Referral Links Explained: Definition, Benefits and More

Posted by Grant Robertson-Adams | Aug 27, 2021

If you’re looking to launch a referral program for your growing business then you’ll need to understand and make use of referral links. They will act as one of the core tools within your program and enable people to access and participate.

What is a referral link?

The referral link, also known as the Share URL, is one of the main components of a referral program. They’re used frequently and will turn up in the vast majority of referral programs, especially those used by SaaS and other online services. In our Referral Marketing Dictionary, we defined a referral link as, “a link that is created by the owner of the program, distributed to the referrer and is completely unique to each user. They are created in a way that makes them incredibly easy to track and monitor, as well as being simple to share. The link, when shared by the referrer, grants certain rewards of offers when used by a third party. These links can be shared manually, embedded in emails or social media and placed on websites.

The links are able to be tracked individually, allowing detailed analytics to be collected on each referrer and, therefore, allows companies to better understand the most effective and successful referral campaigns that they are running.

Here's what a Share URL might look like:

They are, essentially, the shareable items that facilitate your referral program. Without them you’d have to rely on individualised codes and a hefty pile of admin to deal with. There’s no fun in that.

Why Referral Tracking Matters

Tracking your referrals means that you’re able to collate, evaluate and adapt your program based on data provided by your users and their referral links. The most detailed tracking systems will allow you to track customers and those referred to your site through the program, throughout their whole customer journey. This can all be done manually, you could choose to use a system such as Google Analytics, but there are far more useful and user friendly systems that allow the automation of your referral program.

At first, you might think that tracking isn’t all that important, especially when your participant numbers are relatively small. It is, however, important to remember that referrals beget referrals and it is very possible that your fledgling program will host a huge number of participants in a short period of time. It is worth being prepared in advance.

Referral tracking will also best position you to track who gets what incentives and when. As each participant has a unique code, it is straightforward to see when referrals are completed and when rewards can be distributed.

There are more reasons to track your referral program beyond the participant incentives.

You Can Track Sharing Rates

It would be wishful thinking to believe that once you’ve shared your links and the program is underway that every participant will be sharing their links relentlessly. It’d be nice, but it’s unlikely, unless your rewards are unbelievable. Tracking the sharing rate gives you a better picture of how many customers are sharing their links.

referral link tracking

In order to work out the sharing rate of your referral program you need to take the number of people actively sending referrals and divide that number by the total number of participants. For example:

95 customers have referred customers / 145 total participants = 0.65. Multiply by 100 for percentage terms = a 65% sharing rate.

Tracking the sharing rate on an ongoing basis is particularly useful as it gives you a benchmark to compare new initiatives against. Let’s say that you brand into a new campaign of awareness (email marketing) or you might offer a new incentive. Being able to see the impact in percentage terms allows you to evaluate the effectiveness of the new initiative.

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You Can Track Customer Satisfaction

We’ve covered customer satisfaction surveys in detail in previous articles but there are a few core customer satisfaction statistics that are well worth tracking within your referral program. It is a truth that if your customers are satisfied with your services and products then they’ll be more likely to make referrals to your business.

Key metrics to track include; Net Promoter Score, Customer Satisfaction Score (CSAT) and Customer Effort Score (CES). You can read more about each of these in the customer satisfaction survey article linked above.

You Can Optimize Conversion Rate

When tracking the referral links you’re able to see how often those links, when followed, end up in a new converted customer. If the links are being used, but you aren’t seeing conversions then you know that there is something amiss with the customer journey when they reach your website.

Conversely, you can see when people are using the links and completing actions such as contacting your team, signing up for a demo or going ahead and making a purchase. By using a system of user segmentation in combination with this data you’re able to get granular and target potential customers in detail.

In order to really dig into referral tracking it’s worth taking a bit more time and reading our dedicated article on why referral marketing is important.

Referral Link Examples

UTM Codes

UTM codes are pieces of unique tracking information embedded within a shareable link that enables you to track different sources and actions. The best systems should automate these.

UTM parameter examples

Image Source: SEJ

Referral or Coupon Codes

These would be unique combinations of letters and numbers. Each code is unique to a particular referral and the referrer.

referral coupon example - DoorDash

Key Takeaways

Referral links are a major part of your referral program, without them life is a whole lot more difficult when it comes to both tracking and attributing incentives and rewards. Make use of them from the start to make the job easier in the future.

  • Referral links allow tracking and reward delivery.
  • Tracking referral links allows you to evaluate and make your marketing more efficient.
  • Automating the delivery and tracking of referral links will save many headaches.

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