When you ask ChatGPT to do something, such as “find me an IT company in Hickory, NC,” you might expect a quick, accurate list of nearby businesses – and that’s precisely what you’ll get. But what determines which businesses appear first? And why are certain companies selected over others?
While Google bases local search rankings on a combination of factors, including proximity, relevance, and prominence, ChatGPT employs its own layered strategy. This process combines real-time web data, AI-driven reasoning, and ranking logic, all of which the AI optimizes for conversational relevance.
In this blog post, we’ll peel back the curtain on how ChatGPT decides which local businesses to recommend. In it, you’ll find a detailed examination of some of the key factors involved, their relative weighting, and the reasons why these things matter.
An Overview of the AI’s Decision-Making Process
When you ask ChatGPT to do something, like “Find me an IT company in Hickory, NC,” it goes through the following steps to provide you with an answer. It:
- Interprets the intent (you want a local business providing a specific service).
- Triggers a live web search (in most cases).
- Collects structured and unstructured data (from business websites, Google, Yelp, BBB, etc.).
- Evaluates results across multiple criteria, and
- Ranks and summarizes a few strong candidates in its response to your request.
So how does it rank those results? Read on to learn some of the nuances around AI’s decision-making processes.
20 Factors That Influence AI’s Local Business Recommendations
While there are quite a few things that can influence the results you will see in response to a query, the ones detailed below rank high on the list of importance. These factors all have varying levels of impact on AI’s recommendations, so we’ve assigned them a ranking of 1 to 10 to help clarify their significance. Let’s dive in!
- Consistent & Complete Directory Listings (10/10) – AI systems rely heavily on third-party data to verify a business’s existence and reputation. Having a complete, verified, and consistent profile across multiple authoritative directories – including Google Business Profile, Bing Places, Yelp, BBB, and Angi – is critical. Inconsistent information can confuse the AI, potentially leading to a lower ranking.Why it matters: To the AI, these listings are a source of truth. A strong, consistent digital footprint signals that a business is legitimate, active, and well-established. This information also provides the structured data that AI models need to deliver accurate answers.
- Web Search Ranking & Authority (9/10) – A business’s organic rankings on traditional search engines deeply influence AI recommendations. High organic rankings, especially on Google and Bing, are a major trust signal. This is tied to a business’s overall online authority, including backlinks from reputable sites.Why it matters: Search engines have spent decades refining their algorithms to assess authority, relevance, and trust. By leveraging this data, AI platforms can quickly filter out less credible businesses.
- Review Volume, Recency, & Sentiment (9/10) – Customer reviews are a primary data source for AI. High review volume shows popularity, while recent reviews prove a business is currently active. AI platforms perform sentiment analysis, analyzing the text of reviews to understand the overall customer experience, and can use specific phrases to explain a recommendation.Why it matters: Reviews provide a powerful form of social proof. A steady stream of positive, detailed reviews is a critical signal of a healthy business.
- Proximity & Service Area Relevance (8/10) – The AI uses physical addresses and website content to confirm a business’s relevance to a user’s location. This is crucial for both physical and service-based businesses, ensuring the recommendation is geographically appropriate.Why it matters:People want local, relevant solutions. AI’s ability to accurately map a business to a location is fundamental to providing a useful recommendation.
- Business Name & Topical Authority (8/10) – If a business name includes keywords, like “Hickory Computer,” it provides a clear signal of relevance. AI also evaluates topical authority by analyzing website content and listings to see if a business consistently demonstrates deep expertise in its niche.Why it matters: This factor moves beyond basic keyword matching to a deeper understanding of a business’s expertise. It helps the AI differentiate between a generalist and a specialist, providing a more tailored recommendation.
- Website Structured Data & Schema Markup (7/10) – A business’s website is its digital home, and how you build it is crucial. The AI values clear, well-structured websites that make it easy to find services, location, and contact information. Schema markup provides a machine-readable “cheat sheet” for the AI, explicitly stating key business information.Why it matters: A clear, organized, and technically optimized website provides strong signals to AI, reducing ambiguity and increasing confidence in the data it’s collecting. Schema markup is a direct way to communicate key information to the AI.
- Conversational Content & FAQ Optimization (7/10) – AI platforms are built on conversational models, so they favor businesses with content that is also conversational in nature. This means creating content that directly answers common questions, like a well-optimized FAQ section, which often appears in the AI’s direct summary.Why it matters: The AI’s goal is to provide a helpful, direct answer. Content that is already formatted to answer questions in natural language makes it easier for the AI to process and summarize, increasing the likelihood of being featured.
