You’ve decided to launch your first referral marketing campaign. Great!

The next step is to figure out how to track your referrals. Without any way to know where new customers are coming from, and which existing customers are referring you most, you won’t be able to make the most of your referral program.

Setting up a referral tracking system early on can tell you whether you’re getting the results you want.

In this article, we go over the referral tracking process step by step, and review the best methods to keep track of your program. We also include a free referral tracking template you can customize for your own referral program.

What is referral tracking?

Referral tracking is a way to monitor and collect data on all actions throughout your referral program. You can track everything, from the time a customer signs up to your program to the minute one of their referrals results in a new sale.

Tracking referrals can be done in two ways: manually through spreadsheets or automated referral marketing software (which we discuss later in this article).

Benefits of tracking referrals

When it comes to a referral program, the more members the merrier. You aim to promote your program to as many existing customers as possible, who in turn, promote your brand to as many of their friends and family as possible. In time, the number of referrals you receive will add up.

While this is what you’re hoping for, it’s important to keep track of which customers are sending referrals to your business. Not only does it help you know who to reward, a reliable referral tracking system shows an overall view of how your program is performing and ways you can make it even better.

Here are the top reasons to track referrals:

Gauge customer satisfaction

Tracking your referral program can reveal whether customers are actually satisfied with your product or service. Think about it: If you have satisfied customers and offer them an attractive incentive to refer others, you’re likely to see a good amount of growth in your referral program.

Other measurement tools, like the Net Promoter Score (NPS), Customer Satisfaction Score (CSAT), and Customer Effort Score (CES), can also help you track your overall customer satisfaction.

Pinpoint any changes in sales

Say, your sales have recently been skyrocketing. You’re thrilled, but not too sure what’s causing the spike. Is it the new product you launched? The hectic holiday season?

You have a feeling it might be your new referral program. But without a referral tracking system in place, you won’t be able to really know. And if the spike in sales does happen to come from your referral program, a referral tracking system will also let you know which customers are bringing you new leads.

Determine customer participation rate

The success of your referral program relies on its customer participation rate. If only a few customers sign up for your program, you may not see a big rise in referrals.

A referral tracking system can instantly reveal low levels or dips in customer participation rate. If participation seems low, it may be time to refresh your referral program. For example, you can start promoting the referral program in your monthly newsletter. Or change the referral reward to a fixed cash amount instead of a percentage discount.

On the other hand, referral tracking can also shine light on the individual customers bringing you the highest number of referrals. Why not show them your appreciation with a special gift or feature on your referral landing page? Without any means of referral tracking, you may have never found your biggest brand advocates.

Monitor referral sharing rates

Referral sharing rates (or just sharing rates) are the percentage of customers in your program who actually share your brand with others. For example, if 10 out of 50 customers in your referral program have shared your brand with others, your program has a 20% referral sharing rate.

Here is the formula to calculate the referral sharing rate for your entire program:

[ No. of referring customers / Total no. of customers in program ] * 100 = referral program sharing rate

To increase the rate of sharing, it helps to know which sharing channels your customers prefer. Do they send referrals through email, social media, direct links, or other channels?

Once you know where your customers are sharing, you can provide them with some message ideas tailored for these channels and make their sharing process even easier.

Referral sharing rates can also refer to the average number of unique shares per customer. For example, a customer might share their referral code to 1,000 followers on social media. If this only brings in one referral, the customer would be a referral rate of 0.1%.

Here is the formula to calculate the referral sharing rate for a single customer:

[ No. of referrals from one customer / No. of shares from one customer ] * 100 = referring customer sharing rate

Of course, the more a customer shares, the more their sharing rate is likely to rise. You can help increase this number by offering a dual-sided or tier-based reward incentive structure, where the customer and their referrals are able to earn even more rewards.

Note: The referral share rate is different from the referral conversion rate, which we cover in the next point.

Monitor conversion rates

A customer might share multiple times, but only bring in one or two referrals. Tracking referrals allows you to see how many referral shares actually result in a new customer, or how long it takes a referral to interact with your business (i.e., click the referral link, sign up for a demo).

Based on the conversion data, you can determine if a referral marketing strategy is meeting your intended goals, or if you need to make some changes to increase customer engagement.

Prevent any referral fraud

Even the best-laid programs can experience cases of referral fraud. Some people will send duplicate referrals (referring the same person), do self-referrals (referring themselves), or try to get their reward and then return their purchase.

