Affiliate program structure whereby affiliates earn commissions on their conversions as well as conversions of webmasters they refer to the program.
In a two-tier affiliate program, or a multi-tier program (two or more levels), the first tier of commission is the same as in a regular affiliate program. The only difference is the additional tier(s), whereby marketers also earn a commission on sales generated by people they referred to the program. Sometimes compensation will be written in shorthand as tier1/tier2 (ex. 10%/5%).
It is important to read the fine print to determine if the second-tier compensation is calculated as a straight percentage (% of revenue generated by “B”) or a percentage of a percentage (% of earnings generated by “B”).
Affiliate programs can theoretically have an infinite number of tiers, but there are practical limitations. As tiers are added, program attract webmasters who are more interested in profiting from the work of others, as opposed to doing any actual work themselves.
see also: Affiliate Marketing Tools