What is Referral code?

Published on January 9, 2024

Do you Know What Is Referral Code And How Does It Work? ? You receive a unique referral code whenever you sign up for a referral program.

You can refer your friends and family and gain benefits using this referral code. Proper circulation of referral codes is beneficial for the promotion of a company and is far more effective than advertisements.

Let’s talk about the relevance of referral code and how it can be beneficial to any organization.

What is Referral code ?

What is the meaning of referral code ?

According to Google, a referral is a process of referring something or someone for further action or review. The word referral is used to define the action of informing others about the positive features of an organization or a person.

Through the process of referrals or by sharing referral codes, an individual can claim various rewards or cashback offers in the long run.

It is an effective promotional strategy which has gained significant momentum in the present market and continues to grow in the long run.

What is Referral code ?

A referral code is a combination of alphanumeric characters that are assigned to the referrer for sharing. Every referral code is unique and has some reward or incentive attached to it that the referrer receives after every successful referral.

The organizer of the referral program can track the referral code. Thus, the rewards are awarded fairly without any fraud from either side.

Once the conditions required to avail of the reward are fulfilled, the respective reward or incentive gets automatically transferred to the referrer and referee.

It is a kind of promo code that helps increase the customer base of a company and helps promotes the features and benefits provided to customers by a brand. This referral code comes with certain rewards and incentives.

Some examples of these rewards are discount coupons, where if the receiver uses this coupon while buying any product or service from your company, they can get a certain amount of discount during checkout.

Another reward type can include a coupon code, where the receiver of the code can avail of cashback
, or referral cash during a purchase.

Why are referral codes used?

Referral codes are an efficient way to advertise your organization. Referral codes not only make the whole process easier but also are a great way to attract more customers.

A referral code acts as a tracker that tracks every step of your referral program.

This way you don’t have to track or reward every participant manually because the referral code does that for you.

There are rewards attached to every referral program. These incentives or rewards may include gift cards, cash vouchers, or free products and a participant receives these rewards or incentives after a successful referral.

The participants can receive these rewards after successfully logging in to your app, placing their first order, or spending a certain amount on your app.

This way you can secure your existing customers and attract new customers at the same time.

Referral codes ensure that your referral program runs smoothly, increases your customer base, and helps your business grow with the help of word of mouth.

Thus, not only do you earn loyal customers but also enthusiastic advocates for your brand.

Apart from this, referral codes can also help a company save
money and time.

From the point of view of a company, the major reason for using referral codes is to attract more customers. Referral codes are an inexpensive way of acquiring customers.

They are quite cost-efficient as compared to other marketing campaigns like newspaper ads, pamphlets, television ads, and digital marketing campaigns.

Word of mouth is a better marketing strategy than any other campaign since people put trust in the words of people that are close to them.

Types of Referral Code

There are many types of referral codes available for you to use.

These are:

1. Customized codes: Customized codes are the type where the customers can create their own referral codes, however, they want. 
This adds a touch of personalization to the codes and makes the customers more enthusiastic about the program.

2. Link with the Numeric codes: You already know now that the referral code can be a combination of either alphabets, numbers, or alphanumeric characters. 
Links with the numeric referral codes are codes that only contain numeric values.

3. Random code without link: Random codes without links are randomly generated referral codes. Since they aren’t connected with a link you need to input them manually.

How does a Referral code work?

By now, you should be aware of what a referral code is and what is the need for a referral code. Now we shall see how a referral code works and fits into a referral program.

STEP 1: Before you generate a referral code, you first need to create a referral program. A referral program is popularly known as the ‘Refer a friend’ program.


An example of a referral program is - Refer a friend and win an
Amazon gift card worth $100.

STEP 2: Once a referral program is created, you need to assign a unique referral code to your customers.

This referral code tracks all the referrals shared by your customers, and when the conditions for the referral are fulfilled, it automatically rewards the customer.

You can also track the data of your program through referral codes and track the program’s progress.

Apart from this, you need to make your referral code accessible and easy to share. It is better to create a separate landing page for your referral code on your website and your application.

This page should not only contain your referral code but should also be able to link you to social media apps so that sharing the referral code can be made easier.

Moreover, this page should also contain details about the referral program and the terms and conditions applied to avoid any troubles in the future.

You can also explain in detail the code-sharing process and the incentives or rewards that the referrer and referee shall receive after completing the task.

The tasks should also be stated in clear words so that people can easily avail the rewards.