If you don’t track your referrals, you’ll never know whether this is happening in your own program. Having a clear way to analyze your referral data can help you easily spot any suspicious referral activities.

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

How do I track a referral program?

The following diagram shows an example of how a typical referral program works. Notice how every single step or component is accounted for? This is the key to reliable referral tracking.

Knowing how a customer moves from point A to point B gives you a clear picture of each individual step in your referral program.

referral marketing process diagram

Let’s break this down even further.

Each step of your referral program is monitored using referral trackers or referral codes. These are little bits of code inserted into every referral link assigned to customers who join your program.

Referral trackers act as unique identifiers to monitor all the customer’s movements throughout the referral process, from the minute they sign up to when one of their referrals results in an actual sale.

In the screenshot below, you see the first “Referral Code” column lists all the referral trackers. These are unique to the customer and connect them to all their referrals and earned rewards.

Referral trackers are automatically assigned as soon as a customer joins your referral program, whether you use a referral code, referral link, or even a physical coupon.

referral tracking promoters airtable

 

Now that you know how referrals trackers work, let’s look at three main ways they can track your referral process:

Manual referral tracking process

Many brick-and-mortar stores hand out physical coupons or flyers to their customers. (If you’re one of them, here are some popular referral card ideas to consider.) Customers can pass these coupons along to their friends, who then present them at checkout to redeem the offered discount or store credit.

You can keep track of these referrals by having the referred customer write their name and the friend who referred them on the coupon during redemption.

Online referral tracking process

The most popular referral programs are usually online. They start with a customer signing up to a referral program, and then inviting their friend using a unique referral tracker or referral link.

The referral tracker automatically matches the customer to their referrals. Then, for every referred friend who clicks the link and makes a purchase link, the customer is instantly sent a referral reward.

Referral program software

Referral program software is built to handle all your tracking, even for the most complex programs.

Without getting too technical, referral software includes a tracker on the referral confirmation page (typically using a Javascript web pixel to set user attributes using browser cookies). A postback URL then passes back information about any conversion data. Finally, an API call sends the specific URL parameters associated with the customer to the referral tracking software.

The best part about using referral software is that all these steps are done automatically. By using a ready-made solution, all you have to do is customize a few settings, and all the referral data and tracking are done for you.

8 best methods for referral tracking

Not all referral programs are created equal – and they shouldn’t be. For instance, you may want to run a seasonal referral program for the holidays. Or you may want a long-term program with tiered reward incentives.

No matter what type of referral program you run, there will be many moving parts. Keeping track of those parts is one of the more challenging (and often confusing) aspects of word-of-mouth marketing. Thankfully, there are many ways to keep everything in check.

Here are some to consider:

1. Referral tracking software

The easiest way to track referral data is by using referral tracking software. Most referral software comes with a built-in setup wizard that gets your program started in minutes.

All you have to do is enter a few basic details, and the software is able to set up a tracking system, track referrals, and issues rewards automatically.

2. Referral tracking spreadsheets

If you’re just exploring how to run a referral marketing program and aren’t quite ready to use software, a referral tracking spreadsheet is a good way to dip your toes into the water. (We discuss tracking spreadhseets more in the next section.)

Referral tracker spreadsheets are perfect for small businesses who don’t need a complex program, or are still testing out their first referral program and want to manually approve all referral payouts.

You can create your form on a Google Sheet or Excel. Or you can download our free referral tracker spreadsheet to start using right away.

google spreadsheet examples of tracking referrals

Referral tracking spreadsheets can be further customized with a variety of tools. For example, you can use a simple form builder and sync it with your spreadsheet.

refer a friend form template 123formbuilder

Then, using a Zapier integration, you can automatically add, track, and collect all customer and referral data into the same sheet.

typeform google sheets Integrations zapier

Note: If you decide to use this method, keep in mind that you will need to create your own unique referral ID for each of your referring customers.

3. Google Analytics

What doesn’t Google Analytics do? The robust platform has a built-in attribution model that lets you track analytics and conversions on your website or page.

After a quick set-up, you can track all the actions taken on your site, and determine which marketing channels are working best. The data is easily exported so you can use your own filters and share insights with your team.

And the best part? Google Analytics is absolutely free.

ga conversions

analytics referral attributes

4. UTM parameters

In terms of effort and level of difficulty, this technique lies somewhere in between Google Analytics and paid tracking software. UTM parameters are part of a URL and used to identify the specific referral campaign bringing traffic to your website.

