Results 1 to 17 of 17
  1. #1
    Newbie
    Join Date
    August 17th, 2005
    Posts
    10
    Two Tier or not Two Tier
    Hello,

    i am new here and learning a lot about affiliate marketing. I came across a thread on two tier programs where the following scenario was discussed....
    Purchase price of $100, first tier commission set to 10% and second tier commision set to 5%.. in this scenario the merchant pays the 2nd affiliate $10 and the 1st affiliate 50 cents....

    It seems there are lot of affiliates that do not like the tiered system as it pays out peanuts to the referrer (1st affiliate), would the situation be better is the scenario was setup as follows
    Purchase price of $100, first tier commission set to 10% and second tier commision set to 50%.. in this scenario the merchant pays the 2nd affiliate $10 and the 1st affiliate $5.

    or would affiliates prefer a situation where they just get 10%

    under what circumstance would a 2 tier program work or is this to be avoided at all cost?

  2. #2
    Member C.Whyte's Avatar
    Join Date
    August 2nd, 2005
    Location
    Santa Cruz, CA
    Posts
    68
    I've always known 2nd tier programs as the payout being the same total as a single tear program. ie, if the payout was $10 per sale, the first tear would get $9 and the 2nd tier would get $1. The payout is the same: $10.

    This is how I learned 2nd tier works, I am a n00b though and might be wong.

    2 Tier programs are more desirable for merchants to have.

  3. #3
    Newbie
    Join Date
    August 17th, 2005
    Posts
    10
    hello C. White... i can see how a 2 tier program is beneficial to the merchant... i am in the process of setting up an affiliate program as a merchant but want to find out what system is better from the affiliate's point of view...

  4. #4
    Affiliate Manager nish's Avatar
    Join Date
    July 6th, 2005
    Posts
    762
    This thread might have a few answers: Does 2-tier structure influence your decision of joining a program? - http://forum.abestweb.com/showthread.php?t=60451

    -nishith

  5. #5
    Newbie
    Join Date
    August 17th, 2005
    Posts
    10
    hello Nish... i actually read all the replies to the initial thread and see there is a general disapproval of the 2 tier program by affiliates, i also see why merchants will like it, i was just wondering if there are any circumstances under which a 2 tier system will be more favorable for an affiiliate?

  6. #6
    AM Navigator Geno Prussakov's Avatar
    Join Date
    May 10th, 2005
    Location
    Washington D.C. Metro Area
    Posts
    11,798
    Quote Originally Posted by rho
    ... i was just wondering if there are any circumstances under which a 2 tier system will be more favorable for an affiiliate?
    First of all, WELCOME TO THE FORUM!

    Good question. Tho', I believe, most affiliates expressed their thoughts in that thread you've read... Or are you hinting at a specific structure in which it will be "more favorable"?

    Geno
    Last edited by Geno Prussakov; August 23rd, 2005 at 03:54 AM. Reason: forgot to welcome...

  7. #7
    Member
    Join Date
    January 18th, 2005
    Posts
    166
    2 tiers drives some affiliates to spend too much time recruiting and not enough on selling the actual products or services.

    The energy spent building the 2nd tier with rave reviews on how great something is whether you really believe in it or not often gathers an army doing the same thing.....Recruiting.

    At some point, someone needs to actually make a sale for anyone to make a dime.

  8. #8
    Moderator MichaelColey's Avatar
    Join Date
    January 18th, 2005
    Location
    Mansfield, TX
    Posts
    16,232
    It all comes down to how much the affiliate gets. When you work through a network or have a second tier, the affiliate gets less. For instance, if a merchant is willing to pay 15% of their sales into their affiliate program, look at these examples:

    1) The merchant sets up a single-tier in-house program. They can pay their affiliates the full 15%.

    2) The merchant works through Linkshare (who charges 3% of sales). They can pay their affiliates 12% and Linkshare 3%.

    3) The merchant works through CJ (who charges 30% of commissions). They can pay their affiliates 11.5% and CJ charges 3.45%.

    4) The merchant works through SAS (who charges 20% of commissions). They can pay their affiliates 12.5% and SAS charges 2.5%.

    5) The merchant works through SAS and sets up a second-tier that pays 2.5% of sales. They paid their first tier affiliates 10%, second-tier affiliates 2.5%, and SAS 2.5%.

    6) Consider a merchant that has an in-house four-tier program that pays 3%, 2%, and 1% on the second, third, and fourth tiers. That only leaves 9% for the first tier affiliates.

    In all those cases, the merchant pays out 15% of sales, but the affiliate who makes the sale gets anywhere from 9-15%. If you were an affiliate, which would you choose? You would get 50% higher commissions going with the single-tier indie program than with the merchant that pays a modest 2.5% second-tier and goes with the cheapest network (SAS). That's a huge difference.

    Keep in mind that most affiliates are far better at selling products than they are at getting other people to sign up to sell products. (Of course there are exceptions, but not many.)

    I used to promote CafePress.com years ago. I had 50 people sign up under me. In 5 years or so, I've earned a total of $30.90 from referrals. That's about a penny per month per referral. It's just not worth it.
    Michael Coley
    Amazing-Bargains.com
     Affiliate Tips | Merchant Best Practices | Affiliate Friendly? | Couponing | CPA Networks? | ABW Tips | Activating Affiliates
    "Education is the most powerful weapon which you can use to change the world." Nelson Mandela

  9. #9
    Affiliate Manager William's Avatar
    Join Date
    July 22nd, 2005
    Location
    Florida
    Posts
    41
    Thumbs up 2-tier
    2-tier has been proven very successful for me in building my affiliate program.
    Not only can people who refer 2-tier members make money from them, but I also have a heavy bounty for them referring new people so it equals out and is still rewarding.

