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Leveraging referral codes is an easy way to drive more business and reward loyal customers. Whether you’re just getting started with referral codes or looking to optimize your current program, we’ll walk you through what referral codes are, how they work, and the best practices to get the most out of your program.
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What is a referral code?
A referral code is an unique identifier that consists of alphanumeric characters given to each customer or user that they can share with others to receive rewards. Referral codes are typically used as part of a refer-a-friend program where customers are rewarded for referring new customers to the business.
When creating your referral code, there are several best practices to keep in mind. These include:
i. Keep the referral code short and memorable. Longer codes can be hard to remember and type, so try to make it as simple as possible
ii. Avoid using capital I's, lower case L's, or O’s and zero’s as these are easily confused with one another.
iii. Keep the referral codes in the same format for each referral program
iv. Keep the referral codes case insensitive
v. Personalize the referral codes to strengthen the customer experience
Why should you use referral codes?
Referral codes make the entire process of customer referral easier and more efficient for everyone involved.
They offer customers a simple, memorable way to share their code with others, while also allowing businesses to track referrals and reward customers appropriately. Additionally, referral codes help businesses to measure the success of their program and ensure they are getting the most out of their referral efforts.
How does a referral code work?
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, which typically consists of the following steps:
Step 1: Set up your referral program
First, you need to create and launch your referral program. This can be done manually or with the help of referral software such as ReferralHero.
Step 2: Create and assign a referral code to the customer
Your referral program should immediately generate and assign a unique referral code to the customer as soon as they join your program.
Once each customer has their unique code, the next step is to send it out to them. You can do this via email, SMS, or even direct mail. Whatever channel you choose, make sure that the communication also includes information about how and when the code can be used.
Step 3: Have the customer share the code
Making it easy for customers to share their referral code is key to running a successful referral program. Include the referral code on all promotional emails, in their customer portal, and so on. This ensures customers have easy access to the code and can share it with friends and family frequently and quickly.
Step 4: Tracking the codes
Having a system in place to track referrals will help you understand which customers are referring others and how effective your overall program is.
For online transactions, like e-commerce purchases or SaaS subscriptions, tracking can be done by simply using links and cookies.
For offline transactions, this requires a bit more legwork to track properly. Here are some tips:
i. Keep a record of who received the code and when it was issued. Keeping a spreadsheet or using an online platform to manage your codes can help you easily track which codes were used by each customer
ii. Make sure that customers enter their referral code at checkout. This will make it easier for you to track the usage of each code and determine its success
iii. Ask customers to enter their referral code on any orders they place via phone, email, or in person. This makes it easy for you to track the success of each code
Step 5: Promoting the referral program
Finally, don’t forget to promote your referral program to make sure that as many people as possible know about it. You can use email campaigns, social media posts, and even print ads to reach customers and encourage them to take advantage of their referral codes.
Examples of companies using referral codes
Now that we understand what referral codes are and how they work, it’s time to go over a few popular referral code examples.
Example 1: Parcl
Parcl is a blockchain-based real estate platform that allows users to invest in a digital square foot of physical real estate.
The way their referral program works is that users are given their unique referral code link as soon as they join the waitlist. In exchange for referring friends, customers are offered a chance to earn early access to an NFT. Sharing can be conveniently done through Twitter, Whatsapp, email, Reddit, or Telegram
Example 2: youcopia.com
YouCopia is a fast-growing home brand focused on storage & organization. The company has been creating innovative products that are sold through retail accounts like Amazon, Target, The Container Store, and Walmart.
YouCopia gives users many reasons to refer their friends - both the user and friends get a discount on their next purchase, plus a meal will be donated on the user’s behalf.
Example 3: Ibotta
Ibotta is a free cashback rewards web and mobile app that gives users real cash for everyday purchases.
Ibotta’s referral code is conveniently available within their app in the dropdown menu of the Home page. Users simply copy and share their referral code, or they can refer a friend by text, email, or from directly inside the app. To get the Ibotta bonus, referrals need to sign up with an Ibotta referral code.
Referral code program FAQ
Creating a referral code program FAQ is an essential step for any business looking to launch a successful referral program. Providing customers with all the information they need to know about your program - such as how the referral code works, where to find their referral codes, and any applicable terms and conditions - will not only help them understand the process better but will also save you time and energy from answering customer inquiries.
We’ve put together a list below of the 16 most common referral code questions that customers may have. Customize it for your business and use it however you see fit! You may also find it helpful to include screenshots or images to make the process easier for customers to understand, as well as create explainer videos if necessary.
Note: Many of the answers below depend on your policy. Select the one that applies to your business.
1. What is a referral code?
A referral code is a special set of numbers, letters, or symbols that give customers discounts or other benefits when they purchase products in our online store. It's a great way to get a discount for your favorite items.
2. How do I use my referral code?
Using your referral code is simple! Just apply it at checkout when you're making a purchase and you'll receive the associated discount or benefit.
3. What types of discounts can I get with a referral code?
The type of discount or benefit you receive when using a referral code will be [ ].
4. How long do referral codes last?
i. Our referral codes do not expire.
ii. Please make sure you check the expiry date before making your purchase to ensure you don't miss out on the deal!
5. Where can I find my referral code?
You can find your referral code in the footer of our emails or visit your member portal at www.mywebsite.com/referralprogram
6. Is my referral code valid on all products?
i. Yes, your referral code is valid for all products.
ii. Your referral code is valid for [certain types of products or services].
7. Do referral codes work on sale items?
i. Yes, your referral code is valid on sale items
ii. Your referral code is valid for [certain types of products or services].
8. Do I need to spend a certain amount to use a referral code?
i. Yes, you will need to make a minimum purchase of [ ]
ii. No, you don't! There is no minimum purchase necessary.
9. How many times can I use a referral code?
You can use your referral code as many times as you want!
10. Do I need to create an account to use a referral code?
i. Yes, you’ll need to create an account to use a referral code
ii. No, you don't need to create an account in order to use a referral code. All you have to do is enter the code when prompted during checkout and you'll get the discount.
11. Do I need to sign up for emails to get a referral code?
Yes, you need to sign up for our emails to get your unique referral code.
12. Do referral codes work at physical stores?
No, referral codes are typically only applicable to online purchases.
13. Can I use multiple referral codes at once?
No, you can only use one referral code per purchase.
14. Do I need to enter a referral code at checkout?
Yes, you'll need to enter a referral code at checkout in order for it to be applied to your purchase.
Note: in the case of a referral link, customers do not need to enter a referral code at checkout as tracking is done behind-the-scenes through cookies.
15. How do I share my referral code?
Sharing your referral code is easy! Go to your account settings, find the Referral Program section, and copy your unique code. Then, share it with friends and family via text, email, or social media.
16. What if I forget or lose my referral code?
Don't worry if you forget or lose your referral code. Reach out to our customer support team [email address] and they'll be more than happy to help you out.
In conclusion, referral codes are an excellent tool for businesses looking to increase customer engagement and drive more sales. Give referral codes a try today and start seeing the benefits for yourself!
Ready to double your business? Leverage the power of word-of-mouth and use the same referral program platform used to scale 1000s of businesses. Start your ReferralHero free trial today.
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