What is a Tier in Affiliate Marketing?

The word "tier" shows up a lot in the affiliate marketing
industry. In a general sense a tier is a step or level, but what
does this mean in the context of affiliate marketing. The answer
is: it depends.

Downline Levels The most common meaning of tier is a carry-over
from the compensation plans of network marketing companies that
were in place before the Internet boom. When you introduce a new
entrepreneur to the program, he is placed on your second tier.
If that new entrepreneur then introduced his sister to the
program, she would be placed on your third tier.

If the sister brought in a paying customer, she would receive a
first tier commission. Her brother would receive a second tier
commission, while you received a third tier commission (if the
compensation plan included a third tier). In practice, an
affiliate program can offer commissions on any number of tiers,
although the vast majority of online affiliate programs only pay
commissions on one or two tiers of activity.

Sales Volume You would get a different picture of the word tier
from Amazon's compensation plan, where it refers to your sales
volume. (The following numbers don't reflect Amazon's actual
compensation plan, but they serve as an example.) On the first
$500 worth of merchandise you sell, you receive a 10%
commission. Up to $500 is the first tier. The second tier is for
sales up to $1500. If you manage to sell between $500 and $1500,
you will earn 11% commission. Each tier is an additional range
of monthly sales in which you earn a higher commission (or
receive other forms of compensation).

The Problem The confusion arises when affiliate programs
emphasize that they run a 2-tier compensation plan in their
affiliate recruiting efforts. In most cases, this refers to the
downline levels definition, and participants can expect to
receive compensation based on the performance of affiliates they
introduce to the program.

Occasionally, a program makes this claim when referring to sales
volume tiers. This isn't inaccurate, but it is misleading. The
managers of these programs are almost never intentionally trying
to mislead. More often, they have thoughtfully crafted a
compensation plan that rewards affiliates who perform well, and
they want to announce that feature to all potential affiliates.

Who's Right? You could make an argument for either definition of
tier. If you're trying to communicate with other people in the
affiliate industry, though, you need to give strong
consideration to which meaning is generally accepted by most
people. That is the downline levels definition.

About the author:
Clay Mabbitt writes articles about online income opportunities.
He is the founder of a community of Internet entrepreneurs
sharing knowledge and experience at
http://www.affiliatescreen.com