To use this method, you need Google Analytics and the Campaign URL Builder to create a unique URL for each referring customer. This URL is what customers will share with their family and friends, and includes parameters that track data for that specific URL.

While this method is also free, it does involve more work than just using Google Analytic’s built-in attribution model.

campaign URL builder google analytics

analytics utm

5. Coupon codes

Similar to UTM parameters, you can also provide your customers with their own personal coupon codes. Customers can then share these coupon codes whenever they refer their family and friends to your business.

referral code associated to the member

6. Redirecting referral pages

In most cases, a referred individual will land directly on your homepage. Redirecting them to a referral page gives you more control over what the potential new customer sees as soon as they arrive on your site. You can highlight any products, services, or information that can better lead them to purchase. (This works really well for ecommerce.)

Redirected referral pages typically use cookies to tie the referral back to your customer. A tracking cookie is embedded into the browser and captures data about the referral’s on-site actions. So even without requiring them to fill out a form, you’ll already be able to track certain information.

7. Referral form fields

When filling out a website form, you may notice many companies like to ask: “How did you hear about us?” This is a great way to learn more about your loyal customers, and a good field to include in your own referral form.

Although forms don’t collect much in-depth behavioral data, they’re great for starting a relationship with potential customers. (You can always follow-up once someone is further along your funnel.)

Referral forms are also a good alternative to tracking cookies, and are particularly useful for service-based businesses that require an extra step, such as setting an appointment or providing a quote, in order to complete the referral.

8. Redirecting after completed forms

Sometimes, you may not be able to add additional scripts to your referral capture pages. In these cases, redirecting referrals after they complete a form is a good alternative.

A redirect basically takes information from the source URL and applies it to the resulting confirmation page. This allows you to send the referral to the most relevant landing page based on the information they shared.

This method generally works best for businesses that use third-party forms and need a way to send the individual back to their site.

How to track referrals (with our free referral tracker template)

To help you get started, we created a referral tracking spreadsheet that can be easily customized for any referral program. Whether you’re already running a referral program for your business, or simply want to understand the scope of how everything works, we break down all the basic referral tracking steps.

First, you’ll notice our referral tracking spreadsheet has three tabs:

  • Promoters: customers who have signed up to refer or promote your business
  • Referrals: the individuals a customer refers to your business
  • Promoter Reward Redemptions

1. Promoters

The Promoters tab lists all the customers who have signed up for your referral program.

referral spreadsheet example

Whenever a customer signs up for your program, you need to assign them a unique referral code. This can be done either by asking them to fill out a signup form, or manually registering them yourself.

To send a signup form to promoters, click “Open form” on the menu under the tabs.

referral tracking spreadsheet how to register promoters or members on airtable example

This will open another browser tab with the form. Copy and send the URL to interested promoters so they can self-register.

register promoter form on our referral tracking spreadsheet template

To manually register promoters yourself, go to Grid view > Register Promoter (under the Promoters tab title). This will open up a form where you can add each new promoter.

referral tracking promoters airtable

 

Once a form has been filled out, a referral code will automatically generate for each new promoter. This referral code is then used to track each promoter’s referrals and earned rewards.

referral tracking spreadsheet promoters information tracking airtablereferral tracking spreadsheet promoters tracking rewards and referrals

2. Referrals

The Referrals tab includes everyone who has been referred to your business by a promoter (customer).

Just like with Promoters, you can ask Referrals to fill out a signup form, or manually register them yourself.

To send a signup form to referrals, click “Open form” on the menu under the tabs and send the resulting URL to the new referral.

referral tracking referrals spreadsheet to register sales and referrals to promoters guide

To manually register referrals yourself, switch from Grid view > Referral Sale to open the form and add the new referral.

 

referral sale tracking on our referral tracking spreadsheet. a form you can enter in the referral information and link to promoter

Once a referral is linked to a promoter (through the unique referral code), the promoter can then redeem their reward.

referral tracking referrals airtable registering and connect referrals to promoters example screenshot
A note on updating referrals: If a referral is required to take action to earn a reward (i.e., make a purchase, sign up for a demo), you will have to update the status of the referral.

Typical status types are Pending > Qualified > Approved or Denied. The ability to redeem a reward can be tied to either Qualified or Approved statuses, depending on the terms of your referral program. For example, do you require a demo signup or an actual sale to earn a reward?

