Glossary
A
Activation
We call this activation, and it’s one half of the marketing that you must do to make your referral program a success. Because if the people who would be willing to refer you don’t know you have a program, you may as well not even have one!
Activation & Discovery
A referral program is unlikely to succeed without proper marketing support to let people know you have a program and to help them find it. We call that activation and discovery.
Automation
Using integration to automatically carry out processes associated with the referral program such as verifying and approving or disapproving referrals as having met or not met certain conditions
B
Booster Campaigns (or Flash Campaigns)
Another tactic to encourage more referrals, and particularly to encourage more referrals now, is to run a booster campaign. This is where for a short period of time extra referral rewards are offered to potential referrers for each referral.
For example, if the normal reward is US$25 for a confirmed referral, a brand may offer double rewards of US$50 for all referrals confirmed before 30 November. This not only increases the incentive to refer, but also by using FOMO can encourage action now.
C
Calls to Action or CTAs
Calls to Action are one of the fundamental principles of all marketing, and no less so in the case of a referral program. This is a call to the recipient to do something, and do it now. A CTA can be text on a page, a link, a button, navigation or a pop-up of floating CTA.
A good CTA will be very visible, be persuasive by offering a reason and incentive to do something, and do it now and remove any doubts or fears that a person might have about the wisdom of doing so. The CTA should be in keeping with your tone of voice but should also stand out from the rest of the information.
Cannibalization
Cannibalization is the concept that a sale would have happened even if there had not been a referral program in place. This is a common referral misconception, as the truth is that referral marketing drives incremental sales.
Client Dashboard or Analytics Portal
Key to being able to run, manage and improve a referral program is to have access to accurate, timely and insightful data and analytics about the performance of the program, different campaigns and tests. A good referral program should include a sophisticated client dashboard that allows all this data to be interrogated, by period, by campaign and to be able to see the data in graphs and tables.
Customer Led Growth
Customer Led Growth, or CLG, is a marketing strategy that involves putting your customers at the center of everything you do in order to create the best product fit for your customers, increase customer satisfaction and use that satisfaction to drive customer growth through positive word of mouth marketing, like ratings and reviews and referrals etc.
D
Data Protection
Typically this personal data is only required to be collected and stored to create unique referral links or referral codes to enable accurate referral tracking so that the program knows that customer A was referred by customer B. In most cases, this is all that’s required, and once the data is collected and the unique link or code created, a good referral program should be able to destroy the data and keep only a hashed data reference that’s matched to the link. The hash can even be required to be destroyed after a set period of time.
Due to the potential liabilities under relevant data protection laws and regulations, such as the GDPR and CCPA, this is something that you cannot ignore. While we recommend that you get your own legal advice, you may find that a referral program that requires a referrer to give personal details of their friends to a brand (name, email, phone number etc.) so you can contact them, may be in breach of these laws and regulations.
Default Sharing Messages
This is why good referral programs typically offer a default sharing message that the referrer can just send ‘as is’. Often there’s the option to amend or personalize that message a little or delete it and type out a bespoke message. Of course, the default message can also provide an example of what to write, which can inspire the referrer.
Discovery
Discovery is the other half of the marketing you need to do to make your program a success, because once people know you have a referral program they need to be able to find it easily and fast, without too much effort. Discovery means that the program can be found where potential referrers would expect to find it such as:
- Prominently positioned on your home page through:
- Service pages
- Apps
- FAQs
- Navigation links
- Callouts
- Banners
- An indexed and easy to remember URL that can be found in a search engine e.g. yourcompany.com/refer (hopefully you’ll be communicating that in the Activation you’re doing so people know where to look).
E
Eligibility Criteria/Conditions
A good referral program will have clear and accessible eligibility criteria to state who can refer and who can be a referred-in friend. The purpose of this is to protect your program and only pay out rewards and incentives for confirmed and valuable referrals.
Some programs may stipulate a referral cap or limit on the number of referrals a referrer can make over a period, or over a lifetime. Most programs ban self referral, and many require that the referred-in friend must be a new customer, or one not having bought from you within a certain period of time.
F
Friend Landing Page
G
Gamification
Gamification means introducing some common game elements to make referring fun and provide an incentive for potential referrers to refer more.
Gamification often works best with money can’t buy fan prizes like backstage passes. But the only limit is your imagination.
Through Buyapowa’s gamification engine, a number of engagement boosting tactics can be employed, for example:
- Prize Draws: Every referral is a ticket. A handful of big prizes drive mass participation and excitement.
- Leaderboards: Bring healthy competition and give top performers recognition without excluding the middle.
- Milestones: Reward visible progress and the addictive pull of “just one more” at 3, 5, 10, or 20 referrals.
- Quests: “Three referrals in thirty days.” A clear deadline, a clear goal, and guaranteed rewards.
- Streaks: Encourage consistent engagement, like one referral every month for three months.
- Traffic Channels: Broaden the funnel by rewarding clicks and shares, not just confirmed referrals.
