Affiliate Marketing is a great way of boosting your sales and reaching out to more customers. It is based on this simple revenue sharing model where both the affiliate and the merchant are benefited. The merchant gets more sales, while affiliates earn a commission on each sale they bring in.
Usually, an affiliate marketing program comprises of a simple structure where affiliates come under the management of the merchant. However, there are multi-level affiliate programs as well, where a different level of affiliates is present in a single network. In this type of affiliate network, each level has its rate of commission depending upon the hierarchy.
Since affiliate marketing is based on “pay for performance” model, therefore, merchants only pay their affiliates when they see sales being brought in by them. This means that affiliate marketing is a low risk and cost-effective way of marketing. This is also a great way of expanding an affiliate program since existing affiliates will work to recruit new ones.
Multi-level Affiliate Network
In a multi-level affiliate network, a merchant enables its existing affiliates to recruit sub-affiliates into the affiliate program. When a sale takes place where the referral of the sub-affiliate is used, in addition to the commission earned by the sub-affiliate, the parent affiliate (who recruited the sub-affiliate) will also receive a commission on the sale.
This commission on a sale made using the referral of the sub-affiliate becomes an incentive for existing affiliates to recruit sub-affiliates and build their network. It is important to remember that the merchant still manages the whole program, so the merchant can choose the number of levels of affiliates in a network and the commission rates for each level.
How does GoAffPro help merchants with setting up their multi-level affiliate network?
GoAffPro makes it very easy for merchants to set up a multi-level network. By enabling the Multi-level Marketing option, affiliates can then recruit sub-affiliates.
Merchants can easily view the affiliate network that is currently operating. The network or Geneology option provides merchants with the option to view the affiliates and the sub-affiliate that have been recruited by them.
This makes it easier for merchants to manage their affiliate network.
Setting up a number of levels for the network and the commission for each level
In a multi-level marketing network, it is important to set up the number of levels in the network and the commission for each level. GoAffPro gives merchants an easy-to-use method to set up the number of level in the affiliate network and the commission for each level.
There is also an example of the network provided on the right, which shows how the commission works for the multi-level network.
Here we have set up a 2 level multi-level network, where the commission for Level 1 is 20% and for Level 2 is 10%. In this network, there will be three affiliates. The Parent affiliate who recruited a sub-affiliate and the sub-affiliate who recruited another second-tier sub-affiliate. Therefore when a sale takes place using the referral of the second-tier sub-affiliate, all the affiliates up the network earn a commission on the sale.
Test your multi-level network using Playground
GoAffPro offers merchants with a great tool called Playground, which allows merchants to get familiar with the multi-level network with the parameters they have set up. This is a great tool for learning and testing how a multi-level network would operate.
Here the merchant can choose the number of partners in the network chain. There is also an option to choose which affiliate’s referral was used in the sale. The commission calculation can be made using two different methods which are simple or dynamic. There is also a field for commission for the sale. In the simple calculation method of commission, there is also an option to choose the order amount value.
Once all the fields have been filled, the playground will generate a network with a commission breakdown for each level. This helps the merchant in how the commission flow will work in a multiple network of affiliates.
The Number of Levels and Commission per level parameters can be changed using the previous section to see how they will work in the playground.
Choose the commission calculation method of your choice
GoAffPro offers two different commission calculation method for the multi-level network:
The merchant can choose from either of these calculation methods for their affiliate network. There is also an option, where the merchant can choose to apply the level commission even when the sale commission is nil.
Simple Commission Calculation
In the simple commission calculation, the parent affiliate (who recruited the sub-affiliate) will earn the rate of commission that is applied to the order value.
So for an order value of $1000, with a 20% commission rate kept for the level of the parent affiliate. The parent affiliate will earn 20% of the $1000 order value, which is $200.
Dynamic Commission Calculation
In dynamic commission calculation, the parent affiliate (who recruited the sub-affiliate) will earn a rate of commission that is applied to the sub-affiliate’s sale commission.
Here the sub-affiliate’s commission is $100 on the sale that was made using his/her referral. Therefore the parent affiliate will earn a 20% commission on the sub-affiliate’s $100 sale commission which is $20.
If an affiliate higher up in the hierarchy earns a commission on their referral, then any affiliate below them will not receive any commission.
Here a sale was made using the referral of Partner B, therefore Partner A (who recruited Partner B) will receive a commission but Partner C (who was recruited by Partner B) will not earn any commission.
GoAffPro also offers the option to show the affiliate who’s referral is being used to create a new affiliate account.
A multi-level affiliate network is a great way for expanding one’s affiliate program. It incentivizes existing affiliates to recruit new affiliates into the program. This means, that with more affiliates working to promote your products, the higher the number of sales you will see for your business.