Passive Income with Affiliate Marketing: Your Guide to Financial Freedom

The advent of the Internet and the latest technologies has had a beneficial effect on the world of affiliate marketing, and multi-level affiliate commissions are a great example. The following sections discuss two-level marketing, three-level marketing, and ways to find affiliates.

Virtually all affiliate compensation plans, single-tier or multi-tier, fall into the general cost-per-sale (CPS) category because all commissions are paid based on the price of the product being sold. This is one of the main reasons why marketers like affiliate marketing. But you can also benefit from affiliate marketing even when no sales are made.

Try Two-level Marketing

A two-tier affiliate program is a compensation model that gives you the potential to earn affiliate commissions on your direct sales, as well as sales generated by people you invited, recruited, or sponsored into that particular merchant’s program. . These people who are “under your command” are generally called sub affiliates.

Why would a trader do such a program? The merchant would love to add a viral component to the sales force so that it can grow without their constant attention on recruiting new affiliates. After all, why not expand your current sales force by adding the powerful incentive of “overrides” or commissions generated by the work of new affiliates?

A typical structure looks like this:

First level = 50 percent commissions on all sales you generate directly.
Second tier = 10 percent commissions on sales generated by affiliates you introduce or sponsor (your sub affiliates).
How does this type of structure work? Let’s say a product/content costs $100. If, say, you sold ten units directly from your efforts (email marketing, traffic generation, guest blogging, etc.), then you would receive the top-tier commission of $500 (50 percent of $100 × 10 units).

Inviting, Recruiting, and Motivating Sub affiliates

If you present (your entire audience) the opportunity to sell this same product and some accept that offer, what happens? Let’s say you sent emails to 500 people. You asked them to buy the product and got those 10 sales, and then you emailed those 500 people a second time with the following message:

“What a great product! I love it, you love it…and others you know will love it too! Why not make money as an affiliate (earn a juicy 50 percent commission!) by helping others get this product too? To do this, click on the email xxx@xxxxxx.xxx and register as an affiliate (easy and free registration!)”

Let’s say 10 people sign up to become affiliates through your link and this group generates (cumulatively) a total of 50 sales. How did you do it?

Understanding Multi-Level Commissions

Well, a total of 50 sales means that the total gross sales made by your sub affiliates was $5000 (50 units × $100 = $5,000). They (sub affiliates) earned a total of $2,500 (50 percent of $5,000), while you personally (as a second tier) earned $500 in affiliate commissions (10 percent of $5,000). When you add up the first tier commissions of $500 and the second tier commissions of $500, you come to a total of $1,000, which isn’t bad at all.

Keep in mind that your sub affiliates may not have the same enthusiasm for selling the product as you do. It’s probably fair to use the 80/20 rule: the 80 percent probably won’t sell much (or at all), while the majority of your sales will come from the remaining 20 percent. Some veterans at various levels may tell you that we are too optimistic and that it might be more like 90 percent doing little or nothing and 10 percent doing most of the sales.

Beware of the Third Level and Beyond

In a true multilevel (three levels or more), you rely on the viral power of everyone at your level and below you. There is nothing wrong with earning money through collaborative efforts and helping others succeed. The problem is that if you count on hiring and don’t focus on the product and your personal marketing, then you won’t make the money you expect.

Typically, multi-level programs are two levels deep, but some go to the third level and beyond, where you also earn commissions on your sub-affiliates. We’ve seen affiliate levels go up to five levels, but deeper isn’t always better. In fact, it is best to avoid any program that goes beyond two levels.

Multi-tiered affiliate compensation plans are fine in theory, but in practice they can be problematic. In the same way that you are attracted to a multi-level structure because of the attraction of making money from the efforts of others, these others are also attracted to the same attraction. The risk is that everyone will recruit in the hope that others will do the heavy lifting of selling, and the result is that little money will be made even though hundreds of sub-affiliates have been recruited.

Focus on Product Sales and Quality Sub affiliates

Therefore, follow this advice:

• Focus on product and direct sales. Consider this the golden rule.
• When you see potential to recruit a sub-affiliate, make sure they show that they are also excited about the product and its direct sale (point 1).

• Lastly, communicate regularly with the sub affiliate and offer assistance and/or guidance if possible to help them generate direct sales.

The bottom line is that it is better for you to have fewer (but better and more active) sub affiliates than to waste time and effort amassing an army of sub affiliates that do little or nothing in terms of sales. There is no way around it: product sales must be a fundamental part if someone wants to make money.

Please note that multi-level affiliate programs are not necessarily the same as old offline multi-level marketing (MLM) programs (also called network marketing), but we believe their structure is similar and we prefer the multi-level model which is in online because it doesn’t have the old annoying features of going to meetings, paying excessive participation fees, etc.

With this in mind, stay away from any affiliate program that charges you to participate in any way. Those marketers should be happy that you want to be part of their marketing program. Good merchants look to pay you for your performance as they generate sales.

Find Affiliates for your Multi-level Program

Because the emphasis must be on product rather than recruiting, it’s a good idea to spend your time where these satisfied customers are. There are great resources to help you find these people or zero in on the right niche, but here are some places to spend time prospecting.

LinkedIn Groups

LinkedIn is a social networking site that specializes in professionals of all types looking to make business and professional connections. If you are an affiliate looking for sub affiliates, this can be a fruitful place for you. You can perform a keyword search on LinkedIn for groups using terms like engineer or technology. When groups appear, you have the ability to view each group’s profile and other relevant details so you can determine if the group is appropriate for your affiliate marketing efforts.

After you find a suitable group, join it and interact with the other members. Ask questions, post interesting and relevant articles that engineers like, and then start asking about members’ product/service needs. Let’s say you’re a top-tier affiliate for a web hosting company. You’re looking for web designers and related professionals on LinkedIn so you can provide them with a profit center with your suite of services.

Facebook Groups

There are literally thousands of active groups on Facebook, and many of these groups have hundreds and thousands of prospects that you can connect with to share your affiliate program. Finding groups is as easy as using Facebook Keyword Search and then analyzing the results. You will then be able to view the profile and details of each group and decide if the group has members who are suitable prospects for the product/service you are affiliated with. The group leader and key influencers within the group (people with large networks) may be ideal sub affiliates for you.

Meeting Groups

Meetup is a great place for face-to-face interactions. There are thousands of groups and many of them have local chapters in their area. You can find prospects very easily in your niche.

Let’s say you love soccer and you just joined a company that sells popular soccer products. In that case, consider finding, joining, and staying active in a Meetup group that specializes in soccer.