‘Two-Tier Affiliate programs are best’
When you join an affiliate program or start an affiliate program of your own, you have to decide whether it will be a single tier or two-tier program.
With a single tier program you earn a commission on any sales you make and that is it. If you are running your own affiliate program, you pay your affiliates a commission for any sales they refer and that is all.
However, with a two-tier program, affiliates are allowed to recruit sub-affiliates and are paid a small percentage of sales these sub-affiliates generate. For example, affiliates may earn a 30% commission for selling product X himself; and when one of sub-affiliates makes a sale, affiliate may get a 10% commission as well.
This is very profitable for affiliate as he can recruit an army of sub-affiliates, all earning commissions for him without any effort on his part except for initial recruiting process.
If you are starting an affiliate program of your own should it be two-tier or single tier? Some might shy away from seeming expense of a two-tier program. But is it really that expensive? Many affiliate program managers make wrong decision on this.
Let’s look at an example. You have an affiliate program up and running and an average affiliate joins your program. Mr.Average has a web site that receives average traffic. He also has an ezine with thousands of subscribers published monthly. Mr. Average posts your affiliate links to his web site and promotes your product to his ezine list.
Initially, he generates good sales. However,a point comes when he saturates his market with your product and his sales begin to drop. He begins to lose interest in your program and your sales remain small.