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Referral Link: The Simple Guide (How, Why and When to Use One in 2024)

By Liza Shuttleworth Last updated: 7 minute read Marketing GuidesReferral Marketing

Referral links are ingrained in the digital marketing techniques associated with the current advertising strategy of any company selling products or services.

According to Forbes, 80% of online customers in the United States get influenced by social media feeds or friends and family to make purchase decisions.

Also, 78% of these people consider social media posts from brands helpful in their purchases.

This huge chunk of paying traffic is actually referral traffic and it converts into money for both the business and the people sharing these references. This happens through referral links!

This article dives deep into the meaning, functions, and types of referral links. You can understand their uses and significance in the present marketing scenario.

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    What are Referral Links?

    A referral link is a URL equipping an organization to advance its products, services or web content. They provide an incentive to customers and affiliate partners in the form of commissions, rewards, discount coupons, and other innovative schemes.

    All customers who enrol for the referral program get referral links, which they can share with their friends, family, and acquaintances.

    On a professional level, affiliate marketers are the biggest users of referral links.

    Referral links are coded to be trackable. Therefore, courtesy of marketing automation, you automatically earn rewards when your link converts each time. 

    Once the link is clicked and converts into a sale, the referral ID tracks down the account that provided the link and rewards the same on agreed terms.

    Referral Link Example


    How Is Referral Link Different from Referral Code?

    A referral code is a subset of a referral link.

    Referral links will be common for a particular campaign. However, the codes are unique identifiers that enable tracking of these links to each individual profile!

    Some companies use referral codes instead of referral links. Those codes are asked during the sign up process.

    So when users sign up, they are asked to enter their referral/discount code in order to receive a reward. In those cases, both the new customer and the person who referred them, receive a reward.

    Referral Code
    Referral Code
    Registration page - invitation code
    registration page

    Why Use Referral Links?

    Each company needs to convert its online traffic into paying customers in order to prosper.

    In the brick-and-mortar world, affiliate and referral programs have yielded many successes like Amway.

    Amyway report Sales
    Amyway start a business

    Therefore, it only begs to consider that such incentive-based schemes will also work online. And they do!

    Let’s check out how using referrals can be useful through some live examples:

    The website and its backend system generate a referral link containing a unique referral code whenever a customer is enrolled in the company’s affiliate program.

    The company can start tracking conversions and related metrics as soon as the customer shares their specific referral link with their friends, family, or acquaintances, thereby creating a new potential client.

    The same goes for affiliate partners but on a larger scale.

    Let us understand the function of a referral link by taking Chris’s example:

    Chris is a long-term customer of hoops and, an online marketplace for fashion apparel. He appreciates the company’s services and products.

    He is also a member of the company’s referral program.

    Chris recommends the company’s offerings to his friend Karen by sending her an invitation message.

    He does this by sharing his unique referral link with her, which consists of a unique referral code.

    Karen opens the message and clicks on this referral link.

    She lands on the company’s webpage showing a message that her friend Chris referred her to use the company’s services and products.

    Karen also sees, in the message, that she gets a 20% discount on her first purchase from the company’s website.

    Through the referral link, Chris gets an incentive for referring Karen, such as a cashback on his next spend.

    How are Referral Links Related To Referral Traffic?

    A referral link makes it easier to track the performance of an affiliate customer.

    They provide real-time insights on the addition of new customers.

    These insights can be used to develop filtered sales funnels, marketing campaigns and tailor-made products that suit various customer profiles.

    Therefore, referral links save significant time. Most advertisers share a singular objective: expanding traffic to their site.

    Referral traffic is one of the fundamental marketing strategies that can have a significant effect on garnering a larger online audience.

    Social media platforms, being the largest drivers of online traffic, often contain such referral links in their posts and, when clicked, take the visitor to a company website.

    Now that most of these platforms are monetizable, referral campaigns are already seeing a lot of innovation in the form of rich content that invites engagement.

    Also, referral traffic is essential to social media advertisers as it redirects potential customers to the company website from other websites.

    This gives added visibility to the company’s products and services. This strategy allows the company website to transform guest visitors into customers.

    Referral links are successful when executed with careful planning.

    Abruptly putting up products for referrals without branding, adding value and information may yield bad results.

    Keep these Pointers in Mind to Make the Most of Your Referrals

    1. Adequate brand visibility

    Revisit your customer relationships and make sure your brand is known for the success of your referral program.

    You can promote your referral program on the brand’s websites, social media channel shout-outs, magazines, and emails. Build a base first.

    2. Explain clearly how your referral program works

    If you are going to impress someone, do it at your expense, not theirs.

    Create explainer videos or graphics detailing how your referral link program works and how it will benefit users.

    Any company should make sure that each of their referral programs is consistent and does not mislead partners.

    3. Do a market study

    Your company’s referral programs are not going to achieve their goals if the clients feel that your products or services provide too little value.

    Invest in a relevant market study before referral programs are introduced. Make sure that what you are offering generates interest, need, and demand.

    4. Make it super easy

    The tendency to do minimal work is inherent in people’s behavior. Incentivize your customers and clients with the same gravitas.

    More value, less effort (from customers) leads to more customers. Period!

    The marketing and technical team have to work together to increase the engagement of any referral program.

    Starting from the UI/UX, tutorials and accounting, everything should delight your affiliates and referral partners.
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    According to Nielsen, 92% of customers who buy online trust brand referrals.

    Therefore, the success of referral links cannot be ignored un any efficient marketing campaign.

    Various organizations propose referral programs for their clients.

    It acquires better traffic to the business and is rewarding for their clients. Many firms are focusing on providing customized referral programs as a service.

    Plan a value-based referral proposition for your clients, and you will see your referral conversions increase fruitfully.

    Frequently Asked Questions

    What is a referral link?

    A referral link is a unique URL that allows a business or company to market its products, services or web content through link sharing. The link provides an incentive for customers and affiliate partners to share the links with others for certain rewards, such as commissions, discount coupons and other innovative reward schemes. These links are traceable through automation codes, so points are generated every time a customer shares a link.

    How to create a referral link?

    Step 1: Identify the best referral method or software for your business- (e.g. Ambassador, Referral Rock, Extole, Genius Referrals, Viral Loops etc.). Some businesses can do referral programs without software, however it can be very challenging keeping track of unique referral codes for large companies.
    Step 2: Get customers to join the referral program- either through email or social media platforms. Once they sign up for the referral program, a unique referral link will be generated for them to be able to share.
    Step 3: Have the customer/s share their referral links- a unique code will be included in their referral link that will allow them to share and to generate points automatically.
    Step 4: Encourage leads to click a referral link- use an image or message or landing page with CTA to actually get leads to select the link.
    Step 5: Obtaining code redemption from their referral code- here you will need to keep track of the referral codes. If using referral software, this will be very easy. However if you are not using software, you can get customers to complete a form in store or at an e-commerce checkout. You can also train staff to take the code or have a dedicated referral page on your website.

    What is a referral code?

    A referral code is a subset of a referral link, which is a unique combination of numbers and letters to form a unique identifier. This code allows businesses to track the referral to who did the actual referral. So in the case of a referral program, this means that the rewards or cash will go to the correct person.