Key takeaways

  • Tracking referrals from a customer referral program helps you reward the right people, prevent fraud, report on conversions, and identify your most effective advocates.
  • Referrals can be tracked manually via spreadsheets (like the free template below) or automatically with referral software.
  • A conversion tracking tag is a code added to a webpage, which identifies completed conversions on a confirmation page (e.g., after a form-fill, purchase, or user signup).

You’ve decided to launch a referral marketing program. Great!

The next step is to figure out how to keep track of the referrals your program brings in. Without any way to know where new customers are coming from — and which existing customers are referring your business — you won’t be able to properly issue rewards or know if your program is working.

Setting up a referral tracking system from the get-go helps you run your program smoothly and determine if you’re getting the results you want.

In this article, we go over the referral tracking process and review the best methods to keep track of your program participants. Or, you can jump straight to downloading a free referral tracking template + referral code generator that’s customizable for your own referral program. (If you want to generate referral codes, look no further than our free referral code generator)

What is referral tracking?

Referral tracking is the monitoring and collection of data on actions taken throughout your referral marketing program. It’s important to remember there are two sides of the referral process: the ambassador (“referrer”) side and the friend (“referral”) side.

When you launch a referral program, your first step to success is getting your members — be that customers, influencers, affiliates, or partners — to start sharing. You want to track who signs up to your program, how many friends they share their unique link with, and when one of those friends (referrals) converts to a customer.  

The most important part of the tracking journey is the conversion capture because it tells you when a referral becomes a lead or customer. It uniquely identifies who the referral is and who referred them.

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

The automated approach is more scalable and easy to keep track of as your referral program grows. It also gives you a better picture of your referral program’s ROI.

But when you’re starting out or testing out a program, you might want to try a manual process first.

3 reasons to track referrals

When it comes to a referral program, the more members (“referrers”), the merrier. The goal is to promote your program to as much of your existing customer base as possible to cast a wide net. In turn, a portion of these customers will promote your brand to family and friends, and the number of referrals your business receives goes up.

After you launch a program, it’s important to keep track of which customers are sending referrals to your business. A reliable referral tracking system also gives you important referral metrics, including how many members have joined your program, how often they’re sharing, and how many referrals are converting into customers.

Here are the top reasons to track referrals:

1. To determine who to reward (and prevent fraud)

If you want to know who sent a new customer to your business — so you can properly attribute that referral and issue rewards to the referrer — you need accurate referral tracking in place.

It’s also worth noting that even the best-planned 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 if 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.

2. To report on referral conversion rates and sales

Let’s say your sales have been going up and you have a feeling it might be from word-of-mouth. Without a referral tracking system in place, you won’t be able to really know how many new referral customers and brand awareness your program is driving.

Tracking referrals allows you to see how many referral shares actually result in a customer acquisition, or how long it takes a referral to interact with your business (i.e., click the referral link, sign up for a demo). This, of course, depends on your business and the price of what you’re selling.

For example, if you sell a high-ticket product or service that isn’t likely to warrant repeat purchases, you could expect a lower referral conversion rate but a higher referral value. 

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 (e.g. try a 2-sided reward structure, change what incentives you offer, or switch the referral reward to a fixed cash amount or gift card, instead of a discount).

3. To find your best advocates (aka superfans)

Referral tracking shines light on the individual customers sharing the most and bringing you the highest number of referrals — these your best advocates. Why not show them your appreciation with a special gift like company swag or a featured spot on your referral landing page? You could also consider recruiting them as more formal brand ambassadors.

In short, referral tracking helps you find your best referral sources and biggest brand fans — a huge win for your business (and often a lost opportunity if you don’t have a formal referral program in place).

How does referral program tracking work?

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 a sale (conversion).

In the screenshot below, you can see that the “Referral Code” column lists all the referral tracking codes. These are unique to the customer (“referrer”) 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 spreadsheet with referral codes

Now that you know how referral trackers work, let’s look at the main ways you can use them to track referrals.

8 ways to track referrals

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 a few options to keep everything in check.

1. Referral tracking spreadsheets

If you’re just exploring how to run a referral marketing program and aren’t quite ready to invest in a referral tracking tool, referral tracking spreadsheets are a good low-lift solution.

Spreadsheet-based referral trackers 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 a form on a Google Sheet or Excel. Or you can download our free referral tracking spreadsheet to start using right away (don’t worry — it comes with instructions!).

Google spreadsheet example of tracking referrals

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

Refer-a-friend form template from 123formbuilder

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

Typeform and Google Sheets integration through 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. If you download our free referral tracking spreadsheet, we provide a form for you to send to customers to join your program. Once the form has been filled out, a referral code will automatically generate for each new ambassador in the spreadsheet. 

Ambassadors and their referral codes on a spreadsheet

2. Referral tracking tools (automated tracking)

Referral 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 tool.

The best part about using referral tracking tools is that all these steps are done automatically — all you have to do is customize a few settings.

What to look for when choosing a referral tracking tool

Some referral software can only track basic metrics like shares, conversion rates, and referral revenue. But other options have the functionality to give you a more complete picture of your program’s impact, such as member (“referrer”) engagement and referral website visits generated by your program.

Member Visits dashboard in Referral Rock
Referral Rock is the only referral platform to automate and track every step of the referral lifecycle, from first share to multiple conversions. This makes it easy to track your results and impact faster from bother the Member side and the Referral side. 

The software should also integrate with your existing tools and processes, including your CRM and/or e-commerce platform, so tracking data is passed seamlessly through your sales and marketing processes for seamless referral management.

