According to Lattulipe in Marsiyah (2009) reference is the words or phrases that is used either before or after the reference in the reading material. They are used to avoid unnecessary repetition of words or phrases. It means that such words are used to be a signal to the reader to find the meaning elsewhere in the text or sometimes is called pronoun.

For example: Once upon a time, there was a beautiful girl called Cinderella. She lived with her stepsister and stepmother. They were very bossy. She had to do all the housework. What does the word ”they” in the sentence refer to? The word “they” refers to her stepsister and stepmother.
The word “they” is called reference because it becomes pronoun to “her stepsister and stepmother”.