Referral tracking is perfect for businesses that want to know their referral program’s effectiveness.
Monitoring referrals empower brands to make the necessary adjustments to their strategies and improve goal achievement. This strategy enables businesses to identify the most effective (read: productive) ambassadors or advocates and reward their efforts for driving more new customers to the brand.
But what is this strategy, how does it work, and why should businesses implement it? What methods can you execute to make referral monitoring more effective? Please read on to know the answers and more.
What is Referral Tracking?
Referral monitoring or tracking is a purposeful strategy within a company’s customer referral program. It involves data monitoring, collection, and analysis to help brands appreciate the effectiveness of their customer acquisition program.
Data includes everything referrers (customers, partners, and influencers) do within the referral process. It also includes actions by the referees (friends, colleagues, family members, business contacts, acquaintances, relatives, and other referrer social contacts).
How Does Referral Tracking Work?
Tracking referrals works like affiliate tracking. It starts when referrers receive a unique referral code or link. They embed these links in different platforms, including blogs, emails, and social media. Referrers share the links with colleagues, friends, business contacts, acquaintances, and anyone they know.
The company’s landing page opens when a referee (person receiving the referral link) clicks the embedded code. This action becomes a lead or sale.
Referral codes are at the heart of the referral process. Like affiliate links, it contains information about the referrer and enables the brand to give referral incentives or rewards.
Moreover, links allow businesses to identify new customers. It gives brands the chance to convert them into a loyal customer.
Hence, tracking these codes is crucial to ensure the company’s referral marketing strategy is effective.
Businesses can track referrals manually or using a referral program software. Most brands opt for the latter because it’s easier to manage and more scalable. Additionally, automated referral tracking technologies are more accurate in providing valuable insights into the company’s referral program.
Why is it Important to Track Referrals?
Monitoring referrals is every brand’s business. After all, who wouldn’t want more referral traffic to expand the customer base? Like they say, the more, the merrier. That’s the bottom line. But if you want specifics, let’s examine them.
First, tracking referrals allows you to determine who to give a referral reward.
Remember the unique link we mentioned? This code contains information about the referrer. Hence, you can attribute a successful referral to the link-assigned customer.
Second, tracking your customers’ referral activities and performance can help prevent referral fraud.
For example, some unscrupulous individuals might refer to themselves (self-referral) or send a referee twice (duplicate referrals). Please don’t laugh because these fraudulent strategies happen. Sometimes, the referee returns the purchase after getting the reward.
Third, tracking allows you to analyze the program’s performance. You can see referral shares, including how many of these shares lead to customer acquisition.
Businesses can also determine referee time-to-interaction. It’s the time a referral takes before taking the desired action (i.e., sign up for a newsletter, click the link, download an app, or buy an item).
Analyzing the program’s conversion rate empowers businesses to determine whether the strategies meet the referral objectives. You can tweak referral elements to make the campaign more effective.
Lastly, tracking your referrals allows you to zero in on the advocates, ambassadors, or super fans. They are your most loyal customers, ready to support your brand and bring more referral revenue than you can imagine.
We must admit. Not everyone likes referring social contacts to businesses. On the other hand, a super fan or advocate can be your company’s most reliable referral source. So, why not reward them with something extraordinary? They could be your brand ambassadors.
Referral Tracking: 7 Effective Methods to Give a Shot
Referral marketing is a cost-effective strategy for growing any business.
It leverages word-of-mouth dynamics to drive more potential customers to a brand, allowing the latter to boost brand awareness and facilitate brand loyalty.
But how do you track referrals? We have seven methods you will want to give a shot.
Spreadsheets
Startups and small businesses might not have sufficient budget to invest in robust referral monitoring and management technology. If this is you, worry no more. You will do fine with a Google account or a computer.
Referral tracking spreadsheets are the simplest and most practical solutions for tracking customer acquisition activities. You can use MS Excel, Google Sheets, or other spreadsheet applications to create a form for encoding various referral data.
For example, you could create columns for email address, referral channel, event, referral payouts, and more. The only issue with this method is it’s labor-intensive. However, you should be fine once you complete the form.
Alternatively, you could download and install a free referral tracking sheet. It’s like Excel or Sheet, but already designed to make your job more convenient.
Referral Rock offers such technology without costing a dime. More importantly, the tracking spreadsheet is customizable. You can synchronize it with a form builder to make it your own. Additionally, you can use a data integration service to automate the collecting, adding, and tracking of all referral information into the spreadsheet.
