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Two-tier affiliate programs are marketing programs that offer rewards to affiliates who make their own sales and who refer other affiliates. The first tier involves the sales made by individual affiliates, who earn a commission. Two-tier affiliate programs also feature a second tier, in which the original affiliate can refer other affiliates and earn a smaller commission on the sales that they make. This idea of two-tier affiliate marketing is popular for affiliates and businesses alike, but there are both advantages and disadvantages to this commission-based system.
The first tier, involving individual sales and commissions, is often the most lucrative in the beginning of a person’s affiliation with a specific company or product. Commissions for individual sales usually range between 10% and 50%, although they could be higher or lower depending on the product. This reward system is in line with the stereotypical affiliate program and will continue to serve as a viable source of income for many two-tier affiliates.
Second-tier commissions are also possible with two-tier affiliate programs. These result when an affiliate refers others to the company, those individuals become affiliates, and they begin making their own product sales. Commissions for second-tier sales are often lower than first-tier sales, and they typically hover between 1% and 10%.
Some of the main advantages of two-tier affiliate programs are their marketability and opportunity for earnings, and many affiliates can successfully refer some of their clients or coworkers to the system. The second tier not only allows these individuals to earn off of their referrals, but it also increases the likelihood that referrals will sign up and actively participate, because they are also interested in second-tier earnings for themselves. As a result, the system becomes highly marketable, increasing earning potential for both the business and the affiliates. The opportunity for earnings is another advantage of this marketing system, as long as affiliates treat the second tier as a complement to their first-tier earnings rather than relying on it as their main income source.
One main disadvantage of two-tier affiliate programs is the fact that many affiliates will sign up and attempt to earn all of their commissions from second-tier sales. If every affiliate began with this strategy, then no sales would be made because everyone would be relying on their referrals to make the sales. Some individuals also associate two-level affiliate programs with multilevel marketing systems, which are often not as viable. Despite these disadvantages, many affiliates and businesses are able to successfully use two-tier marketing systems to increase earnings and boost product recognition.