Tiffany Joy Yamut Author
UpViral Team
October 26, 2023

What is a Referral Link? (How It Works, Purpose, Examples)

What is a Referral Link? (How It Works, Purpose, Examples)

Picture this: While catching up with your friend over coffee, she excitedly shares her latest fitness secret, pulls out her phone, and shows you how her fitness app has transformed her workout routine. Not only that, but she remembers that the app offers a referral program.

The next thing you know, she quickly generates a personalized referral link from within the app and sends it to you through text message. The link not only invites you to download the app but also promises both you and your friend a special discount on premium features if you subscribe! 😯

In this scenario, you can see how referral links empower satisfied customers to become brand advocates. 💪🏻 Keep reading to learn about the purpose of a referral link and its significance in a referral marketing campaign!

What Is a Referral Link?

Referral links are an important part of a referral marketing strategy. These are special web links that referrers (individuals who do the recommending) can share with their family and friends (referrals). Essentially, these links are used to track and credit individuals who are referring new customers to a product, service, program, contest, or giveaway.

To generate these links, businesses will use a referral link generator, which is a tool or software application that creates unique referral links for people participating in referral marketing programs.

Referral marketing is a highly effective strategy for businesses since it relies on the power of social connections and word-of-mouth. According to Nielsen's 2021 Trust in Advertising Study, 88% of respondents trust recommendations from the people they know. This study covers 56 countries in Asia Pacific, Europe, North America, Latin America, and Middle East/Africa.

In the US, the same results can also be seen. The most trusted channel of advertising is recommendations from the people they know. Along with solicited emails, these recommendations are almost twice as likely to cause action.

What Is the Purpose of a Referral Link Within a Referral Program?

To help you understand what is a referral link used for, you first need to understand how a referral program works. In a referral program, referrers are provided with unique referral links or codes. These are used to track who referred whom.

Anyone who clicks on the link will be redirected to various destinations, such as the following:

  • Email sign-up pages
  • Product or service pages
  • Shopping carts
  • Download pages
  • Custom landing pages for referral programs

Referral links are also used in giveaways to incentivize participants to promote the giveaways to friends. When referrals click on the link and do something, such as signing up for an email list, the referrer will get rewarded. This can be in the form of discounts, cash rewards, free products, or other gifts. 🎁

Here is a real-life example to help you understand better:

An e-commerce clothing retailer decides to host a giveaway to thank their existing customers and also reach new customers. Participants are encouraged to sign up for the giveaway on the retailer’s website.

Upon signing up for the giveaway, participants are given unique referral links. They share these links with their family and friends. The more friends sign up for the giveaway using their link, the more points they gain (more points = more entries for winning).

At the end of the giveaway, the participant with the most referrals wins. 👏

The Benefits of Using Referral Links

Referral links offer a win-win situation for both businesses and people to participate, such as existing customers and fans. Here are some reasons why:

Viral growth

With the right incentive or reward, a referral program can motivate participants to refer others who, in turn, refer even more people. This results in exponential and rapid growth, similar to a virus infection spreading within a population — hence the term “viral”. 🤓

Referral links make it easy for the number of participants to quickly multiply as each participant recruits more participants. These links provide ease of sharing especially when used on social media platforms and online communities where information can quickly spread.

For example, an online food delivery service launches a referral program where their customers can refer friends and earn discounts. Each user will have a referral link to share on social media, email, or messaging apps like WhatsApp. The following happens… 👇🏻

1. Customer A sends their link to three friends (persons B, C, and D). Each of these friends decided to sign up through the referral link and receive a discount on their first delivery order!

2. Customer B was so happy with the service that they decided to refer 3 friends (persons E, F, and G).

3. Persons E, F, and G sign up using Customer B’s referral link and place their first order, which earns Customer B another discount on their next order.

4. Customers C and D, who signed up through Customer A’s referral link, also refer their friends!

The cycle continues, leading to exponential growth in the online food delivery service’s customer base. As you can see, each new user is referring new people because they’re enticed by the discounts, and they love the service!