Referral Software
Tracking and analyzing referral conversion rates and other referral marketing metrics is tedious with conventional spreadsheets. Although the latter is perfect for small businesses with less complex referral programs, it’s insufficient for handling more robust strategies.
Referral tracking software simplifies referral processes and activities. It empowers businesses to launch and manage a customer acquisition program seamlessly. Such technology is the best tool for ensuring highly successful referral campaigns.
Unfortunately, choosing the most suitable referral marketing software for your business can be challenging, especially for first-timers. That’s why we recommend starting referral monitoring and management with ordinary spreadsheets. The knowledge you’ll gain from these technologies is a stepping-stone for automated platforms.
Of the many referral software available, we trust UpPromote. It’s a favorite of Shopify ecommerce owners because setting up a customer acquisition program is easy. It even allows for customization, giving businesses exceptional control over their campaigns.
Creating attractive referral widgets is also a cinch, ensuring you’ll get impressive referral sharing rates. You can devise enticing rewards and incentives, too. Moreover, email marketing, brand awareness activities, and sales-generation strategies are easy to manage with UpPromote.
If you want to search a different software, ensure it can track the metrics you want to measure. Ideally, the platform must allow for integration with existing processes, systems, and tools. A user-friendly dashboard is vital to make customer referral monitoring more convenient.
Google Analytics
If dedicated software is beyond your reach, Google Analytics might be a better option than traditional spreadsheets. Google continues to amaze the world with its innovative solutions. And anyone with an online business should be familiar with the tech giant’s analytics tool.
Google lets businesses monitor all referral-related actions on their websites and other platforms. For example, if you use primarily social media platforms as a referral marketing channel, Google’s web-centric attribution can get you the information your brand needs.
The good thing about Google’s analytics data is its exportability. You can save the information on your computer and open it with a traditional spreadsheet. Most businesses export analytics data to share with marketing and management team members.
Unfortunately, Analytics can be confusing for beginners. On the bright side, it’s free. You only need to master the app to leverage its distinct features.
UTM Parameters
Urchin tracking module (UTM) codes are texts added to a URL. These parameters allow businesses to track performance metrics, making UTM an indispensable referral marketing tool.
Sadly, this method isn’t for newbies because it requires knowledge of Analytics and a bit of programming.
For example, suppose you have a URL that reads, “https://myreferralbusiness.com/10-reasons-to-invite-a-friend?utm_campaign=blog_post&utm_medium=sociial&utm_source=instagram.”
Notice the three UTMs after the question mark (?) and two &s. These are markers describing the parameters for Analytics to track.
The first string (utm_campaign=blog_post) shows the campaign type website visitors engage with (blog post), while the second series (utm_medium=social) denotes the channel. Lastly, the “utm_source+Instagram” portion dictates the specific social media channel the visitor must use.
Hence, writing UTM parameters can be challenging for beginners. However, tracking referral metrics is more accurate, especially if you define the parameters to a tee. This method also ensures more precise referral attribution. It allows you to reward the customer with a qualified referral.
Coupon Codes
Who doesn’t love coupons? You’ll be surprised to learn that 97 of 100 consumers seek discount coupons when shopping. Moreover, 23 of 25 customers regularly find coupons to minimize shelling out cash. Unsurprisingly, nearly 150 million Americans use coupon codes to shop.
This method is similar to UTM parameters, except it’s more convenient for customers. Referrers will also love the coupon’s more attractive design, allowing their friends and social contacts to click the link.
Embedding these coupons in marketing platforms and channels is easy. Referrers can integrate these tools into social media posts and comments, blog articles, and emails.
Like UTM parameters, coupons contain referrer-linked codes. The information allows businesses to attribute referee actions to the referrer. Rewarding high-performing referrers should be easy by simply tracking coupons.
Cookies
Affiliate marketers know cookies very well. These digital markers allow websites to communicate with browsers and facilitate a more seamless user experience.
For example, when a person visits a website, the website leaves cookies in the browser the visitor used. When they revisit the website, it loads the cookies to open the pages faster and more efficiently. Hence, visiting a website the second time is almost always faster than the first. Cookies let websites remember the user’s first visit.
These identifier codes are also excellent referral monitoring tools.
