Single Tier, Two-Tier & Multi-Tier Affiliate Programs

Single-tier Affiliate Programs

Single-tier affiliate programs offer the easiest commission structure. Essentially, single tier affiliate programs pay commissions only on transactions generated by the affiliate. No commissions are paid for recruiting other affiliates who may also generate transactions.

Single-tier affiliate programs are appropriate for any web site. Affiliate earnings will depend entirely on how well you are able to "pre-sell" the product or service on offer, how many visitors you can send to the target merchant, how well they are able to work to monetize your traffic, and the affiliate commission plan under which you're operating.

Two-tier Affiliate Programs

Two-tier affiliate programs reward their affiliates in two ways:

1. Commissions are paid for transactions generated directly by their affiliates
2. Commissions are paid to affiliates for bringing new affiliates into the program who generate transactions for the merchant. This commission override structure comprises the "second tier" of two-tier affiliate programs.

Second-tier payments can be made on a commission or flat-fee basis. For example, an affiliate program might pay affiliates 20% commission on the transactions they generate, plus 5% of the total earnings of the affiliates that sign up directly under them (that's 5% of 20%, of course). Alternatively, they may pay a flat affiliate referral fee, for example "US$10 bonus for each new affiliate you refer that produces at least US$25 in sales."

Two-tier affiliate programs are good for affiliates who believe they can recruit other productive affiliates. However, you should be wary of any affiliate program that places more emphasis on the earnings to be made by recruiting other affiliates than on the earnings from sales - after all, ultimately SOMEONE has to close those sales before ANYONE earns any money! You should also be suspicious of programs structured with a very low first-tier payout but a very high second-tier commission - again, that type of structure emphasises the recruiting of affiliates over the sale of products.

Two-tier programs are less attractive for affiliates who don't like the idea of essentially recruiting their own competition, or who are exceptionally good at pre-selling customers. In this case, a single-tier affiliate program would be more appropriate.

Multi-tier affiliate programs

Multi-tier affiliate programs are similar to the 2-tier programs, however, the multi-tier programs reward affiliates who sign up other affiliates several levels "deep". In other words, if Affiliate-1 recruites Affiliate-2 and Affiliate-2 recruits Affiliate-3 who generates a transaction, then Affiliate-1, Affiliate-2, AND Affiliate-3 would ALL receive a commission.

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