A Guide to Referral Tracking

For any business, knowing where your referrals are coming from is an essential tool to grow your business. The statistics back this up: 83% of customers are prepared to refer different products and services. This is a huge market to tap into.

Key Takeaways

• Referral programs can be a great way to capitalize on word of mouth marketing.
  
• Tracking referrals is essential to understand your business, reward the right people, report on conversions and revenue, find your best brand advocates, prevent fraud, spot spikes in sales and dropoffs, and measure customer satisfaction.
• There are several methods for tracking referrals, and each have their pros and cons. Choosing will depend on your business needs, size and budget. Tapfiliate is a great referral tracking software that can help to automate tracking easily.

What is a Referral and How Does Referral Tracking Work?

A referral is when someone recommends your business to someone else. The person they spoke to then come and makes a purchase from you. This is a valid method of getting more sales for any type of business, but tracking referrals will look different depending on your business and the size of your business.

Many businesses use referral tracking software like Tapfiliate to automate it and save time. Smaller businesses may go for a manual method of tracking like a spreadsheet. We’ll go into more detail about the different methods to track referrals later on, but in principle referral tracking software uses a link or referral code to track who referred the sale (and should be rewarded), so you don’t need to manually track anything. 

Usually with affiliate tracking software first party data enables you to track this information. Many affiliate tracking softwares have phased out 3rd party tracking to avoid the loss of tracking valid sales from affiliates. It integrates with a number of platforms so you can automatically invite happy customers to spread the word. If they accept they will receive a link they can use to promote your brand and track sales.

7 of the Best Benefits to Tracking Referrals

Tracking referrals can really benefit your business and help you to grow and drive revenue. Here’s why:

Gain a Better Understanding of Your Business

Knowing exactly where your referrals are coming from can help you to optimize your referral program, focus on what works well, and try to repeat it. You can find people who are great at referring others and work more closely with them.

Reward the Right People

Referral tracking software like Tapfiliate make it simple to reward the correct people. The tracking of who is sending referrals is automated so rewarding them is easier than if you have to do everything manually. 

This is particularly true when you have more customers. With several moving parts, tracking automatically can save you time and money.

Easy Reporting on Conversions and Revenue

Being able to understand on a granular level and report to senior management or stakeholders on the progress of your referral program is essential. Most affiliate software will provide you with in-depth reporting in real-time.

These numbers will give you a view of the overall revenue impact of having a referral program, which can help to justify it to stakeholders and management, and win additional budget.

Find Your Best Brand Advocates

By tracking your referrals, you can find your best brand advocates. This is important because these are the people you want to forge strong relationships with as they can help you to grow. The more they refer, the more revenue you could make. Seek these people out and reach out to them personally.

Fraud Prevention

By using referral tracking software you can help to prevent fraud. You avoid issues like duplicate referrals, people purchasing and making returns while the original referrer still gets rewarded, or self referrals.

If you aren’t tracking this automatically, you can miss these situations and end up losing money.

Spot Sales Spikes and Dropoffs

With an automated referral program tracking software, it’s really easy to see spikes in sales and big drops in sales. This way you can analyse what was happening during these peaks and drops to help you to repeat this in the future.

Measure customer satisfaction

Unhappy customers might not be inclined to join your referral program. Happy customers are way more likely to share your brand with their friends, family and acquaintances. By looking at the numbers of people are invited to your referral program vs those who join you can use it to work out the percentage of happy customers. Of course, this isn’t foolproof as not every happy customer will want to promote your brand, but it is one way of measuring happiness.

Now you understand the benefits, let’s get into how you actually track these referrals.

4 Proven Methods for Tracking Referrals

Tracking referrals can be time-consuming and there are different methods. Some of these are inexpensive but will take time, and others will require some budget to implement. 

Spreadsheets

Spreadsheets are the most manual and time-consuming method, especially if you have a lot of referrers. These are best suited to very small businesses just starting out because it does take more time to work on. It’s possible to automate some aspects of this by using automation tools like Zapier

Pros: Costs nothing

Cons: Time consuming and more difficult to detect fraud and self referrals.

Best for: Small businesses just started their referral program

Referral Tracking Software

Referral tracking software like Tapfiliate can help you to automate your referral program. Whether you are a smaller business, or you have a big brand with a complicated referral program, a software is set up to help you automate it.

