What is a Referral Code and How Does it Work?

Last Updated on June 11, 2025 – by Lubhanshi Lamba

Are you a business owner looking to promote your products or services? You can try referral marketing which allows your current customers to refer others and receive rewards. A referral code is beneficial for both parties as it rewards customers for referring people through word-of-mouth marketing. And your business thrives with new leads and sales. 

It works very well because Word of mouth builds trust among people about the brand. For instance, if you find your friend talking positively about a brand, you are highly likely to give it a try.

Referral codes or marketing work better than traditional advertising due to the personal connection. Scroll through the article to learn more about referral codes and how they work.

What is a Referral Code? 

It is a unique combination of characters and numbers used to avail exclusive discounts. These codes identify and connect participants in a referral program. It acts as a bait for existing customers to earn rewards. They can receive a bonus by referring others to a product, service, or business.

The customer generally shares a code with their friend. If that friend uses it during sign-up, the user and friend will earn a discount. You can even track the owner of the code. Many businesses find success as it opens the door to tracking sales. 

How Does a Referral Code Work?

It is essential to understand how these codes work before proceeding further. It is a digital key that unlocks exclusive benefits for both the referrer and the referred individual. Follow these steps to use this code. 

1. Code Sharing: Existing customers can share the referral code with their friends or family. They can spread it through social media platforms or other messaging apps. 
2. Redemption: Your friend can use the code during checkout or sign-up. It acts as the conversion of lead into a customer. 
3. Referral tracking: The app system recognizes the code of the original customer and ensures that they are credited for their referral. This referral tracking system is a real game-changer for businesses. 
4. Rewards and discounts: After the successful redemption of the code, the original and new customers are rewarded. This incentive system shows the brand’s appreciation for customer loyalty. 

Difference Between Referral Code and Coupon Code 

• Referral Code: This feature enables existing customers to refer their friends and earn rewards in return. The referrer and the referee receive bonuses in some form when a potential customer uses the code to sign up. It helps businesses grow through word of mouth and personal communication. 

• Coupon Code: A coupon code is a special promotional code offered to both existing and potential customers for discounts. This is used to promote the business,and the reward is typically a one-time discount on a transaction.

How to Track Referral Benefits through Your App? 

Follow these steps to track referral benefits on your app and avail yourself of various discounts. 

• Sign up or Log in: You need an active account to participate in the referral program and track your rewards for the code. 
• Find Referral Section: After logging in to the app, click on the profile icon. Go for the “refer and earn” section to copy your unique code. 
• Share: You can copy the code and share it with your acquaintances through social media platforms. You’ll earn rewards when they use your code to sign up. 
• Track Rewards: You can track your rewards by visiting the “referral status”  or” wallet” section in the app. This will show how much you have earned through the code and the no. of people who used your code. 
• For example, in the Swiggy app, you can find a “refer and earn program” in your profile section, where all the stats about the money earned through your Swiggy referral code are visible. 

Referral Code Benefits for New Users on Sign-Up 

If you’re a new user of any app, you must use a code for additional benefits. These codes are perfect for you to earn rewards when signing up for different services. Many big brands offer signup bonuses, discounts, free trials, or account credit to users. Here are some examples of referral programs of different categories. 

• Fitness: New users can avail of discounts of up to ₹200 off on their first subscription or plan. Additionally, you can get Free 7–14 days of premium access to fitness classes or online wellness programs.
• Food Delivery: As a new user, you can get up to 50% off your first few orders and free delivery on the first 2–3 orders.
• Finance: Here, you can avail ₹100–₹200 cashback or ₹100 worth of free stocks after the first investment.
• Entertainment: Apps like Spotify and Netflix offer 30–50% off the first month’s subscription or free trials for 1–3 months.

Top 5 Apps Using Refer and Earn Program 

1. Swiggy 

Swiggy, an online food delivery app, employs a user-friendly referral program that offers various exciting rewards to its new customers. After a user receives their unique referral link, he/she can share it with their network. The referral code offers a blend of letters, numbers, and special characters. It ensures a secure and easy sharing to enhance the user experience. 

Swiggy’s new user benefit offers ₹90 off and free delivery on the first order, with up to ₹2,500 cashback for the first 50 successful referrals.​

2. Amazon

Amazon. India’s one of the biggest shopping platforms has reached a milestone where 

Referrers can unlock various rewards as they bring in more subscribers. The referral code consists of a combination of letters, numbers, and special characters that allow you to share the program effortlessly.

Amazon’s new users can pay ₹179 for the monthly membership plan, receive ₹18 cashback from the referral reward, and gain a 50% discount. Referrers can receive rewards worth up to ₹25,000 for each code usage. 

3. Zomato 

Zomato is an Indian online food ordering and delivery platform. On this app, referrers and their friends can receive discount codes when the referred friend makes their first purchase.

Under its “refer and earn” program, customers can earn free cash in the Zomato wallet by sharing their unique referral link. When someone uses your code, they will get Rs. 100 off on the first order. The customer needs to place an order worth Rs. 300 or more to make it a validated order.  Sometimes, Zomato gives a flat 50% discount on the first order by using a referral link. 

4. Cultfit 

Cultfit is one of the most renowned fitness brands in the industry. They offer an incentive referral program to their customers, providing Fitcash or free culture days for membership extension. It can work as an access pass by referring the code to their friend. 

It’s important to note that this referral program is not valid on the 1-month pre-registration launch pack. This offer works only in India. You will get your referral link during log-in. You can share it with your friends. Use the code to purchase the cult bootcamp and get a discount of Rs. 750.

5. Myntra 

Myntra’s Refer and Earn program is known as Shout & Earn. This promotional initiative is associated with their End Of Reason Sale (EORS). The program allows you to invite friends and earn rewards during the sale period. 

During its active period, users can earn additional discounts of up to ₹500 for each successful referral made during the sale.

How to Create a Referral Code? 

Apps often create these codes for you on a random or sequential basis. Random codes offer higher security due to less predictability. However, sequential codes provide a sense of order and organisation. A few apps also allow you to create your unique code where you can consider your specific preference. You can add numbers with your name or special characters to make it less predictable. For example, Yash1158 is a sequential code, while 2178oquld is a random code. 

Conclusion 

Referral marketing is an effective way to approach customer acquisition and foster brand loyalty for a business. And it is highly beneficial for you as a customer. If you want to you can benefit from sharing products or services you love. This win-win scenario offers rewards such as discounts, credits, or cash back. From a customer’s perspective, using these codes through MonetizeDeal saves money while helping others gain some profit. This mutual benefit system offers growth for companies and profit for consumers.