The Loyalty Lab: Crafting B2C Loyalty Programs That Drive Customer Retention
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Referral Code Definition

A referral code is a combination of characters (letters and/or numbers) that identifies referral program participants. Every person gets a personal referral code upon joining the program.

The functionality of a referral code doesn’t end with identifying the participants – it also tracks their referral activities, such as sharing the referral link. Each time a link containing a referral code is used by a new customer to sign up or place an order (depending on referral program rules), the information is processed and stored in the system.

It is crucial for the rewards feature – achieving the required number of referrals usually allows referrers to claim prizes, and without referral codes, it would be impossible to trace which users were brought by which referrers.

A referral code is usually a part of the referral link, but in some cases, it could also be typed manually while placing an order or creating the account.

Example of a referral code

How do referral codes work?

To make sure that referral codes will be a useful addition to your referral program, you need to properly understand how they work.

First, the referral program has to be created, because there won’t be any referral codes without a corresponding program. If you don’t know how to start with a referral program, begin by reading our guide on how to create a successful referral program.

Once you have a referral program – with tiers, rewards and rules set – you may launch it. After the launch, each customer who’d join the program should get their referral code. From now on, each referral activity performed by referees would be tied to their referrer via the code.

How to issue a referral code?

In most cases, the referral codes are created automatically by the referral program software, but you can also use them to choose exactly how the codes would look like (add a prefix, set how long should it be, exclude some characters (such as 0, O, lower case “L” and capital “i”).

Also, keep in mind to create memorable, rather short referral codes, so they could be shared and used easily in emails, SMS, blogs, videos, and more. It’s much easier to remember the “mmorgan20” code (especially if we got it from Mike Morgan) than a random sequence of characters, such as “23fsFhoL4g”

Learn more about the benefits of referral programs here.

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