STEP 3: You need to encourage sharing. Your customers must share their referral codes enthusiastically to ensure proper circulation of the referral code.

You need to motivate and encourage your customers through messaging and social media apps to share their referral codes with their family and friends.

Send them frequent reminders through emails and app notifications to inform them of your referral program and the amazing rewards offered.

You can use pop-ups in your app and website to covertly remind your customers about the referral program.

Most referral codes are for sharing so make sure that the referral code is simple and it would be better if the code comprises the name or initials of the participant.

STEP 4: Tracking and collecting the referral code after the purchase is the final step in this process. To track the referral code for online transactions you can use cookies and links.

As for offline transactions, the referee needs to input the referral code manually during checkout.

Since the offline referral process
is quite complex and time-consuming, it is better to use referral program software for a better experience.

How do you make a referral code?

Various organizations launch referral programs from time to time to spread their influence and attract customers.

You can either launch software-generated referral codes or manually create them. It is better to generate these codes using software given their large number. 

You should also maintain a record of all the generated referral codes. You can either create a spreadsheet in excel or any other accounting software.

Following are some guidelines that you should keep in mind while creating referral codes:


  1. Avoid using 'O', since it is often confused with '0(zero)' and 'I (uppercase i) ' or 'l (lowercase L)', as they are often confused with one another. 

  2. Make sure that your referral code is easy to remember, unique, and case insensitive. 

  3. It is better to create custom personalized referral codes instead of brand-specific ones. 

  4. Keep the referral codes of all your referral programs in a familiar format.

Is a referral code number required to run a referral program?

Well, a referral code is not exactly a requirement for a referral program, however, it is highly recommended. A referral code makes dealing with a large pool of customers easier.

You can keep a track of every customer in your referral program and the referrals they make. It also helps automatically reward the referrer and referee for the successful completion of the task.

Thus, your referral program runs smoothly with the help of a referral code. Most of the process gets automated if you use referral codes and you are only required to verify and record all activity in the referral program.

Marketing through referral codes becomes formalized and helps establish a happy customer base for your brand. Let’s see it like this.

You tell your loyal customers that you are going to reward a little something to them and their friends as a thank you if they shared your referral with their contacts.

This way you are making your existing customers your loyal advocates who will advertise your brand for you. 


Moreover, their words would be more convincing since people trust the words of their friends and family over a random company.

Conclusion

If you are going to launch a referral program, then referral codes are an important component of your campaign. You must keep your referral codes simple, unique, and personalized.

This way they are more appealing to your customers and can gain more attention. Referral codes are easy to track and verify and are a better and cost-efficient way of spreading your brand name.

You can use them as a marketing campaign and they are more efficient than any other marketing campaign since they have the power of word of mouth.

People believe the words of people who they trust more easily. After all, why would they trust the service and product of a random company?

So, they really are a great way to spread your influence, especially in the early days of your launch. They help you retain your existing customers and develop a wider customer pool using rewards and incentives.

I hope you liked our article on What is Referral Code ? If you have any suggestions please leave a comment below.

Frequently Asked Questions (FAQs)

Q1. What is referral code ? Give example.


The referral program of Zipcar is well known. Zipcar gives each customer a unique referral link that they can share with their contacts.

The referral code is available at the end of the referral link. The reward offered is usually in the form of cash. Their customers can share this referral code using various social media platforms and through email.


Q2. How do you make a referral code?


You can either generate unique referral codes using software like voucherify, talon.one, or coupon tools. Apart from this, you can manually assign your customers referral codes.

However, it is a better idea to use software-generated referral codes since they are not time-consuming and are easier to generate for a large customer base.

You just need to take care of certain things while creating a referral code. Make sure you don’t use ‘O’,’l’,’I’, since people can easily confuse them with their alternatives that look alike.

Create simple and personalized referral codes so that people can memorize them easily and with a personal touch added to it, people are more enthusiastic about sharing the referral code.

Moreover, your referral code should be case insensitive and it would be better if the referral codes of all your referral programs are created in the same format.


Q3. How do you get a referral link?


Referral links are shared using various social media platforms like Twitter, Facebook, Instagram, and WhatsApp. Apart from this, you can also share your referral code using email and messaging.

Even on social media platforms, there are different ways to share this code. For example, on Instagram, you can share your referral code either on your story, as a direct message, or on your feed.

Similarly on Twitter and Facebook too, you can either share the referral code in the form of a post or story or by displaying it on your id. You can also tag your friends in these posts to gain their attention.

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ishant

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