You should be able to integrate using your ecommerce platform, 

Once you are set up, you can integrate so you can automatically email to invite your customers to join. Once they have accepted they will be able to log in and grab their unique tracking link or referral code and start promoting you.

When a user clicks on the link shared by your referral program member or uses the coupon code and then purchases, the referral tracking software can track who is responsible for referring this purchase via a first party cookie, pixel, or API (depending on your setup). 

Then this will automatically appear in your referral tracking software and you will be able to reward the correct referrers.

Pros: Automates a lot of the grunt work, affordable, and easy to track who to reward.

Cons: For smaller businesses the cost might not be worth it if your referral program is really small.

Best for: Businesses that are getting regular referrals and want to automate, or newbies who want to automate right off the bat.

GA4 (UTM Parameters)

Setting up UTM parameters could be a good option to track referrals. You’ll need to ensure your ecommerce tracking is set up correctly before you start setting up your UTMs.

There are several options for UTM parameters but the most critical UTM is source. Here are some other options for your referral program:

• utm_source: Each referral partner should have a unique identifier.
• utm_medium: Use “referral” because the traffic is from your referral program.
• utm_campaign: If you want to get more granular you can specify the campaign name, which can help you segment different referral initiatives or promotions.

Once you have done this, you’ll need to send each member of your referral program their personalized link.

Once that has been done, you just need to keep an eye on your GA4 data to see what is happening in your referral program.

• Go to the “Reports” section.
• Go to “Acquisition” > “Traffic acquisition” to review traffic sources. Here, you can filter by UTM parameters. We recommend medium (so you can isolate the referral traffic all in one place, and campaign to look at individual campaign performance..
• To track sales from referrals you will need to go to the “Monetization” section and go to “E-commerce purchases” or look at “Conversions” if you have set up custom conversion events for sales.

Pros: Can see the data combined with other data, and get other data aside from only conversions and clicks.

Cons: Can be difficult and time consuming to set up

Best for: Any business.

Coupon Codes

Coupon codes can be a good way to monitor referrals. All you need to do is create coupon codes for members of your referral program, send them out and then monitor how often they are used in your backend. Then you can work out what you need to reward each individual (depending on your referral program setup)

Pros: Easy for smaller businesses with a very small referral program, and easy to see conversions with coupon codes attached to them.

Cons: Difficult to manage if you have a lot of people signed up

Best for: Smaller businesses just starting out and rely less on automation.

How to Use Tapfiliate to Track Your Referrals

Tapfiliate is a great option to track referrals. With an intuitive UI and automations, setting up a referral program is simple.

Integrations

Tapfiliate has more than 30 integrations available including ecommerce platforms, payment platforms, SaaS solutions and more. Once you have integrated we have several solutions you can connect to to automate invites to your referral program.

Automate Recruitment

Automatically invite your customers to join and promote your brand to their friends and family without lifting a finger. You can customize your invitation to join. Once a customer accepts they will be directed to log in to Tapfiliate and get their link. If you want to use coupon codes as an additional option for your referral program, this is also a possibility!

Reporting

Tapfiliate’s dashboard is simple to navigate and offers you information in real-time. You can see an overview of your referral program performance or go more granular and look at individual performance of affiliates. You can see information on countries, transactions, number of sales, and more. 

Flexible Rewards or Commissions

Tapfiliate offers a flexible solution for rewards or commissions no matter what your business type is from ecommerce to SaaS and subscriptions and everything in between. You can set a  conversion up as a purchase, trial signup, or converting from trial to paid.

You can even track referrals without rewarding your referrers. 

We also offer the option to award points in Tapfiliate, and you can choose how many points you award for a conversion.

Pricing

Tapfiliate offers affordable plans for businesses at any budget. Starting at $89 per month for our essential plan, and our pro plan is $149 per month. We have annual options which will save you money (you get 17% off).

Start Tracking Your Referrals Today

If you are thinking about starting a referral program there are several ways to do this. As a business you need to think about what works best for you. If you are a small business with not many customers, maybe paying for a referral software isn’t the best option, but if you’ve got more of an audience it might be worth forking out a little extra for automation and ease. 

Ashley Howe

I’m the content strategist here at Tapfiliate. I write about affiliate marketing, referral marketing and influencer marketing and have more than 10 years experience in this industry. You can find me on LinkedIn or Twitter.