Are Two Tier Affiliate Programs Good Enough?

Whenever you decide to join any business as an affiliate or an affiliate program the most basic decision you will have to make is whether the program will be single or two-tier.

A single tier affiliate program will get your commissions from your personal sales only. In case you run your own single tier affiliate program then you will pay your affiliates their respective commissions for their own sales.

Two-tier affiliate programs are more popular because they permit affiliates at every level to collect a small portion of the commissions generated by the affiliates on the level directly below their own. This concept is the basis of multi-level marketing systems that permit the building of huge downlines and provide a very good incentive for every affiliate to try and recruit as many first level sub-affiliates as possible. In fact, an affiliate need only recruit a lot of sub-affiliates and do nothing more besides to receive healthy paychecks based on the commissions generated by the subs.

So when you are planning to start an affiliate program you have to ask yourself: are two tier affiliate programs good enough? The biggest incentive not to go for two tier programs is their apparently high running cost. People go through a mental shudder at the thought of only a few levels of affiliates doing actual sales while the recruiting affiliates on higher levels just sitting around eating commissions. In truth this is hardly ever the case with two tier affiliate programs.

The entire two-tier methodology relies on the fact that people will recruit more affiliates to increase sales by trying to increase their own commissions. In the absence of two-tier programs and their incentives there is no motivation for affiliates to go on promoting a business. No matter how good anyone is at network marketing, eventually individual affiliates begin running out of contacts to whom they may sell and this causes them to rely on cold calls and blind approaches, which are too much of a hassle just to make a sale. For the business owners this means that every affiliate will "dry out" after a certain number of sales and the only way to keep the sales high is to get new affiliates. Higher number of affiliates means higher sales even though it means higher commissions.

Two tier programs provide the business owners with a wider customer base that purchase their products rather than the affiliate membership. This increases profits and also increases the number of loyal customers, as they are encouraged to promote the products to receive dividends. The whole situations cumulatively leads to a substantial number of people who are actively engaged in selling your products because they are motivated to do so.

The large numbers of commissions that scare people who think about starting a two-tier affiliate program are easily covered in this picture.

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