When a customer refers a friend through your referral platform, the referee lands on your home page. A referral widget on the home page can redirect the referee to a referral landing page, where the convincing occurs.
You can offer persuasive information about your offerings and highlight their unique attributes and benefits. The referral landing page is where you convert the referee into a paying customer.
Businesses must embed the trackers in the referee’s browser. Cookies capture all information about onsite referee actions. Hence, you don’t need the referee to complete a form because some data is already trackable.
Referral Forms
Did you notice some website forms asking visitors where they heard about the brand? They also offer possible answers, such as an online advertisement, social media post, or someone the visitor knows. Sometimes, the latter answer requires the visitor to be more specific, requiring them to identify the person who told them about the company.
This scenario exemplifies the value of referral forms in boosting customer acquisition. It requires careful planning to create forms eliciting much-needed information about your referral campaign’s performance. Otherwise, the data you collect will be shallow.
On the bright side, data simplicity is perfect for spreadsheets. It’s ideal for beginner businesses or companies still discovering the ins and outs of referral marketing.
Moreover, you can redirect the completed forms to a referral landing page. The beauty of this technique is the referee lands on a referral page specific to the information provided in the accomplished form.
How to Track Referrals Effectively with UpPromote
We mentioned that UpPromote is one of the referral management tools we recommend to businesses. So, how do you track referrals with this platform?
Everything starts with the correct customer referral program settings. Log into your UpPromote account and look for Growth in the main menu. Click it and find Affiliate Recruitment. Although it says “affiliate,” don’t worry because it also works for referrals.
Next, check Refer-a-Friend and open Customer Referral. You should see several options. Click Settings and tick the box opposite Active to turn on the referral feature.
Follow the prompts that follow. Focus on the reward types because some users find this section confusing. Please note the rewards can be single-sided (only the referrer receives an incentive) or double-sided (referrers and referees get rewards).
Decide what reward to give to referrers (percentage or flat rate), and do the same for referees (fixed amount, percentage discount, free shipping, or none).
Your next task is to design the referral widgets. Thankfully, UpPromote makes designing and editing referral pop ups easy. Now, launch your referral campaign.
Return to your UpPromote account and log into the Analytics page. You can check three data categories: referral performance, top referrers, and product analytics.
You can head to the Referral Performance tables to track various metrics, including referral status, total clicks, referral source, total orders, and others. You can also check the campaign’s conversion rate.
As the name implies, Top Referrals help determine the customers driving the most traffic to your business. It’s a similar story with the Product Analytics page.
FAQs
- Are referral tracking and affiliate tracking the same?
Although they share a bottom line, referral tracking varies from affiliate tracking. The former focuses on referral, churn, participation, net promoter score, CLV, cost per acquisition, campaign impressions, and conversion rates. Although affiliate tracking can measure these parameters, most businesses emphasize average order value, ROI, and sales.
- What is the best method to track referrals?
Referral management and tracking software offer the best chances of accurately measuring referral conversions, shares, and other metrics. For example, UpPromote’s easy-to-use program allows you to track and manage your referral program. It has analytics tools and other resources to provide insights into customer acquisition campaigns.
- What is the function of referral tracking?
The principal function of referral monitoring is to collect, track, and measure referral campaign-relevant parameters. These include referral sources, conversion rates, referral traffic, program costs, and revenues. It empowers businesses to gauge customer acquisition efforts, maximize referral-related revenue generation, and optimize referral strategies.
- How do I track a referral on my website?
You can use Google Analytics to track various referral-related metrics on your website. This strategy makes sense because websites generally rely on organic traffic. Alternatively, you can create spreadsheets and manually encode referral data. Automated tracking remains a worthy option.
- How can I manually track a referral?
Use spreadsheets (Google Sheets, Excel, or similar apps) to track referrals manually. It can be a time-consuming activity but can be equally effective if done properly. Identify the parameters you want to track and create appropriate columns on the spreadsheet. You can develop Macros for often-used operations to lighten the work.
Conclusion
Managing a referral or customer acquisition program isn’t as straightforward as it sounds. While disregarding monitoring campaign metrics is tempting, we advise against it. Monitoring referrals is crucial because you need the rewards to produce the desired results. You don’t want to spend on referrer incentives if new customers don’t come your way.
Referral tracking allows you to measure results against objectives. It prompts you to act, whether to tweak some strategies or modify the incentives. The point is that gathering data about your referral program’s performance will influence your company’s success.
