What is the purpose of a referral code in a loyalty program?

The purpose of a referral code in a loyalty program is primarily to invite friends and family to join the program. By utilizing referral codes, existing members can share their unique codes with potential new members, creating a sense of community and encouraging sign-ups. This approach also enhances the program's growth by incentivizing current members to promote the benefits of the loyalty program to their networks, thereby expanding the member base in a cost-effective manner.

While referral codes serve other functions, such as tracking and differentiating members when they join, their main intent lies in facilitating new member acquisition through personal recommendations. This mechanism not only encourages members to engage more actively with the program but also allows new members to start their journey with potential rewards or bonuses associated with the referral—making it an attractive feature of loyalty programs.