What is a Referral Code? How Does its Works?

A referral program is a system where loyal customers of a brand can tell their friends and family about the company. Then, if their friend or family purchases from the brand or sign up for a service, the customer will earn a reward. This works because the program provides an easy and safe method for the customer to share the brand, whether by a referral code or link, and rewards the customer when their friend or family member purchases through their link or with their code.?

Referral marketing is often beneficial for marketing strategies because it leads to higher conversion rates. In many circumstances, referral marketing can have better results than traditional marketing. Are you considering a referral program for your company?

Referral codes can be highly beneficial to your company and make a lasting impact on your marketing strategy. In this article, we'll give you a complete guide to referral codes and how they work.

What is a Referral Code?

A referral code is a unique combination of letters, numbers, or both that businesses provide to their customers. This code can be shared with friends, family, or anyone else to encourage them to try the business's products or services. When a referral code is used, both the referrer and the referee (the person using the code) typically receive some form of benefit, such as discounts, cashback, or exclusive perks.

For example, if you’ve ever received a code like “RAFE10” from a friend to use on an e-commerce site, that’s a referral code in action.

How Do Referral Codes Work?

Referral codes create a connection between existing customers and the friends who are being referred. The process of using referral codes can be broken down into four essential steps:

1. Customer Enrollment: Loyal customers sign up for the business's referral program through a straightforward process, typically via the company’s website or app. Once enrolled, they receive a personalized referral code unique to their account, ensuring that all referrals can be accurately tracked and attributed.
2. Sharing the Code: Customers can share their referral code widely through various channels, such as email, social media platforms, direct messaging, or even printed cards. Many businesses provide pre-made templates or sharing buttons to make this process easier and encourage frequent sharing.
3. Code Usage: New customers, or referees, enter the referral code during checkout or when signing up for the service. This step confirms the referral relationship and ensures that the referee qualifies for any advertised benefits or discounts. Some businesses also allow the use of QR codes or clickable links tied to referral codes for added convenience.
4. Tracking and Verification: Advanced tracking systems automatically record every instance of code usage, linking it to the referring customer. These systems also verify the referee’s actions, such as completing a purchase or fulfilling other program requirements, to prevent misuse or fraudulent activity.
5. Rewards Distribution: After successful verification, rewards are promptly distributed to both parties. Referrers may receive cash rewards, loyalty points, or exclusive deals, while referees benefit from welcome discounts, free trials, or similar incentives. Businesses often use automated systems to ensure accurate and timely reward distribution, enhancing the user experience.

How to Setup Referral Code in 99minds

Businesses can set up a referral program using 99minds to attract more customers and boost revenue. Customers can share their referral code with friends and family and earn benefits (e.g., store credits or loyalty points) when their referrals make qualifying purchases. Each customer is automatically assigned a unique referral code upon creating an account with 99minds, making it easy to start sharing.

Configure Referral Code

The first step is to configure the referral code. Here’s how:

→ Navigate to Referrals from the left navigation menu and click Configure Referral Code.

→ On the Configure Referral screen, provide the following details:

??Referral Code Length: Specify the number of characters for the referral code (e.g., entering 8 creates an 8-character code).

??Referral Code Prefix: Add specific characters at the beginning of the code for easy identification. The prefix length must be less than the total referral code length.

??Referral Code Suffix: Add specific characters at the end of the code for identification. The suffix length must also be less than the total referral code length.

??Character Set: Choose the character set for the referral code — letters only, numbers only, or a mix of both.

→ Click Save to create the new referral code.

Final Words on Referral Code

Referral codes are a powerful tool for businesses looking to grow through word-of-mouth marketing. By offering a win-win scenario for both existing and new customers, they help build loyalty, trust, and sustainable growth. Whether you’re a small business owner or part of a large enterprise, implementing a referral code system can be a game-changer for your marketing strategy.

Are you ready to leverage referral codes to grow your business? Share your thoughts and experiences in the comments!

Source of the Article: https://www.99minds.io/blog/referral-code