Two-Tier Programs: Affiliate Marketing Explained

Two Tier Affiliate Marketing Programs

Find out about an exciting but little known method of generating more income for the same amount of work. Using the benefits of Two-Tier Affiliate Marketing Programs. What they are? How they work? Where can I find them? 

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Earning even more income with Two-Tier Marketing

Two-Tier Affiliate Programs Explained

Definition of Two-Tier Marketing Program:

An affiliate program structure where affiliates earn commissions on their conversions. But also earn on conversions of affiliates they refer to the program.

How can I earn more money out of referring someone to an affiliate program? By earning a commission on their referrals as well. That's how a two-tier affiliate program works!

How two-tier operates?

Fred is an affiliate of XYZ LLC. Through Fred's embroidery blog site he refers customers to his affiliate program. This is tier-one affiliate marketing.

Now let's suppose that ABC LLC is a two-tier affiliate program. It may also be a multi-tier program (more than two levels). First tier operates the same as Fred's above. But now because ABC LLC is a two-tier program, Fred earns a second commission.

He earns another commission on sales generated by people he referred to the program. Tier-one may reward Fred with 20% and the second tier may reward him another 10% (20%/10%). Fred signs up Donal to the ABC LLC program.

Take Away:

  1. Generate more income in affiliate marketing from Two-Tier Programs.
Happy People Jumping after seeing their Two-Tier Program PayCheck

Woohoo! Two-Tier, twice the pay! Fantastic

Like everything else in life, it pays to do your due diligence. Fred must understand how ABC LLC calculate his tier-two compensation. They may pay him as a percentage of revenue generated by Donal. Or they may pay Fred a percentage of Donal's earnings.

Sounds MLM-like

It definitely sounds like it is mid-level-marketing like. Tiered programs may have many tiers. It is attractive to marketer's who manage to get into the program early. Their compensation compounds the more tiers they referred under them.

Take Away:

  1. Research, more research & even more research
  2. Do your due diligence.
  3. This is not MLM.
The Cs in Two-Tier Affiliate Marketing

All the Cs

Nowadays affiliates know the different types of traffic that can earn them a living. There are a lot:

  • CPA - Cost per Acquisition: This is a pricing model where the advertiser pays for a certain acquisition. For instance, he pays for clicks, sales or registrations.
  • CPC - Cost per Click: This model is self-explanatory. The advertiser pays every time someone clicks on their link or banner. Think PPC (pay-per-click).
  • CPD - Cost per Day: Here the advertiser pays for every entire day their ad displays on a website.
  • CPD - Cost per Download: An advertiser pays an affiliate every time a customer downloads a file.
  • CPE - Cost per Engagement: Cost per engagement occurs when there is an interaction with the ad. This could be submitting a contact form or watching a video sales letter.
  • CPI - Cost per Install: Paid every time an app installation occurs on a cell phone, for instance.
  • CPL - Cost per Lead: This is a model where the advertiser pays for someone who has interest in his products or services.
  • CPM - Cost per Impression (or Cost per Thousand): Every time someone clicks a banner that is an impression. The advertiser pays an amount for 1000 impressions.
  • CPvM - Cost per viewed Thousand: If 50% of an ad plays on a users screen for 1 second or more then it is a view. After 1000 views the advertiser must pay.
  • CPS - Cost per Sale: The advertiser pays commission to the affiliate every time a referral purchases.
  • CPV - Cost per Video Ad: This is a payment made for every time someone plays a video ad.

Complexity

Complicated lot, this online advertising crowd! There are, I am sure, more acronyms and permutations. I leave it to you to find them. If you do add them in the comments below, please!

As you can see, an affiliate gets rewarded when an action, performed by his referral, takes place.

Performance marketing is the term used to describe this. Sometimes one action initiates the commission, other times requires many actions.
An important aspect of performance marketing for the advertiser is tracking. A precise and reliable tracking method ensures system integrity.

Thou shalt not cheat the advertiser. Or be cheated yourself!!! 

Take Away:

  1. Ensure you understand your compensation method.
  2. Read many reviews and ask questions to find out exactly how everything is tracked.
Win-win for you

An Affiliate Marketer?

An affiliate employs digital marketing techniques to redirect people to a vendor's website. The marketer place banners or text links on their own site. They may buy sponsored listings on search engines.

Or may have an active email list and use email marketing. Marketers use social media or YouTube to send visitors to a vendor and get paid when an action happens. The action may come from the list of Cs above.

Two-Tier Compensation

The affiliate gets a commission for redirecting visitors to a page on the website. This is a specific page that the vendor wants the visitor to land on (known as a landing page). Here is where the action happens, a click, a sale or some other action the advertiser will pay for.