Watch this video where Wilco de Kreij, founder of UpViral, reveals the TOP MISCONCEPTIONS some people have about viral marketing:

Effective targeting

The use of referral links allows businesses to target a specific audience based on the interests and demographics of their existing customers. Since the process of sharing relies on personal connections from existing customers, recommendations become more relevant. 🎯

Here’s another example:

A sports store runs a referral program where everyone can earn discounts. Referrers get to choose who they refer, such as their more athletic friends who are highly likely to be interested in the product or service of the sports store. They know that by selecting people who are more likely to convert, they can boost their chances of earning rewards from the referral program.

This is why referral marketing can lead to higher conversion rates — the successful completion of a desired action by a potential customer, such as making a purchase or subscribing to an email list.

Not only that, but referral programs can easily tap into niche communities. Many people who participate in referral programs are part of specific communities, which can be a huge advantage for businesses looking for a more targeted audience.

📖Read the article: 11 Best Referral Program Examples (And Insights You Can Steal)

Community building

Referral links can be a valuable tool for community building because you’re building upon your customer’s personal connections and promoting a sense of belonging among a group with common interests!

Referral links are shared within personal networks, which can help strengthen community ties. The shared experiences of those trying out a product or service recommended by a fellow community member can further strengthen their sense of belongingness.

For example, an online fitness community dedicated to promoting healthy lifestyles and workouts wants to grow its membership base. So, the administrators decided to launch a referral program where current members can send referral links to friends who are interested in fitness.

To promote a sense of belonging, the fitness community encourages both referrers and referrals to participate in group discussions and fitness challenges.

Case Studies of Businesses Using Referral Links

Referral links are vital to any referral marketing campaign. Now that you know about their importance, you might be asking yourself, what is an example of a referral? Here are some real-life examples:

Stacked Marketer’s Evergreen Contest

Emanuel Cinca founded Stacked Marketer, a daily marketing newsletter that offers news on digital marketing topics. He chose UpViral to launch an evergreen contest that offered prizes based on the total number of referrals made!

Incentives Dashboard

Subscribers shared their referral links on Facebook, Twitter, and Slack groups.

One of the reasons the referral program has become so successful is because of the first referral prize. It was an access to Stacked Marketer Insiders FB Group. Becoming a member helped build the decision to purchase offers from Stacked Marketer. 💰Aside from that, it fostered a community of followers who are more than willing to refer others.

Another reason why they received so many referrals is their email strategy. Below every newsletter is a sign-up link. It only takes a click to share, making it very easy for readers to refer others! See the screenshot below:

Stacked Marketer Referral Email Example

Friendly Rugs’ Pet And Family-Friendly Rug Giveaway

Sébastien Godin is a business developer at a Canadian-based digital marketing agency called Performance Marketers. At the time of using UpViral, he was working with Friendly Rugs, a business that the company recently launched.

He used UpViral to run a giveaway with the purpose of creating an email list which can lead to more profits in the future. The main prize was a rug from the brand. Discount codes were also given as additional prizes so participants who didn’t win could still purchase a rug of their liking.

The share page below features a unique invite link that participants can copy and paste to share with their friends on different channels. They are given 5 extra chances of winning for every friend that joined the contest. To encourage more people to refer their friends, a $100 gift certificate was also given to the person who referred the winner. 🔥

Friendly Rugs’ Pet And Family-Friendly Rug Giveaway Campaign

The giveaway resulted in 4,508 total leads and 30% of that number are all referrals. 👏

Groove Watersports’ Sports Vest Giveaway

Groove Watersports wanted to increase its email list of subscribers pre-launch, which led them to use UpViral. To reach their goal, they decided to run a giveaway by using their own product as the prize. The Groove Vest was a sports vest with integrated speakers, designed for athletes that wanted to enjoy music while doing watersports.

Groove Watersports’ Sports Vest Giveaway Campaign

To increase their chances of winning, participants were given 3 steps to complete. This involved sharing their referral link with family and friends.

Observe how Groove Watersports motivated participants to keep sharing their referral links by giving them more entries to win. 20 points were awarded for every successful referral and 5 entries for simply sharing the giveaway on Facebook or Twitter. Aside from the main winner, the person who referred them will also receive a Groove Vest!

After two giveaway campaigns, Groove Watersports got more than 2,800 leads and increased their company’s brand awareness! 👏

Over to You

Now that you know how referral links can help your marketing campaigns succeed, the next step is to figure out how to get started.

Here at UpViral, we offer a complete viral marketing system that you can try now for only $1.

If you’re interested in attracting new leads to your business, click here to learn the features we offer. 😉

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