Referral codes let you track exactly who’s sending new customers your way. In this guide, you’ll learn what referral codes are, see how real companies use them, and get tips for creating your own.
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For a quick run down, check out our explainer:
What is a referral code?
A referral code (or referral tracking code) is a unique combination of characters used to identify the participants in a customer referral program.
Referral codes are assigned to every customer as soon as they’re invited to a program. They help connect each referral made to the person who sent it. Participants will send their code to their friends as an invitation to check out your brand.
Once the friend enters the code at checkout (or clicks on a link with the code inside), boom – now you know exactly who sent the friend your way.Â
The main difference between a referral code and a typical discount code, promo code, or coupon code is that referral codes are linked to an individual person. So, referral codes let you track WHO a new customer is coming from, not just WHERE.
How referral codes make things easier
Referral codes make running a referral program and generating word-of-mouth marketing easier by:
- Streamlining referral attribution: The code identifies who sent each new referral (and who brought in each new customer) so you aren’t left guessing about the sources of new business.
- Allowing you to engage current customers as brand advocates on a larger scale:Â Instead of only relying on sales reps to ask for referrals, you can empower your customers to share on their own with unique referral codes.
And if you’re offering rewards to the referrer, their friend, or both, the code will show exactly who to reward and when.
Referral codes vs. links: Which keeps things rolling?
Referral codes and referral links are both ways to track referrals, but they create different amounts of friction for your customers.
Referral codes are a string of characters people have to remember and enter on their own. They’re easy to generate but harder for people to use. If you give participants just a code (without a link), their friend has to go to your site and enter it manually. If they forget or lose the code, you might not realize they came via a referral.
Referral links contain the URL plus the referral code embedded inside. Friends don’t have to type the code; it’s already registered for them. Less friction means more referrals actually get tracked.
Below, you can see how Doordash’s referral links contain a code at the end for tracking:
How does a referral code work?
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Create a referral program: Build a referral program manually or with software. This involves choosing referral incentives and creating a landing page for customers to join and for referred friends to land.
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Assign customers a unique code:Â As soon as customers join your program, they should see a unique referral code they can access via email and a portal. This is a point of high engagement, so help them start referring right away.
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Ask customers to share their code:Â People can send referral codes via email, social sharing, and messaging apps. The most popular promotion channels are email and in-app (after checkout, for example).
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Track the referral code during purchase:Â For online transactions, new customers enter the code during checkout. For offline transactions, your staff can enter it manually (keep in-person codes simple).
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Reward the referring customer and/or the referral:Â Once the purchase is confirmed, send rewards manually or connect referral software with your CRM to trigger rewards automatically.
**Free referral code generator**
Check out our free referral code generator that can be used to make your own referral codes in an instant.
5 referral code examples
Here’s how companies use referral codes in practice.
Zipcar assigns each customer a referral link with a unique code at the end. Easy to copy, paste, and share via email, text, or social.
Airbnb (popular referral program) combines the user’s name with a series of numbers to create a unique referral code embedded in the customer’s referral link.
Ibotta uses a standalone code (no link). New users download the app and manually enter the code. They also offer social sharing options that add the code automatically (see more mobile app referral program examples). 
Dropbox’s referral program gives free storage to both the referrer and the friend. The code is longer, but since everything is online, customers just copy and paste the link.
Lyft puts the customer’s name at the front of the link and the code at the end. Referral credits are common among ride-sharing apps.
How to create a referral code
Four ways to generate referral codes:
- Manually create codes and track them in a spreadsheet
- Use our free referral tracking tool
- Use our free referral code generator
- Automatically generate and track codes with dedicated software like Referral Rock
With Referral Rock, codes are generated automatically when you add customers. You can issue randomly generated codes, personalized codes based on first names, or codes with a custom prefix. The software tracks every code and the ROI it generates.
For more on easily tracking your referrals (including with referral codes and links), check out our in-depth guide to referral tracking >
Referral code best practices
No matter how you go about creating referral codes, here are some best practices to follow:
- Keep the code easy to read and case insensitive.
- Avoid O’s, zeros, ones, capital I’s, and lower case L’s. These get confused.
- Personalize the code for the customer, not the brand.
- Keep it short enough to be memorable, but long enough to be unique.
Generate referral codes with our free referral tracking template
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Give everyone a code by default
Most businesses make customers sign up before they get a referral code. Forms, logins, “join our program” buttons. Every hoop kills conversion.
The better approach: everyone is already a member. Give every customer a code or link by default, no signup required. When someone wants to share, their code is already waiting.
You never know who your biggest promoters will be. Keeping access open unlocks them. If you gate your program, you might be blocking the exact customers who would have sent you the most referrals.
Where to surface referral codes:
Put your program where people will naturally find it:
- Your website and app menus
- Receipts and shipping confirmations
- Email signatures and newsletters
- After great customer experiences (this is where your team as recruiters works best)
The goal is discovery, not announcement. Make your referral program easy to find whenever someone thinks “I should tell my friend about this.”
Do you need a referral code?
Technically, no. But if you’re dealing with more than a handful of customers and referrals, it’s highly recommended.
Referral codes automate tracking, make your program scalable, ensure rewards are sent on time, and build customer trust. Without them, you’re manually tracking every referral and hoping nothing falls through the cracks no matter what your referral marketing strategy is.
Common referral code questions
Once you launch your referral program, it’s normal to get questions about how it works or where customers can get their referral codes. To reduce customer confusion, we recommend putting together a referral program FAQ or link to a knowledge base on your customer referral program landing page. 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.)
Put together a referral program FAQ to reduce customer confusion. The most common questions:
- Where do I enter my referral code? (Provide clear instructions or a direct link)
- How do I share my referral code? (Show the sharing options available)
- What if I forget or lose my referral code? (Explain how to retrieve it)
- How do I collect and track my rewards? (Link to the rewards portal)
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!
What’s next
Referral codes are essential for tracking referrals and rewarding participants. Ready to put this into practice?
