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A referral code (or referral tracking code) is a unique combination of numbers and/or letters used to identify the participants in a brand’s customer referral program.

Referral codes are assigned to every customer (the referrer) as soon as they join a program. Unique referral codes track and connect every step of the process, from when a customer sends a referral to whether these referrals end up making a purchase.

Most importantly, these unique referral codes automatically distribute any program rewards to the customer and referral (the referred customer).

What’s the difference between a referral code and a referral link? Many people will use the terms to mean the same thing, but there is a difference between the two.

Below, you can see how Doordash’s referral links contain a referral code inside.

Let’s start getting a better picture of how a referral code works by going over a few popular referral code examples. In most cases, referral codes follow a standard format, with the code found at the end of the entire referral link.

A good example of a referral code is the one used by Zipcar. The company’s referral program assigns each customer their own referral link, which they can instantly start sharing with others.

As highlighted in the screenshot below, you can see the unique referral code is found at the end of the referral link.

Airbnb is a company known for its referral program. In this referral code example, they combine the user’s name with a series of numbers to create a unique referral code.

Just like Zipcar, the referral code is added at the end of the entire referral link.

Ibotta is another company that offers a popular refer-a-friend program. However, this referral code example is a slightly different. It’s just a unique code, without a link.

With this type of referral code, the referral (the new user) will have to download the company’s app and manually type in the code. The program also offers the option to invite friends through social media, which automatically adds the referral code to the new user’s first purchase.

Dropbox grew to be a household name thanks to its popular referral program. It launched with a dual-sided reward structure, giving free storage space to both the customer and the referral. This motivated everyone to use the product and refer even more people – the reward was baked into Dropbox’s customer acquisition and growth!

This referral code example is a bit more complex than the previous ones we’ve seen. But since Dropbox runs a purely online product and referral program, customers don’t have to worry about manually typing in the code. All they have to do is copy and paste to send it to their friends and family.

As a freemium note-taking app, Evernote can’t really offer any discounts or freebies. Instead, its referral program rewards points that can be used toward a premium account (three referrals = 10 free months of premium).

Like Dropbox, Evernote’s referral code is rather long (so long, it got cut off in our screenshot). But since it’s also an online app, it’s still easy for users to participate in the referral program. All they have to do is copy and paste the referral code to share it with their friends.

Morning Brew is a daily email that doesn’t actually sell anything, but invites subscribers to share the good news with others. A subscriber’s referral status is included at the bottom of every email, along with a “Click to Share” button and clickable referral code.

Like most of the online referral code examples we’ve seen, Morning Brew’s referral code is placed at the end of a referral link. Since the referral process is completely online, subscribers may not even notice the referral code. They can simply refer others to the email in a few clicks.

Check out more referral program examples here, to see how other top brands use referral codes.

Referral codes make the entire process easier and more efficient for everyone involved.

Rather than having to manually log every participant and reward, a referral code automates and tracks every step of your referral program.

As for your customers, if your referral programs offer a reward incentive for every successful referral (e.g., free products, cash, gift cards), a referral code makes it easy for existing customers and referrals to get their reward. By using the code when they make their first order, the reward will automatically be sent to the customer and/or referral.

Referral codes make sure your program runs as promised, and gives loyal customers and brand advocates a good experience so they can continue generating word of mouth for your business.

Now that you know what a referral code is and why you should use them, let’s go over how these codes fit into your entire referral program process.

As you may have guessed, you’ll need to first create a referral program (also called a refer-a-friend program). For example, you can reward current customers $25 in store credit for every referral, or offer a $50 Amazon gift card for every new customer they send to your business. For more ideas, we have another article that covers everything you need to know about building the best referral program.

As soon as a customer joins your referral program, they should immediately be issued a unique referral code. (This is a point of high engagement with your customer, and you want to help them start referring right away!)

The referral code essentially ties the customer to every referral they send, and distributes any referral incentives they earn through the program. Referral codes also allow you to track other data about your program, so you can gauge how well it’s doing.

A big part of running a referral program is motivating your customers to share their referral code.

Thanks to all the social media platforms and messaging apps, it’s become extremely easy for people to send referral codes to their network. Some of the most popular channels are email and social media posts or messages.

But even your best customers won’t always have your referral program on top of mind. Add a small banner in the footer of your newsletters or on the thank-you page after checkout. A big part of running a successful referral program is regular promotion.

Some referral programs allow customers to share their referral code in person, usually through a printed referral card or flyer. In these cases, it’s best if the code is something simple, like the customer’s name, rather than a lengthy alphanumeric combination. This makes it easy for the referral  to remember the code when they make a purchase.

The final step is to collect the referral code after every successful sale.

This is easy for online transactions, such as in ecommerce stores or subscriptions. You can simply use links and cookies to track these referrals for you.

For offline transactions, you have a few other options. You can have the referral or your staff to manually enter the code during the checkout process (which is why it’s best to keep in-person codes simple). You can also create a dedicated landing page on your site to collect the referral code during purchase. Keep in mind, you’ll still need to find a way to connect the code to the customer and the referral.

Offline or multi-step sales often have more a complex referral process. Using referral program software can make the entire set-up and experience much easier.

For more information, read our step-by-step guide on how to set up a referral tracking system and download our referral tracking spreadsheet to get your program started.

As a business, it’s up to you to generate referral codes for your customers. You can use software to automate the process, or you can manually create the referral codes yourself.

If you choose to do it yourself, plan to keep an updated record of all the referral codes. You can create a spreadsheet, use accounting software, a CRM, or the like. (We have another post that breaks down the step-by-step process of referral tracking.)

No matter how you decide to create your referral code, here are some best practices to follow:

Technically, no. But if you’re dealing with a number of customers and referrals, it’s highly recommended.

Imagine having to track of every customer who joins your program, and every referred friend they send to your business. You also need to check which referred friend actually ends up making a purchase, and immediately reward the referring customer.

Now, imagine this happening several times per customer. No matter how simple your referral marketing strategy is, there are a lot of details to take care of so it runs smoothly.

Referral codes can automate most of these steps for you. They also formalize your referral marketing program, make sure all the rewards are sent on time, and establish more customer loyalty and trust, even if you choose to not use extra graphic designs or software.

Once you launch your referral program, it’s normal to get an influx of questions about how it works or where customers can get their referral codes.

To lessen any customer confusion, we recommend providing a referral program FAQ or knowledge base. Include any screenshots or images that will help your customers better understand the referral process. (Some businesses also find it helpful to create a few FAQ explainer videos.)

Giving customers all they need to know about your referral program will not only save you hours of  customer support inquiries, it’s also a great way to refine all the smaller details of your referral program before launch. Here are a few common questions to include about referral codes:

Note: Some of the above questions might not be relevant to your referral program. Run through the list and only include the ones that will be of help to your customers.

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