There is a lot of different pieces of information companies will pay for. They want to build an email list so they want your email. They want your address for a direct mailing list. Telephone numbers, birthdays, what gas you put in your car.

In an excellent book by Thomas Duhigg on habits, he talks about Target. Target got customers to sign up for their store card. Target used the record of what people purchased. They then could target them with specific deals in direct mailing. Target used people's own shopping habits against them.

After that interesting side-note above, the affiliate gets paid when an action happens.

Two-tier affiliate programs allow the affiliate to get paid twice. Once for his referral and gets a piece of any business the referral does. Who would not want to get paid twice for doing the work once? Simple!

Take Away:

  1. Ask the company if the affiliate program is two-tiers.
  2. Search the Internet for companies that offer two-tier programs and join the programs you have an interest in.
Two-Tier Program Example

Two-Tier Example in Action:

I know we spoke about this a little above but this is a little more in-depth. Let's get Fred to work at ABC LLC. Fred is sending visitors to ABC's website for different offers and products. Donal, a fellow embroidery enthusiast wants to earn some extra money. He knows Fred is making money on the inter-web. He wants in. No worries!

Fred explains he gets a commission every time someone he sends to ABC carries out an action. That could be they sign up for a newsletter or they make a purchase. Donal says "he's in like Flynn!"

ABC LLC - Two-Tier Affiliate Program

Fred agrees and gets Donal to use a link on his website. This link redirects Donal to a landing page on ABC's website. The link Donal used is a unique code. In ABC's tracking system that code refers to Fred.

Since Donal signed up with Fred's code, the tracking system puts Donal below Fred in the system. Donal is now an affiliate with ABC and Donal gets his own unique code in the system. Fred gets a commission for Donal becoming a member.

Donal has an email list from the local embroidery club. Donal decides to send an email to the club highlighting a special offer on ABC's website.

Fred doesn't get these emails. His suspension from the club is still in place over a nasty "French knot" incident. The 2015 knot incident., unsavory affair I digress back to the example.

Five people from the club buy the offer on the website. Donal makes five sales commissions. Fred gets a percentage for each of Donal's sales. Everyone is happy!

It can get better some affiliate networks pay LIFETIME commissions. Fred would gets a referral commission FOR ALL TIME.

In time, Donal is promoting the offer to all the embroidery clubs in the country. Business is booming and Donal is making money hand over fist. Since Fred referred him, Fred isn't even promoting ABC anymore.

Donal is supplying Fred with an income that allows him to go in search of another network to promote.

Take Away:

  1. Your list is your income stream, guard it.
Important to Remember

Important Questions and Concerns:

  1. How does the affiliate program track your referrals? The system must track correctly your referrals.
  2. Does if have good campaigns and offers for the affiliates to promote? You have to make money, if the program or product they have is worthless then you won't make money.
  3. Do they pay on time and on a regular basis? Self explanatory.
  4. What is the compensation amount for tier-one? Self explanatory.
  5. What is the compensation amount for tier-two? Self explanatory.
  6. How long do you continue receiving referral commissions for? Self explanatory.
  7. Compare different programs to see what the industry standard is. Sensible approach to take.
  8. Do not jump at the first program you find, research, research, research.

 

The Skinny:  

Whilst these programs may sound sexy, you have a program here that has been rocking and rolling since 2005, Wealthy Affiliate has been around for a long time. It is easily checks all the ticks of the boxes above. No it is not two-tier but, who needs the extra tier when the first one is running like a Ferrari.

Many Blessings to you!

If you ever need a hand or have any questions, feel free to leave them below and I will be more than happy to help you out.

All the best,

Sean

Take Away:

  1. Ask questions!
  2. Research, more research and even more research.
  3. Understand the tracking mechanism thoroughly.
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  • Missy says:

    I had no idea that there were two tier affiliate marketing programs. This was a great read and I learned a lot. I’ll definitely keep an eye out for this type of program going forward. Do you have any examples of real companies that do this?

    • Sean Murphy says:

      Hi Missy,
      Yes two-tier programs are real, some of the programs I have come across are flexoffers.com, sellhealth.com and shareasale.com. In the future, I will put together a more comprehensive list of 20 or more.
      Thanks for your comment,
      Sean

  • Wei says:

    I have heard of these two tier affiliate programs. They sound great with a lot of earning potentials.
    I assume some of them are legit and others could be a bit doggy. Would love to see some reviews from you.
    Thanks for sharing!

    • Sean Murphy says:

      Hi Wei,
      Yes they are interesting and yes I do plan to complete some product reviews of the two-tier programs. So much to do and so little time. I am sure you know what I mean. Thank you for your comment.
      Thanks
      Sean

  • Nick Cooke says:

    Very useful article! I did not know all the C’s! I’ve saved your site and will refer to it when I need to and hopefully learn something else useful. Thanks for a great post keep it up!

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