3. Promoter Reward Redemptions

The Promoter Reward Redemptions tab is used when a promoter wants to redeem their reward.

Simply click on “Open form” and find the specific promoter using the form’s drop down.

promoter-reward-redemptions-open-form

Then, input the amount the promoter wants to redeem. (The amount range can be customized however you want.)

Redeem Promoter Rewards form for your promoter requesting a payout of their reward on our referral tracking spreadsheet

Our referral tracking spreadsheet automatically adds the date and time when a redemption was made.

We also included a space for you to write any additional notes, such as how the promoter redeems their reward (as seen in the image below).

referral tracking promoter reward redemptions

While a referral tracking spreadsheet helps monitor the connection between promoters and referrals, and promoters to rewards, it’s recommended to track the referral’s purchase as well. This helps determine when a referral makes a purchase, so the associated promoter can be rewarded as soon as possible.

Referral tracking FAQs

What is a conversion tracking tag?

A conversion tracking tag or script is a short bit of code added to a page signifying when a conversion has occurred.

A conversion can mean a number of things, depending on your business. For example, a conversion can be a demo or quote form submission, an online purchase, a newsletter sign-up, or any other on-site action.

A conversion tracking tag is usually placed in one of the following areas:

  • A thank you page, after a successful form submission
  • A confirmation page, after a successful ecommerce purchase
  • A welcome page, after a successful user sign-up

As soon as these pages are loaded, a conversion tracking tag starts collecting information:

  1. It checks if the visitor is a referral, by looking for the existence of a cookie
  2. It creates a referral record and attributes it to the correct customer or promoter
  3. It adds any other information or parameters to the new referral record (i.e., the referral’s name, email address, purchase amount)

Should I automatically approve a referral?

Standard referral platforms give you the option to automatically or manually approve a referral.

Automatic approvals will instantly approve every referral as soon as the conversion tracking event occurs (on a thank you page, confirmation page, etc.).

Manual approvals, on the other hand, can be time-consuming, but are useful when sales are not completed right away, or you require a waiting period before rewards can be redeemed (maybe based on your payment process or return policy).

What if someone is sent more than one referral link?

Sometimes, someone will get different links from more than one promoter. Who gets the reward?

This is one of the best uses of referral tracking cookies. Thanks to cookies, the customer’s unique identifier (in the referral tracker or link) is saved and used to credit any rewards. Here are a few ways a tracking cookie can work:

  • Last smart interaction (Recommended): Credit for the referral goes to the most recent customer whose link was clicked by the referral. For example, if a referral clicks on Customer A’s link first, and then clicks on Customer B’s link, then Customer B’s cookie will replace Customer A’s cookie. Customer B gets the reward.
  • First interaction: Credit for the referral goes to the first customer whose link was clicked by the referral. For example, if a referral clicks on Customer A’s link first, and then clicks on Customer B’s link, then Customer A’s cookie will not be replaced (as long as it hasn’t expired). Customer A gets the reward.
  • Last interaction: Cookies are always replaced by the referral’s latest link click, regardless of how many links the referral clicks. This reduces tracking accuracy and fraud detection, but can be useful if multiple referrals and customers are expected to use the same device, such as an in-store referral system.
We’ve just scratched the surface of how a tracking cookie can be used in your customer referral program. While there’s a lot more you can do, we recommend you cover the following questions before starting your referral program (especially if you plan to use a referral software tool):

  • How long will the tracking cookie stay in a referral’s browser? Do you have the option to change its expiration?
  • What happens when a referral clicks on a referral link on a mobile browser, and then switches to a desktop browser?
  • How do you include this data capture in your privacy policy so you are GDPR compliant?

What else can I do with a referral tracking system?

Another benefit of referral tracking is the ability to manually or automatically approve a referral after they’ve made a purchase or a completed form. Furthermore, a referral tracking system can also sync with other marketing tools, allowing you to customize and expand your entire marketing campaign.

Start tracking your referral program

We covered quite a bit on how to track your referral program. We also shared an easy-to-use referral tracking spreadsheet to help get started.

With all the steps and data to track in a single customer referral program, it’s best to have an idea of how you want to run your referral program and use it to grow your business. Our blog offers a wealth of referral marketing info to get you started, while our free learning resource is full of marketing guides for more in-depth information.

Of course, if you want to personally see how this type of program can work for your business, we also offer a free trial and walk-through demo through our referral program software.