The Power of Two-tier Commissions
Previously
we looked at programs that offer you the ability to earn commissions
without having to actually sell anything. Instead they pay you for
generating sales leads and product demo requests--a pay-per-lead
model that has become popular thanks to above average conversion
rates.
This time we look at
another type of affiliate program that has become increasingly popular recently. These are
programs which offer two-tier (or more-tier) commission structures that allow you to earn
revenue from not only sales you directly refer, but also from the sales that new
affiliates you refer make. Similar to pay-per-lead programs, two-tier commission programs
offer an opportunity to earn revenue without having to actually sell anything yourself.
The difference here is that someone does eventually have to make a sale for a commission
to be earned.
Perhaps the best example
of a two-tier commission program is the Virtualis
Reseller program. Virtualis was one of the first to offer this
type of opportunity and they quickly attracted a horde of webmasters,
site owners, and consultants who promoted their products. Virtualis
did this by not only offering generous commissions to affiliates
who made the sales, but also by paying additional commissions to
the person that referred the affiliate. Using this strategy, Virtualis
has quickly built a network of nearly 30,000 affiliates that promote
their products and continue to help expand the membership of their
affiliate program.
There are several advantages to
two-tier commission programs to affiliate hosts and vendors alike. As a host, not only are
you promoting the program to try to personally make sales, but also encouraging other
webmasters who visit your site to sign up to become affiliates. For each webmaster you
sign up, you can count on a portion of their commissions for each sale they make.
Therefore, two-tier programs are often best suited to sites that attract not only an
audience that may be interested in the product the program promotes, but also which
attracts webmasters who may also be interested in making money from such an opportunity.
Two-tier programs have also
resulted in a monumental change for vendors in the way in which many affiliates handle
their programs. Without a two-tier commission structure, many affiliates will want to try
to keep the programs they are having success with a secret. After all, each new affiliate
only means more competition. This in turn stifles the growth of the program for the
vendor. But, by using a two-tier commission structure, all affiliates are now encouraged
to promote the program and try to get others to sign up, leading to quick growth in the
program.
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