Ideally, there’s also a dashboard for your members to track the status of their referrals, so they’re more motivated to share and trust in the program.

3. Google Analytics

Google Analytics has a built-in attribution model that lets you 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.

To view referrals in GA4, go to Life Cycle > Acquisition > Traffic acquisition, where you’ll see “Referral” as a line item. Filter to “Session source” to see a list of URLs. If you’ve set up your tracking events correctly, you should be able to see conversions (or assisted conversions) attributed to each URL.

GA4 session source

Note that while this method is free, you’ll need some experience with Google Analytics to set up conversion events (like purchases).

GA4 referral attributes

4. UTM parameters

In terms of effort and level of difficulty, this technique lies somewhere in between Google Analytics and paid referral tracking tools. 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 Analytics’ built-in attribution model.

Campaign URL builder in Google Analytics

5. Coupon codes

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

The code attributes a specific referral to a customer so you can see how many times it has been used and for what purchases.

referral code associated to the member

6. Tracking cookies (by 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 e-commerce.)

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. 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.

8. 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 (which are being phased out), 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.

Note: When you integrate Referral Rock with the form builder or e-commerce site you already use, you’re set up to capture the referrals people send your way at the destination of your choice, including checkout pages, landing pages with lead capture forms, or contact forms anywhere on your site. Learn more > 

Free referral tracking spreadsheet + referral code generator

To help you get started, we created a free downloadable referral tracking spreadsheet (with sample names) in Airtable that can be easily customized for any referral program. (If you want to generate referral codes, look no further than our free referral code generator)

Whether you’re already running a referral program for your business, or simply want to understand the scope of how the process works, we break down all the basic referral tracking steps.

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

The spreadsheet has three tabs:

  • Ambassadors: tracks customers who have signed up to refer or promote your business
  • Referral Sales: tracks the individuals a customer refers to your business, who have completed a sale
  • Rewards Sent: tracks when you’ve given rewards to Ambassadors based on a successful referral

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 ambassadors, select the view “Register as an Ambassador,” and then click “Share form” on the menu under the tabs. Then, copy the link shown.

sharing the ambassador form

After copying the link, send the URL to interested ambassadors so they can self-register. They will then see a short form to fill out (you can also use this form to manually register a customer yourself).

Once the form has been filled out, a referral code will automatically generate for each new ambassador in the spreadsheet. This referral code is then used to track referrals and earned rewards for each ambassador.

After an ambassador registers, you can send them their referral code so their friends can easily reference them.

Ambassadors and their codes

 

Get the spreadsheet >

While a referral tracking spreadsheet helps monitor the connection between ambassadors and referral sales, and ambassadors to rewards, most the steps must be done manually.

Referral Rock provides an online referral program solution that removes lots of these manual steps (registration, reward issuing, track visits, and giving ambassadors a portal to check their stats).

Once your manual referral program becomes too cumbersome (because of all the referrals you’re getting!), give our software a try so you can put these steps on autopilot and make it seamless for you and your ambassadors.

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 e-commerce 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 ambassador
  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?

Sometime a person will get different links from more than one ambassador via email, text, or social media. Who gets the reward?

This is one of the benefits 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 referral marketing software):

  • 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.

In Referral Rock, you can use One Click Access links to invite customers or affiliates to your program from email campaigns, during checkout, or other places in-app. These links give people a way to start sharing instantly — no logins or passwords needed!

One Click Acccess link for Hubspot

What referral marketing metrics should I be tracking?

Every referral program has four key stages to evaluate and optimize. We call this the Referral Funnel.

The below diagram shows an example of how a typical referral program works. The top two stages are on the member (“referrer”) side — tracking how many customers join your program and how often they’re sharing. The bottom two stages are on the referral side, tracking how many referrals visit your website and turn into customers.

Referral funnel

 

Let’s break this down even further. The four stages of the Referral Funnel are:

  • Joined Members: How many people have joined your referral program?
  • Engaged Members: What percentage of your members are actively participating (sharing) in your referral program? What is the referral sharing rate?
  • Referral/Brand Visits: Is the referral program driving activity to your website?
  • Referrals Added: Are you getting new referral customers/sales?

Without the right referral program software, it can be hard to track every stage of your program, but at minimum you want to track Joined Members and Referrals Added.

Joined Members allows you to give each customer (aka “promoter”) a unique referral code to share with friends. These are little bits of code inserted into every referral link assigned to people who join your program. Referrals Added lets you see new customers/sales that are coming from referrals (aka a successful referral).

Is referral tracking the same as affiliate tracking?

Affiliate tracking links are used in an affiliate program, where content creators promote your brand on their channels to earn commission. They work similarly to referral links in the way that they track purchases made through the link using a unique code.

However, affiliate tracking is still a bit different from referral tracking, since affiliate programs operate differently than referral programs, you’ll need affiliate marketing software for tracking. Some referral software (like Referral Rock) also has affiliate tracking capabilities, though, so you can run both referral and affiliate programs with the same software.

Start tracking your referral program today

As you can see, there are several ways you can track your referral program — we shared an easy-to-use free referral tracking spreadsheet (+ referral code generator) to help you get started.

But if you’re looking for a less manual way of doing things, use referral software to build an automated program that frees up the time. Referral Rock makes it easy to track referrals, manage rewards, and promote sharing across your customer lifecycle.

And it gives your members an easy way to track their own referrals, so they can see if and when they’ll be rewarded.

My Rewards in Referral Rock's member portal
The Member dashboard in Referral Rock shows the status of all referrals.

Want to see see how this type of program can work for your business? Book a demo or start building your program for free.