its sales force in order to accomplish its goal of acquiring thousands of new SMB customers. Rather than hire a marketer who puts lipstick on a pig and tries to implement marketing tactics to sell a service that many businesses are frustrated with, I think that yelp's big opportunity is to innovate its services in a way that provides far more value to SMBs and business owners than it currently does. 
The "secret sauce" that founder Jeremy Stoppleman discovered while building yelp was that he could make the site popular and sticky by attracting and nurturing a core group of fanatic reviewers (called the yelp elite squad) and by building community among all reviewers. “Yelp is about the reviewing experience,” Mr. Stoppelman has said. “It is like a blog with a little bit of structure.” And for those businesses that have been awarded a strong review by an influential yelper, they've often witnessed tremendous customer growth. The reputation of yelp among many small, local businesses, however, has not always been positive. 
This reputation has been based upon ongoing stories and accusations by business owners of aggressive sales tactics), a relative high cost as compared to AdWords and selective display of reviews which yelp has directly and repeatedly denied. I personally think that yelp in its current state can be a tremendous resource for business owners. Being able to capture consumer feedback and insights without having to spend money for focus groups or other research studies should allow owners to identify ways to improve its operations in order to make its customers happier. But the simple fact of the matter is that "Stoppelman [has] said that the site deliberately tilts its rules to support the reviewers. 'We put the community first, the consumer second and businesses third.' Under the current business model, businesses are the primary source of revenue and yelp should work to improve its product and services so that business owners find even more value than it currently does. So how can yelp expand its paying advertising base of SMBs in the face of poor product reputation? In my opinion, sales people armed with better sound bites, more colorful collateral and a special offer to florists in the month of November are not the way to significantly accelerate the acquistion of new SMB clients. SEM? I'd be highly surprised if a business owner visits Google to search "San Francisco advertising options." Beyond the basic advice of better educating business owners to how it can use yelp in its current state to receive and use consumer feedback, what I believe yelp needs to do is to innovate its offering to develop and launch information & services beyond customer reviews and ratings that help local business owners better manager their business. The following ideas are what I believe yelp should put into development. Provide business owners with information & tools that helps them operate more effectively – This could take several different forms:
- Capture additional information in the review system to identify how a reviewer learned of business. Every business owner wants to know which of its advertising vehicles was responsible for generating awareness and trial. What if yelp could show a business that a yelp review, rather than a google search was responsible for increasing traffic?
- Offer reports (for a fee) that summarize a businesses reviews into actionable categories. I’ve recently spent hours cutting and pasting the reviews of a client so that I could identify where opportunities to improve customer satisfaction exist. I’ve had to manually categorize feedback in terms of pricing, product quality, product assortment, customer service, and overall business concept in order to draw conclusions on what part of the businesses operations deserve more in-depth review. yelp could do this for me and I’d probably pay for it;
- Offer reports that make comparisons of various metrics across competitors, against defined industry segment, etc. This could help an owner determine whether it’s doing well or poorly versus competition;
- Conduct research studies that help business owners use yelp tools. This could be a study that shows the greatest impact on sales of displaying a Yelpers Love Us sticker, or the increaseed redemption rate of a direct mail piece that features a yelp review;
- Develop a B2B review section where owners can share reviews of vendors and suppliers so that they can make informed choices;
- Create widgets of a customer's reviews that can be placed on customer websites. At some point in time, businesses are going to realize that having negative reviews of its products and services can often lead to increase sales;
Celebrate small businesses – At some point in time yelp needs to change the perception that it's holding business owners at gun point and instead embrace them as valuable, paying customers.
- Host business owner seminars to educate owners, to solicit feedback and to identify new ways that yelp can help them grow their businesses;
- Develop a yelp video channel to feature successful businesses (or even businesses that the elite squad loves). Business owners crave seeing success stories of other small business owners;
- Create a blog about businesses who are seeing success using yelp.