    Best of luck,
    William

  10. #10
    Newbie
    Join Date
    August 17th, 2005
    Posts
    10
    thanks for all the responses.. i appreciate the feedback and wealth of information on this site

  11. #11
    Affiliate Manager
    Join Date
    June 14th, 2005
    Location
    Los Alamitos, CA
    Posts
    48
    We chose to include a 2-Tier system simply because some affiliates work in a collaborative environment. Of course, competition is good, but a 2-tier system simply allows those affiliates that have found their horizontal competitors or vertical partners to work together to promote their sites and our products better.

    I can understand why a 2-Tier might seem like it shorts the 1st-Tier earner (however marginally). But I think the overall benefit to those affiliates that use multi tiered marketing outweighs those shortfalls.

    All the best,

    Dave

  12. #12
    Member KrisKringle's Avatar
    Join Date
    January 27th, 2005
    Location
    Colorado
    Posts
    90
    Thanks MichaelColey ... that really clarifies it for me! I've been planning on a second tier, but I thought they were added together if the sale is created by only one affiliate.

    For example "5) The merchant works through SAS and sets up a second-tier that pays 2.5% of sales. They paid their first tier affiliates 10%, second-tier affiliates 2.5%, and SAS 2.5%."

    I would want the affiliate to get both (10% + 2.5%) if he or she alone made the sale. (Actually 20%/1st + 5%/2nd = 25% of $12.00 Sale - 6.00 COGS = $3.00/DVD - 50:50)
    + SAS's 5%

    Would one tier, with a bonus for higher sales, be better for affiliates than a second tier if they cannot be added for solo sales?

    Thanks, Kris
    He who knows others is wise; He who know himself is enlightened.

    He who knows does not speak. He who speaks (me) does not know.

    A journey of a thousand miles must begin with a single step.

    To know you have enough is to be rich.

    - Lao Tzu, "Tao Te Ching"

    :santa2:

    viking:

  13. #13
    2005 Linkshare Golden Link Award Winner  ecomcity's Avatar
    Join Date
    January 18th, 2005
    Location
    St Clair Shores MI.
    Posts
    17,328
    The only 2nd tier payouts from merchants amounting to anything goes to the CPA networks who are an anonamous group of sleezebag affiliates booted or hiding from the real networks. Forget any value, other then smoke & mirrors of who sold what, to any 2 tier program.
    Webmaster's... Mike and Charlie

    "What have you done today to put real value into a referral click...from a shoppers viewpoint!"

  14. #14
    .
    Join Date
    January 18th, 2005
    Posts
    2,973
    To me, the key issue is whether you can reasonably expect most of your new affiliates (and most of your GOOD affiliates) to come from internal recruiting or self-selection, or whether many of them are likely to be driven to you by a referrer. Keep in mind that you might elect to hire a consultant or freelancer to recruit affiliates, and compensate that person as a first-tier affiliate.

    My clients' experience has been that few, if any, active affiliates are drawn through referrals, and if there is a two-tier program, some affiliates will strive to usurp both tiers (signing up Grammy in Omaha as the first tier, then clicking from her link before signing up the actual web site).

    In some segments, multi-tier programs might work more effectively (for example, for web hosting), but for my clients who sell tangible goods, two-tier has not been effective, and sweeping the entire commission into the "bottom tier" has proven more effective.

    Keep in mind that even if you don't have a multi-tier affiliate system, you should track so you know which affiliates are significant influencers or sources of new affiliates.

  15. #15
    ABW Ambassador
    Join Date
    January 18th, 2005
    Location
    West Coast USA
    Posts
    3,043
    We DO compensate a person who will direct us to Mr./Mrs. RIGHT
    That is off the books, as it were.
    We have had ONE such case...

  16. #16
    Moderator MichaelColey's Avatar
    Join Date
    January 18th, 2005
    Location
    Mansfield, TX
    Posts
    16,232
    Quote Originally Posted by tim-store.com
    In some segments, multi-tier programs might work more effectively (for example, for web hosting), but for my clients who sell tangible goods, two-tier has not been effective, and sweeping the entire commission into the "bottom tier" has proven more effective.
    Excellent point. Sometimes we can be pretty opinionated one way or another, but in reality the answer can vary. That's an excellent example of a category where multi-tier programs can make sense.
    Michael Coley
    Amazing-Bargains.com
     Affiliate Tips | Merchant Best Practices | Affiliate Friendly? | Couponing | CPA Networks? | ABW Tips | Activating Affiliates
    "Education is the most powerful weapon which you can use to change the world." Nelson Mandela

  17. #17
    Newbie Celltradeusa's Avatar
    Join Date
    August 28th, 2005
    Posts
    2
    Exclamation I work for a Celltradeusa marketing dept with a two tier program
    I work for Celltradeusa marketing dept with a two tier program.

    I can say we went back and forth regarding the single tier verse the two tier.

    After a few weeks of polling and interviewing they decided to go with the two tier program.


    The program in itself is amazing and is going to make alot of people alot of money.

    I will try to ask to see the poll results they have and post them here during the week.
    Last edited by Celltradeusa; August 28th, 2005 at 12:45 AM. Reason: removed links

  18. Newsletter Signup

+ Reply to Thread

Similar Threads

  1. **SAS:2-tier referral and 2-tier sales**
    By Stacy ke in forum ShareASale - SAS
    Replies: 10
    Last Post: March 21st, 2013, 10:17 AM

Posting Permissions

  • You may not post new threads
  • You may not post replies
  • You may not post attachments
  • You may not edit your posts
  •