What Is a Referral Code: How Does It Work in Referral Marketing?

How do referral codes work in referral marketing?

Discover what a referral code is and how it actually works with a referral marketing program.

Referral programs are essential when it comes to attracting new customers. It is a well-balanced strategy where customers are rewarded for referring people through word of mouth marketing. It can help businesses thrive.

Why? Because people are often influenced by what they hear, and consumers trust it more because of it. People who have good relationships with each other can easily influence each other to buy a particular product or service.

Referral marketing is beneficial for organizations all over the world. 88% of people say they have the highest level of trust in a brand with recommendations from friends and family. Word of mouth advertising should be a critical part of your marketing strategy.

Here are the things we will cover in this article:

Tip: Make sure you have a great product (or service) and excellent post-purchase customer service. People will be more encouraged to share your products with friends and family.

Rewards are very important. When starting your referral program, you need to motivate the referrers to tell your family and friends. These could be things like discounts, points, or discounts on their next purchase.

You can track the progress of those who signed up for your referral program using referral codes. We recommend using referral marketing software to generate referral codes for your existing customers and track results.


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What is a referral code?

It is a unique set of alphanumeric symbols or emoticons similar to a promotional code. Referral codes identify who in the referral program has successfully referred someone who continues to buy.

These unique referral codes are the key that opens the door to tracking sales. See our support documentation to explore further how this works.

Many businesses have had success using referral codes. It allows companies to reward their successful referrers with cash or gift certificates.

It also allows businesses to tailor their referral marketing strategy and gives them a more powerful marketing tool. Referrals are a simple way to show your customers that you appreciate their business and loyalty.

How does the referral code work?

Before we go any further, it is very important to understand how a redirect code works.

Imagine you are an e-commerce site. You discovered that your website started getting more visitors because someone told them about your business.
You decide you want to get more advice. You start a referral program to reward anyone who brings in a new customer.

Longtime customer Gary occasionally uses your website to order new clothes. Have recommended your business to colleagues before and now they’re eager to try it out.

Gary logs into the referral program account and copies the referral link. He sends a message to his colleagues or friends telling them to use the referral link.

Colleagues visit the website using Gary’s referral link. Maybe they get a coupon code for a discount as part of your referral program.
The forwarded customer enters the code and buys his product. Next, the software that manages your referral marketing program recognizes Gary’s referral ID. You then allocate the bonus to Gary.

Who doesn’t like discounts? People refer others to your work and they are rewarded. Your business achieves the growth you desire, resulting in a win-win situation for both parties.

How do you set up a referral program?

Here’s a quick look at how to set up a referral program. Note that the rewards offered by a referral program are dependent on the business. Some businesses only offer discounts on the referrer’s next order. Other companies offer different types of bonuses.

1. Install the referral tracking software

Instead of manually creating a referral program, we recommend installing referral tracking software. You can automate many steps to set up a referral program with the software. For example, allocating unique referral links to customers, allocating rewards to the right person, and automatically enrolling customers.


Start your referral marketing program with Tapfiliate now. Try all the features: 👉Get a free 14-day trial here


With referral software, it’s easy to enroll new customers in your referral program. New customers will automatically receive an email to report referral links. You can add loyal customers to your referral program by uploading their information using a CSV file. You can also give your customers a unique referral code.

Referral link and coupon code

There are several options for informing customers about referral codes and links. However, there is no one-size-fits-all approach.
It is up to you to determine how you will persuade customers and partners to join. To get customers into your referral program, consider displaying their code or link when they log into your website. You can also send referral codes via email.

4. Track your results

Log into your dashboard to see how your referral program is performing. See which customers are driving the most users to your website.
Evaluate what is going well and what can be improved and take action. Look at the data – what is the conversion rate, average order value and total revenue from your program? How can you increase these numbers?

Referral program benefits

Using a referral program can help businesses save time and money. Referrers attract new customers cheaper than running paid advertising campaigns.

Referral programs can also help businesses build closer relationships with their target audience. It can be helpful for online businesses if they’re struggling to capture the spirit of customer engagement.

Finally, referral programs can increase brand visibility. Advice is helpful for online businesses struggling to capture the spirit of customer engagement. Brand advocates who love what you do are crucial to success.

The way referral codes work to increase brand awareness and reputation is quite simple. With just a few references, a brand can become more successful as it learns about a few people.
It can also help drive user-generated content for your business. Many people will want to share their experiences on social media.


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How is information spread about your referral program?

When telling people about your referral program, remember that the channels used depend on the type of your business.

Here are some channels you can use to spread your referral program.

1. Social media

Social media is a powerful channel you can use to interact with people from different walks of life. The advent of social media has helped improve the growth of many businesses.
Evaluate which social media channels would be best to advertise your referral program. At best, you use one to help you target your desired audience.

2. Email

Email is one of the best ways to communicate with your customers. It is direct, personal and easily customizable to send any message, including information about your referral program.

Start by sending an email to promote a new referral program (or remind customers of an existing referral program). If you want, you can divide your emails into sections such as inactive and active customers.

Sendable email about referral program
Image source: Can be sent

3. Landing page

Every referral program should have a dedicated landing page. Besides promoting the referral code or the link itself, the page also organizes all the essential program information in one place. You can simply create a simple landing page for your referral program.

Example of referral program landing page
Image source: DeGiro

It should explain program rewards and benefits, referral mechanisms, and other details. The effectiveness of a landing page is also influenced by good text, a clear structure and a nice design. Make sure you think about it as you do it.

Have you always wondered if referral code is different from referral links? Both work in different ways.

As you can imagine, every ecommerce marketer understands that the fewer upfront purchase steps customers need, the better. As a result, online businesses prefer to use referral links to codes in most cases.

Each referral link is unique and contains a unique referral code. When a user clicks this link, the cookie is sorted immediately and the click is tracked. If the purchase is made, it will be attributed to the affiliate that made the referral.

Registered customer shares referral link (or share referral code) with a friend. Their friends can go to your website or download your mobile app without doing any extra work.

As a result, you might ask why someone would still want to use redirect codes instead of direct links. It’s easier to tell someone sitting next to you about a code than it is to email, text, or send a link to them.

How to generate referral codes

Referral codes are created by businesses and then shared among referrers. Referral tracking software will save you the stress and time-consuming task of manually setting up a referral program.

Links and codes are automatically generated when someone joins (or is added to) your referral program. Investing in automatic redirect software to complete the task will be more beneficial for you in the long run.

Redirect code best practices

There are basic things that you should not neglect when creating a referral code. These guidelines will help you create good referral codes.

Here’s a quick look at some referral code best practices.
– Use symbols, numbers or expressions that are easy to memorize where all words are used
– Avoid generating case sensitive codes
– Keep your referral codes short
– Customize referrer codes as it will help referrers remember them
– Avoid using 0 and zero. Or big I’s and small L’s

tidy up

If you are running a successful online business, having a referral program is a great idea. Use referral codes and links to track the progress of your referral program to be successful.

Referral codes and links will allow you to reward every deserving customer without fail. Creating a referral program will help make it better and more relevant to your consumers.


Start your referral marketing program with Tapfiliate now. Try all the features: 👉Get a free 14-day trial here


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