- Freshness & Online Activity (6/10) – An active, thriving business provides fresh signals to the AI. Signals include recently updated website content, new reviews, and recent social media activity. A dormant online presence can suggest a business is no longer operational or reliable.Why it matters:The AI prioritizes current, relevant information. Freshness signals that a business is engaged and responsive to its clients and the market.
- Internal Linking & Content Structure (6/10) – The AI analyzes how a website is organized. A well-structured site with a logical hierarchy and strong internal linking helps the AI understand the relationship between different services and pages. This signals a well-organized and authoritative resource.Why it matters: A good internal linking structure helps the AI crawl and index a website efficiently, and it demonstrates a deep, interconnected body of content that builds topical authority.
- Presence in Reputable Directories (6/10) – Beyond the big names, a business’s presence in niche or local directories, such as the Chamber of Commerce, professional associations, or industry-specific sites, adds significant credibility.Why it matters: This acts as a corroboration strategy. A business that is consistently mentioned and listed in trusted, high-quality sources is more likely to be considered legitimate and authoritative.
- Customer Feedback & AI Interaction Data (5/10) – The AI uses anonymized, aggregated data from its interactions. This includes things like click-through rates on its recommendations or if users request follow-up details about a specific business. The AI learns which businesses are the most useful and which lead to a dead end.Why it matters: This feedback loop allows the AI to self-correct and improve its recommendations in real-time, prioritizing businesses that lead to a positive user experience.
- Visual Elements & Branding (5/10) – The presence of a high-quality logo, professional photos of the team and workspace, and an overall polished brand identity across all platforms sends a strong trust signal. AI models can now process images and assess their quality and relevance.Why it matters: Good visuals signal that a business is investing in its image and professionalism. These factors build trust not only for the user but also for the AI model’s assessment of legitimacy.
- Business Description Quality (5/10) – A well-written, keyword-rich “About Us” or business description on a Google Business Profile or other directories helps the AI understand the company’s services, values, and history. This goes beyond a simple list of services to provide a narrative.Why it matters: Thoughtful descriptions provide the AI with the narrative it needs to craft a comprehensive and helpful recommendation.
- External Recognition & Certifications (5/10) – Awards, media mentions, and professional certifications are subtle but powerful signals of authority. For an IT company, mentioning CompTIA or Microsoft certifications provides a clear, verifiable mark of expertise.Why it matters: External validation from third-party sources serves as a trust signal, indicating that the business is recognized by its peers and the broader community.
- On-site Expert & Author Bio (4/10) – AI is becoming increasingly focused on E-E-A-T (Experience, Expertise, Authoritativeness, and Trustworthiness). Having clear, detailed bios for authors or experts on a business’s website—especially in blog posts or “About” sections—helps the AI verify the credibility and human expertise behind the content.Why it matters: This adds a layer of trust and authority. The AI can validate the credentials of the people creating the content, which is a major ranking factor in the age of generative AI.
- Accessibility of Contact Information (3/10) – The ability to easily find a business’s phone number, email, and physical address is a sign of professionalism and transparency. This is a basic but important factor that builds confidence in the recommendation.Why it matters: Easy-to-access contact info improves the user experience and signals that the business is open and ready to engage with potential clients.
- Social Media Presence (3/10) – Although not a primary ranking factor, maintaining active and professional social media profiles contributes to a business’s overall online presence. The AI can use these profiles to verify operational status and monitor customer engagement.Why it matters: Active social media suggests an engaged, modern business that interacts with its community, adding another layer of real-world activity.
- User Behavior Signals (2/10) – The AI may consider user behavior data, such as a business’s click-through rate in search results or how long users spend on its website. A high engagement rate indicates that users find the business’s listing and website compelling.Why it matters: A business that consistently earns user engagement is a strong indicator that it is meeting expectations and delivering a positive user experience.
- Mobile-Friendliness of Website (2/10) – The AI considers whether a business’s website is modern, fast, and easy to use on a smartphone. This is a basic quality signal, as most users now search on mobile devices.Why it matters: A good user experience is crucial. A clunky, slow, or non-responsive website can be a negative signal for both the AI and the end user.
- Years in Business (1/10) – While not a top priority, a business that has been operating for a long time—and mentions it in its descriptions or on its website—gains minor credibility points.Why it matters: Longevity can suggest stability and reliability, providing a small but positive signal to the AI that the business is not a new or fly-by-night operation.
Need help getting your business recommended more often by AI platforms like ChatGPT? By optimizing your website, reviews, service clarity, and third-party listings, your WordJack Marketing Manager can make sure your company has the best strategy in place to give you the boost you need!
