What is Referral Code, Definition & Type

For example, in the application, when someone enters the referral code, the application provider will provide benefits as promised if they have completed registration or product purchases.

Because the more you invite and give referral codes to new users of an application, the more rewards you get. However, keep in mind the terms and conditions that apply so that later the referral code will remain active for both parties.
In general, referral codes are a marketing technique that can provide benefits to customers if they have successfully met the specified conditions. That is asking other people to enter the referral code when the person concerned becomes a new customer.

How Referral Codes Work

There are several steps how referral codes work, as follows:

1. Set a promo code

The first thing to do is set a code. For example like static code, where all references use the same code. However, not a few determine a unique code for each customer or customer.

2. Ask the customer to share the code.

Share the code for the newly registered customer via the customer’s account or email. It is better to write the terms or conditions as clearly as possible in the code submission.
Customers are also free to share codes and invite their friends to do the same, such as on social media, short messages or blogs.

3. Collection of promo codes

Business actors need to collect and record codes. This process occurs when the customer enters the code after checkout or the company tracks the code from cookies and links.
From the referral code, usually the customer will get a commission or incentive. To get it, companies have their own rules. Therefore, the referral code is enough to be shared on social media or others.

4. Claim prizes

If the referral member succeeds in inviting new prospective customers to use a product from the company using a referral code, they will receive the compensation that has been promised by the company.

Uses of Referral Codes

In addition to how it works, there are other uses for referral codes, including the following:

1. Get more customers.

The higher the number of products sold, the company will have the opportunity to get more customers. So, sharing the referral code will have a great opportunity for people to shop. This is good for the growth and income of the company. In addition, the company’s business also has the opportunity to grow.

2. Marketing

This code is one of the marketing strategies in the world of e-commerce, financial services and marketplaces. Especially if the code contains free shipping and discounts. The hope is that more people will be interested and transact.

3. Product development

If there is an e-commerce that sells fashion products and there is a plan to launch a new product, it is possible to conduct a survey to customers about matters related to fashion.

4. Establish loyalty

Customer loyalty can be obtained from the referral code. However, code sharing must go hand in hand with product quality and customer service. This is so that customers continue to use the service or product.
To appreciate customer loyalty in shopping, then provide a loyalty program with various benefits.

Things Businesses Should Pay Attention to:

Giving a unique code alone is not enough, business people must also pay attention to product quality and customer service. Because the purpose of the promotion program as a business strategy will be lost, if a problem occurs.
One of the problems is complaints. Both complaints because of the quality of goods or delivery. If this happens, then resolve the complaint first, for example, such as looking for answers to causes and future solutions.
If you are in this condition, do not give a promo code because it makes customers angry. For example, when a customer is complaining about an item purchased, the team must immediately handle the complaint.
After the complaint is completed, the seller can provide a discount code with no minimum shopping as a token of gratitude.

Types of Referral Codes

In the world of referrals, there are various types of referrals that are used to promote a brand, including the following:

1. Direct Referral

Direct referral is the process of registering on a particular website using a referral link that has been given to other people. For example, when we have friends who promote the referral link to social media, our friends will be interested in the link. We will become referrals and our friends become sponsors or uplines.

In its management, direct referrals do not require fees because the system can work automatically. There are several advantages to using direct referrals, namely:

1. Referral users can delete their referral link if the link no longer provides incentives or income
2. Referral owners don’t have to bother, because the direct referral system is automatic. So that if the referral is silenced, it will still be able to get incentives or income.

2. Rented Referrals

Rented referrals or rental referrals are referrals intended for people who will register to become members. Register on the PTC site without having to be someone else’s referral. The site owner will rent the referral to members who will rent it for a certain fee.
Users of rented referrals should manage carefully, because these referrals are paid. Rented referrals are like employees who are paid to make money to become a referral member.
Therefore, if you are going to use rented referrals, then use them and manage them properly so that later you will get the maximum profit or return on investment.

Advantages of Using Referrals at Companies

The use of referrals to companies will provide many advantages, so they can promote their products easily. There are several advantages of using referrals to companies, as follows:

1. Having a clear target

Referral marketing will give the company a clear target for selling its products. For example, when a company chooses an influencer who has the same target market or audience as expected by the company.
Thus, the messages that will be conveyed by the company to the audience or market will be more easily accepted through influencers. Because between the audience and influencers one type.

2. Increase trust in consumers

According to Nielsen research, 92% of customers will be more confident in a product if the product has been recommended by people they know. Thus, referral marketing has an impact on consumer trust.

3. Obtaining high reach

Due to the existence of websites, social media and e-commerce referrals, you will get high reach to improve current marketing. In general, everyone will recommend products or services that they like to hundreds or even thousands of people, if they have a large number of followers and readers.

4. Can be used for free

Referral marketing can be used for free, but there are types of referrals that use a fee. It’s just that the costs incurred are not as big as other digital marketing strategies.
The way referrals work is like a virus, if one brand can attract one customer, other customers will also attract other potential consumers to buy the brand. The attraction process will continue so that the brand will be known to more people only based on the recommendation of one customer.

Referral Facts

are a marketing strategy that can generate huge profits by quickly introducing a brand to a wide audience. However, companies sometimes have difficulty seeing or checking whether consumers actually bought the product based on someone’s referral or not.
While the referrals themselves are also difficult to trace, even requiring a great effort to trace the referrals. If the business owner still has doubts about using referrals as a form of digital marketing.
So there are some facts about referrals, namely:

1. Prospective consumers generally ask for recommendations from other people.

In general, potential consumers interact and ask for recommendations from someone they already know. Then consumers will have their own satisfaction until finally voluntarily provide product recommendations to other potential buyers.

2. Referrals are spread not only through words, but through experience

Besides being spread through words, referrals are also spread through experience. For example, such as skin care products that are proven to have a good effect on one consumer.
Then the consumer gives recommendations on the products used with evidence of skin changes before and after use. If it gives good results, potential consumers will also see for themselves the results of the product.

3. Referrals can be disseminated through social media.

Referral members can share codes or links via social media. This spread works like influencer marketing.
In addition, members also have a large number of followers or followers on their social media. It can indirectly attract potential consumers who are distributed in just one upload.