I
Incentives
When we talk about incentives, we mean the inducement or reward that is given to the referred-in friend when he or she completes a transaction that has been tracked to a referral.
A good incentive will often be something that is only available via the referral process and not available elsewhere. Sometimes, it’s only available for a short period of time, creating the Fear of Missing Out (or FOMO) and encouraging immediate action.
The impact of incentives for the referred-in friend should not be underestimated. As well as making the friend more likely to convert, research from Harvard showed that the presence of an incentive for the friend made a customer more likely to refer.
Incremental Sales
Allied to the concept of cannibalization is incremental sales – how many more transactions happened due to the referral program above and beyond the sales that would have happened anyway. This is hard to measure definitively, but having historic sales and trend data may help provide an answer.
Although, incremental sales are not only from new customers, but also include extra sales to existing customers. And where referral rewards are discounts on future sales, loyalty points, gift cards or temporary access to premium content, these may also generate incremental sales from existing customers.
Integration
The process of integrating a referral program with other systems and technologies that you already have set up. A good referral platform will be compatible with most CRMs and data management platforms. The purpose of this integrition would be, for example to confirm that post referral completion conditions have been met and automatically trigger the payment of a referral reward and/or incentive.
N
Native Sharing
Very simply, the easier you make it for referrers to refer your brand, the more referrals you’re likely to get. So as well as offering the option of default sharing messages, you should allow potential referrers to refer by any legal method they want to. So in the case of a referral from a mobile phone, you should allow native sharing to let you customers share using all the apps on their phone such as Facebook Messenger, Whatapp, Viber, Telegram as well as email apps like Google Chrome. The beauty of native sharing is that it can be done in a few taps!
M
Managed Service
A managed service is the expert support layer that complements referral technology, ensuring a program is designed, launched, and optimised effectively. Rather than just providing software, it delivers ongoing strategic, operational and analytical support from specialists who understand what drives results. This matters because it shortens time to launch, improves early performance, prevents common mistakes, and keeps the program evolving through continuous optimisation.
O
Offline Referral Program
Some referral programs operate wholly or partially offline. In fact, before the advent of digital technologies, all referral programs were offline.
Omnichannel Tracking
One Touch Referrals
Buyapowa’s One-Touch Referrals gives every referrer a personalised QR code linked to their referral journey, so they can trigger a referral in the moment—no swapping contact details, no copying links, no delay. Friends scan, tracking is preserved, and rewards flow to both sides once confirmed. It turns everyday conversations, workforce touchpoints, packaging, emails, and events into instant, attributable referral channels.
Online Referral Program
One-sided Referral Programs
P
Partner Programs
A partner program combines many of the elements of a referral program and an affiliate program, but is where your brand leverages third party brands or companies to market your product or service to their audiences of customers or followers. That may be because you have similar audiences and the partner feels that your product or service would be a good fit for its audience, for example a pet food manufacturer promoting third party pet insurance.
Pending Referral
Another reason to do this is that, on seeing a pending referral, a referrer may be able to encourage the referred-in friend to take the action required and complete the referral.
Pop-Ups or Floating CTAs
Post Referral Completion Conditions
To operate post completion conditions, a brand needs to be able to integrate its referral program with its back end where these actions are recorded and be able to confirm these to the referral program to authorize the payment of the right reward.
Preventing Abuse or Fraud
Unfortunately human nature means that when you offer a valuable reward or incentive, some people will try and get the benefit of that reward or incentive without providing anything of value in return.
Abuse or fraud can range from everything from criminal activities, such as using stolen credit cards, to self referral or to people referring a friend who has no intention of ever using or paying for the product or service but who just transacts to get a reward. In the last case, that often means that the referred-in customer deliberately cancels the service or returns the product within the trial or cooling off period or never pays for the service or product.
A good referral program will have measures to identify and prevent such abuse or fraud, but the best protection is typically to delay the payment of any reward or incentive until post-completion conditions have been met.
R
Referral
A referral is when a person, often a current or past customer, tells a friend, colleague or family member about your brand and recommends that he or she buys your product, try your service or sign up for a free trial etc.
- It’s typically from some who knows the recipient of the referral, and so it’s more likely to be seen by that person (e.g. you tend to read text messages from friends)
- It’s often convincing because the referrer who is recommending your brand typically has actual experience of using your product or service
- It’s trusted, due to the relationship between the referrer and the recipient (e.g. between friends and family members)
- And it can be very targeted, as the referrer often knows both your brand and their friend’s needs and tastes very well.
Referral Cap
Referral Code
An alternative to using a referral link is to use a referral code. This is a unique code that is created for the referrer and sent to the friend. To earn the referral incentive, the referrer is required to input or declare this code as part of the check-out process. Provided the referred-in friend remembers the code and applies it when buying, the referral can be attributed to the referrer.
The need to input a referral code to obtain a referral incentive can be another great reason to offer an attractive friend incentive. Also, ideally the code will be easy to remember, such as a name or email, rather than a complex string.
