Why a Two-Tiered Program Isn't Network Marketing, but a Mastermind
by: Declan Dunn

A two-tiered program is simple: You let people/organizations sign up as affiliates (first tier). Any new affiliates that sign up from your affiliates comprise a second tier of commission. Your first-tier affiliate now makes money on each sale as well as each sale of affiliates which signed up through them. What better way to encourage your affiliates to help you further your network?

Keep in mind that two-tiered programs are not necessarily network marketing. Rather, you give your affiliates the ability to build their own business.

If done correctly, it can be a great service to them. You give them the ability to get you more affiliates while at the same time making themselves more money.

Instead of network marketing, think of two-tiered programs as online retail. In the retail world, you have a manufacturer, a distributor, and a storefront/retailer. Online, the owner of the affiliate network is the “manufacturer,” your affiliates are your “distributors,” and their affiliates are your “retailers.” Because there is only one level of signing up affiliates, it does not have the complexity of many network-marketing structures.

An affiliate network does not have to simply sign up affiliates. It can build an entire sales force with the tools available. Certain steps should be taken to ensure your success. Best of all, you can automate virtually all of your initial contacts and personalize the approach.

• First, make sure it is a true two-tiered affiliate system, and reward for every action. If your affiliate sends you a customer, pay them per sale.
• If your affiliate sends you another affiliate, give the first affiliate an override commission on the sales of the referred affiliate. In my ActiveMarketplace Affiliate Programs, we also include a 25-percent per-sale commission and a 10-percent commission per affiliate sale.
• You want your affiliates to reach out and build their own networks; you will be part of that growth and reward them. In this way, each retailer can also become a distributor. One part is making the sale, and another part is introducing this to other people, the sales manager, and the sales staff.
• Someone who has a large network can get initial sales plus sales of their entire network. When your affiliates catch on to what this two-tiered system means, they will advertise for you, thus introducing you to the key players and getting affiliates for themselves.
• They are building their own affiliate network while building yours.

Most people think affiliate networks are about hardware and software. Rather, it's about relationship building – making your affiliates and customers your close allies. You won't be able to do this as easily in a few years; and frankly, few companies are currently making such a system work for them.

In my case, in the two-tiered system, I am a merchant – building a network of people to refer and resell for me. I'm using all of my tools for tracking and for testing my ads, and I'm building up a customer list. I take all of that and give it to every one of my affiliates – I give them the ability to do the same thing. They can now do what I'm doing, building a network and a customer list. And together, we can learn more and earn more. This builds a sales force instead of a one-time lead generator.

It's all about building the lifetime value of customers and of affiliates.

One-tiered systems don't even have the possibility of building loyalty; you can only take customers from others. Two-tiered systems will become an increasingly important method of affiliate networks.

With a two-tiered program, you can own your network while building up co-owners who can help coach, teach, and spread the word...it is a marketer's dream.