From Knowledge@Wharton: If your hair stylist gave you $10 every time you sent one of your friends her way, you might be more tempted to tell all of your buddies what a fabu­lous stylist she was — or you might even try to make new friends to refer. This clever method of customer acqui­si­tion is a form of word-of-mouth (WOM) marketing known as a referral program. While such programs have been used for decades by not-for-profit orga­ni­za­tions like PBS, similar customer referral programs have also become increas­ingly popular with compa­nies in a wide range of indus­tries, from finan­cial services and auto­mo­biles to news­pa­pers and hotels. Christophe Van den Bulte, a professor of marketing at Wharton, describes customer referral programs as an effec­tive way to attract higher quality customers. “They are an old idea that’s getting more trac­tion these days,” he notes, “and we now have solid evidence of their finan­cial bene­fits.” · Go to Turning social capital into economic capital: Straight talk about word-of-mouth marketing — Knowledge@Wharton →