Last Updated on

8 minutes to read

Before we show you a referral code example, let’s start with a referral code definition. What is a referral code?

A referral code is a unique combination of numbers, letters, or both, which are used as an identifier.

Businesses use referral codes for their referral programs. And as we all know, referral programs are powerful ways to generate word of mouth.

In these programs, referral codes are used to track the origin of a referral. Referral codes effectively connect the referral to the customer who sent them to the business. This way, if a referral program offers rewards, say cash or a discount, it can be distributed to the right person.

Keep everything organized and in one place with our free referral tracking template

A referral code example

To get a better picture of how a referral code works, here are a few referral code examples. As you’ll see, they all follow the same pattern – the code is found at the end of the entire referral link.

Example 1: A good referral code example belongs to Zipcar. Their referral program provides each customer with their own referral link, which is clearly highlighted in their referral form. 

Zipcar's referral code example

Example 2: Airbnb offers another well-known referral program. In their referral code example, they use the user’s name and a unique number to create a unique referral code.

Airbnb's referral code example

Example 3: Ibotta’s referral program also makes use of referral codes. This referral code example is a slightly different, however, as it’s just a unique code, unattached from a link. Using this type of referral code, the referred friend will have to download the company’s app and type in the code manually. As an alternative, these short codes are usually accompanied by other options to share on social media.

referral code example

How does a referral code work?

Step 1.  Assign a code to the customer

A referral program starts by issuing a unique referral code to the customer who wants to refer you business. Some businesses opt to use a static code (wherein everyone uses the same code), while others prefer to assign unique codes to each customer (the individual who is referring others).

If you intend to give incentives or rewards for each successful referral, it’s best to assign unique codes. This will help you tie the customer to their referral, and provide a number of other tracking benefits. (We share more about creating a unique code later in this article.)

Step 2.  Encourage customers to share the code

A big factor of a referral program is how a business gets their customers or partners to share their code. Thanks to the influx of social sites and applications, it’s very easy for people to send their referral codes. Most commonly, customers will do so through email, a social media post, or direct message.

Sometimes, a referral program will allow customers to share their referral code in person. In these cases, the code might just be something simple, like the customer’s name, rather than a generated number. This makes it easy for the referred friend to remember when they decide to make a purchase.

Step 3.  Collect the referral code during redemption

referral code

As a business, you are on the receiving end of a referral and need to figure out a way to collect the referral code. This is much easier if you transact online, where you can simply rely on links and cookies to track referrals for you.

If that’s not possible, however, there are a few other options. You can have the referred customer enter it themselves during the checkout process. (Similarly, brick and mortar businesses can train their staff to input the code into the final sale details.)

An even better option is to dedicate a page on your site to collected referral codes. This is often part of a more complex referral marketing services. Of course, you’ll still need to connect the code back to the referrer and customer. This is where a good referral program can help make the referral process much easier.

You can also read our step-by-step guide on how to set up a referral tracking system and check out our free referral tracking spreadsheet available for download.

Why would someone use a referral code?

That’s one of the trickier points. Oftentimes, a referral code doubles as a discount code. In other words, a person is incentivized to enter the code in order to get the associated reward or incentive.

codes

This is where incentives, like the popular double-sided reward, come in. A reward motivates customers both share (step two) and redeem (step three) the referral. And by rewarding both parties – the customer and the referral – for their efforts, you are making your offer twice as attractive.

Note: If your program uses a link and browser cookie tracking, customers don’t need to enter a code. The link acts as the code, and the action required to redeem the reward is to actually make a purchase.

In other words, the customer can’t get the reward unless their link is used, and the referred individual can’t get the discount unless they use the link provided.

Is a referral code required to run a referral program?

Technically, no. However, when dealing with any number of customers and potential referred friends, it’s highly recommended. Imagine remembering not only your customer’s names, but the names of their referred friends, and the exact date they decide to make a purchase. Then, you will need to keep track of which referrals succeeded in becoming customers, and go back to the referring customer to give them their reward.

Now, imagine this happening several times per customer. A single referral program, no matter how simple, can already be an overload of information.

Codes don’t only make the referral process easier and more efficient, they also create a level of trust. It’s not just someone filling out a form and wondering what the next steps are – a well-run referral program offers rewards, engagement, a fun way to share with friends, and the opportunity to form customer relationships.

How do I generate a referral code?

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

If you do choose to do it on your own, make sure to keep a good record. You can create a spreadsheet, use accounting software, a customer relation tool, or the like. We go over eight of the best tools for referral tracking in another blog post.

The following are also some referral code best practices:

  • Keep the referral code short enough to be memorable, but long enough to be unique
  • Make the code easy to read and case insensitive
  • Try not to use O’s, zeros, capital I’s or lower case L’s.
  • Personalize the referral code, if possible (for the customer, not the brand)

Help answer common referral code questions

When you start your referral program, you might get flooded with questions about how your referral program works or where a customer can find their referral code.

To lessen the confusion and likelihood of customers giving up should they come across an obstacle, it’s advised to create an FAQ or knowledgebase. Many businesses also find it helpful to create a few FAQ explainer videos (which customers may find easier to watch, rather than reading long documentation). A comprehensive FAQ will not only save you from hours of customer support inquiries, it will also help you in planning all the details of your referral program. 

Here are a few common questions we’ve encountered in our years of referral experience. It’s also best to include any screenshots or images that will help your customers refer others in the easiest way.

  • Do you have a referral code?
  • How do I find my referral code?
  • How do I create or generate my referral code?
  • Where do I enter my referral code?
  • How do I enter my referral code?
  • How do I share my referral code?
  • What if I forget or lose my referral code?
  • Where can I promote my referral code?
  • How does the referral promo code work?
  • Where can I retrieve my referral code?
  • Why would someone else use my referral code?
  • What do I do after receiving a referral code?
  • How can I find a referral code for registration?
  • Will I be notified when someone uses my referral code?
  • How do I use a referral code to sign up for an account?
  • What if a customer I referred forgets to use my referral code?

You might notice that some of the questions above might not be relevant to your referral program. Consider each one carefully and only include the ones that will help your customers.

Summary

Referral codes are a key consideration for every well-run referral program. Without the use of referral codes, businesses are unable to track the referrals, customers may not get their incentives, and ultimately, the referral program won’t serve the intended purpose of helping grow your business.

Avatar

Posted by Megan Mosley

Megan Mosley is a writer for Referral Rock. You can find her poking around online or tweeting about marketing, small businesses, SEO, or even sharing funny memes. She is addicted to coffee and uses it as a fuel to keep her going through the day.