Referral Dashboard
A referral dashboard is a personal dashboard for each individual referrer that lets him or her login and see the status of their referrals and find sharing links and sharing buttons. It also provides a great opportunity for you to resell the reasons to share, such as the availability of tiered rewards, booster campaigns and gamification etc.
Referral Funnel
The referral funnel maps every stage of the referral journey, from a referrer sharing through to the friend’s conversion, confirmation and reward. It shows where engagement is strong and where drop-off occurs, helping brands focus their optimisation efforts. By analysing each stage, you can improve conversion and increase total referrals. Watch the overview video here.
Referral Link
One of the most common forms of referral tracking is to use a unique referral link that is shared by the referrer. If the referred-in friend clicks on the link, the link can be tracked with a cookie. If the referred-in friend completes the transaction with the cookie in place, then the referral can be attributed to the referrer.
Referral KPIs
Referral KPIs are the key performance indicators that measure how well a referral program is performing and how it evolves over time. They include metrics such as referral rate, conversion rate, incremental value and customer lifetime value. Tracking and comparing these data points over time or against industry benchmarks enables brands to understand effectiveness, optimise each stage of the referral journey and prove ROI.
Referral Program (A.K.A. Customer Referral, Refer a Friend, Invite-a-Friend, Tell-a-Friend, Tell-A-Pal, Member-get-member etc.)
The key elements of a referral program are that:
- It’s marketed by you (‘the brand’) to your customers etc. (for example by email, on your home page, in your app or client area, in-store etc)
- It asks them to refer you to friends, family and colleagues etc (‘Call to Action’ or ‘CTA’)
- It offers enticing rewards and incentives for each successful referral
- It provides them with a safe and easy environment from which to share with their friends; for example allows them to share in a couple of clicks from your app or mobile site using native sharing
- Rewards and incentives are only paid out when the action that is rewarded is confirmed, such a purchase being made and not canceled in the cooling-off period
Referral Rewards
When we talk about rewards, we mean the reward that is paid out to the referrer as a thank you for a referral that has been tracked as being due to the efforts of that particular referrer.
Rewards play a key role in encouraging referrals as, as explained by Yale University, a referral reward can overcome the psychological barriers to a referral, namely that a referral could turn out to be bad.
Referral Tracking
Referral tracking is key to a referral program. It’s how you know how many referrals you got from the program, how many converted into paying customers, who referred them and who should be paid a reward and what reward they should be paid. Without effective referral tracking you’re effectively flying blind.
Referral tracking typically relies on either referral links or referral codes and can be configured to track the various stages in the referral user journey from referrer sharing, friend visit, friend sign up, friend purchase, purchase confirmation, and reward payout.
Referrer
The main difference between a referral from a referrer and general word of mouth, for example recommending a brand to a friend at a Sunday barbecue, is that the referral is usually targeted at driving a particular action for a specific product or service from a named brand, and is often done on the understanding that there will be a reward for the recommendation. Whereas, with word of mouth, the recommendation is often made to be helpful or appear knowledgeable without any expectation of reward, other than a thank-you.
Referred-in Customer
Referred-in Friend (A.K.A Referee)
For example, if you don’t have a means of capturing the details of the referred-in friend, such as by having a friend sign-up page as part of the referral journey, you may not know the name and details of the referred-in friend until they complete a transaction with you.
Reminder Emails or Nurture Sequences
Reward Choice
We refer to reward choice but we could say reward and incentive choice.
The basic premise is that not all rewards and incentives are attractive for everyone.
There’s an eventual limit to the number of Amazon and Spotify vouchers you can use in any period of time, and the attractiveness of another identical reward can be expected to diminish when you already have lots of them.
Reward Payout
In the context of a referral program, this means the payment of a reward or incentive for a qualifying referral to referrer or referred-in friend.
A good program will only pay the reward or incentive once the transaction has been confirmed. And while some simple referral programs only pay one reward regardless of the value of the referred-in friend, a good program will determine the reward or incentive according to the value of the referred-in friend, and may offer a choice of rewards.
Reward payouts are often sent digitally by email or text message, but on occasion are sent by mail or can be picked up in store with a code.
S
Saas Plus Service
Self Referral
This is a type of abuse or fraud where a customer tries to refer himself or herself to get a reward and/or incentive and is particularly common in retail referral programs where the reward or incentive is paid out immediately, such as by applying a discount to the purchase.
Sharing Messages
T
Tiered Rewards, Stretch Targets or Milestones
In order to encourage referrers to refer again and again, a common tactic is to offer tiered rewards or rewards based on stretch targets or milestones. For example, if a referrer has successfully referred one friend, he or she could be reminded that a tiered reward or extra reward is available if, say, 3, 5 or 7 friends are successfully referred.
Two-sided Referral Programs
A two-sided referral program is where both the referrer and the referred-in friend receive an incentive or reward for completing the referral.
V
Viral Loops
W
Welcome Offers
White Label
By white label, we mean that your referral program should be completely on brand and appear as you, with your colors, logos, fonts, tone of voice etc. This is essential to encouraging trust with referrers and referred-in friends. And that’s so important because referral is all about the relationship between a brand and the customer.
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