DAP supports (up to) a 2-tier affiliate program. So you could pay just one level (“tier”) of commissions (A gets paid when he refers B), or you could also set up DAP to pay 2 “tiers” of commissions (User 1 gets paid when he refers User 2 AND User 1 also gets paid something when User 2 refers User 3).
[NOTE: Paypal has an Acceptable Use Policy - especially for a product or service that could be considered "MLM" or "Pyramid". Make sure you're not violating their terms. For eg., requiring your members to keep paying subscription fees in order to remain an affiliate, could be considered a Pyramid scheme. So, in general (nothing to do with using DAP or paying 2 levels of commissions), if you are running an affiliate program and will be paying out commissions via Paypal, make sure you are not violating their terms.]
How The 2-Tier Affiliate Program Works
In a typical “1-Tier” affiliate program, when a buyer makes a purchase, the affiliate who referred the buyer is the only one who gets paid an affiliate commission. Which is why it’s called “1-tier”, because there’s only one level of commissions paid.
However, in a “2-tier” affiliate program, the “Affiliate’s Affiliate” (2nd level above) can also be paid a portion of the sale in commissions.
So consider this this example…
You are selling Product A that costs $100.
You’ve set up your commission structure for Product A as follows:
Tier 1: 50% Per Sale
Tier 2: 10% Per Sale
Joe Customer is referred by Charlie to your web site. Joe went on to purchase Product A for which commissions are set up above.
So Charlie (tier-1 affiliate) gets paid 50% of the sale - which is $50.
Now, normally a 1-tier affiliate program would stop there, and that would be the end of affiliate commissions for that purchase. But you have set up 2 tiers.
So now DAP looks at who referred Charlie, the affiliate. It finds that David originally referred Charlie to your web site (regardless of how Charlie got in to your membership site).
So now David (tier-2 affiliate) gets paid 10% of the sale – which is $10.
So for that one sale of $100, $50 was paid to Charlie, and $10 was paid to David, which totals $60.
So $40 is your earnings, as the site owner.
How To Set It Up
The 2-tier or “n” tier setup is the exact same as the 1-tier setup.
Only difference is, set up a new record on the “Affiliates > Set Commissions” page for each tier – one for Tier 1, one for Tier 2, and so on.
8 comments ↓
How does Paypal know that it is a 2 tier affilate set up?
What do you reccomend as a payment processor if not using paypal.
There’s nothing to really let Paypal know about the 2-tier affiliate payments. As far as Paypal is concerned, you’re just paying a bunch of people, that’s all. They don’t know about any “tiers”.
We do have DAP users using this feature, and using Paypal to make payments, and they’re doing just fine. So as long as you follow Paypal’s TOS in terms of the products you sell, you should be OK.
What is the no no as far as payola is concerned that could get you banned?
Gavin
First, kudos to you for a powerful, well-thought-out system! Wow I am blown away!!!
Second, as a new user, where can I learn more about big and small picture of setting up a Paypal 1 or 2 Tier affiliate system especially–how do the affiliates actually get paid? If by Mass-Pay what do I have to do to get that set up? Or where to look? Thanks very much!
How many tiers can you have?
Hey Ravi,
Quick question: Can I control/change who a 2nd tier affiliate is attached to? Example: John is a tier 1 affiliate, and Sarah is under John as a tier 2 affiliate. Is it possible to move Sarah under a different tier 1 affiliate??
@Gavin: >>What is the no no as far as payola is concerned that could get you banned?< <
Just adhere to their terms, that's all.
@Dan: >>How many tiers can you have?<<
You can have up to 2 tiers.
@Micah: You can’t change who the 2nd tier affiliate is (grandparent affiliate), but you can change the tier 1 affiliate (immediate parent affiliate) associated with a user. You’re looking at the tiers from the wrong direction – you should see it from bottom-up.
For eg. consider this:
John referred Sarah (Sarah is “under” John)
Sarah referred Joey (Joey is “under” Sarah)
Which means, here’s what the “tier” structure looks like…
John -> Sarah -> Joey
-OR-
John (T2 for Joey, T1 for Sarah)
–> Sarah (T1 for Joey)
—–> Joey
From Joey’s perspective (always from bottom-up), Sarah is “Tier 1″ (immediate “parent” of Joey) and John is “Tier 2″ of Joey (grandparent of Joey). And then, John is also “Tier 1″ (parent) of Sarah.
In this scenario, you can change Joey from under Sarah, and assign Joey to be “under” someone else – even directly under John, if you so choose to, or under a completely different affiliate, like Mary.
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