In a two-tier affiliate program, affiliates not only earn commissions from their direct referrals but also receive a smaller commission from the sales generated by affiliates they recruit. This creates a network effect that can significantly expand the merchant's reach.
This structure incentivizes affiliates to recruit others, expanding the merchant's network organically. It introduces a multi-level component, but unlike MLM schemes, earnings are typically limited to two levels to maintain focus on product promotion rather than recruitment.
Successful two-tier programs require clear compensation structures, training resources for new affiliates, and support systems to help recruiting affiliates mentor their referrals. The program should maintain balance between recruitment and product promotion incentives.