How do I know if a particular affiliate scheme is right for me?
This is a frequently asked question by new business starters looking to make money from affiliate programs. There are various affiliate schemes you are likely to come across. If you don’t know what differentiates these programs you may be wondering how to find a good one and which ones to avoid.
There is always confusion between affiliate programs, MLM, Pyramid Schemes, and Matrices. With an affiliate program you earn commissions on all sales resulting from your efforts to promote the product or service. With MLM, Matrices and pyramid programs you earn commissions by introducing others to the program and from their promotions as well as your own.
Multi tiered affiliate programs and MLM programs are similar but generally affiliate programs are free to join where as MLM programs include a joining fee or some sort of initial investment.
Affiliate schemes are a very popular way to earn money online today. However, do you know what to look for in an affiliate schemes? It is important that you know what makes the best affiliate scheme to be successful before you sign up with any program. An affiliate scheme with a high reputation will enable you to succeed because it will be much easier for you to make sales.
There are many traps and pitfalls present in this business, which may result in loss of commissions. Doing business with reputable affiliate schemes is the only way to avoid such constraints. If you do not research this aspect, you risk joining an affiliate scheme which is a scam.
Here are several aspects to consider when looking for the right affiliate scheme to promote for long term success.
There are hundreds of variations of affiliate programs. Things varying wherever from pay per click to paid per lead to pay per action, and other things in between. As an affiliate, it is your “job” to advertise the program you are affiliated with. ClickBank.com, Amazon.com, Commission Junction, Linkshare and Befree are probably the biggest of all affiliate networks on the net.
As an affiliate, your earnings will depend on how many visitor you send to your affiliate program and take action, either purchase a product, sign-up to a list, click on an ad or any other important action.
When you look into affiliate programs, you will notice that there are all kinds of them. The ones that I am interested in right now are the single-tier programs, two-tier affiliate programs, and multi-tier affiliate programs. You may not understand what the difference is, but there is a difference.
These types of affiliate marketing are based on the different levels or tiers that you will get paid within the network. Let me explain...
Single-tier Affiliate Programs - In single-tier affiliate programs you are paid one time. When a visitor goes to the merchant website through your affiliate link and complete the wanted action you get a commission one time.
Some examples of single-tier are Google Adsense pay per click (PPC), pay per lead (PPL) affiliate programs and many other programs pay only one time.
Two-tier Affiliate Programs - It’s a Kind of Multi Level Marketing scheme, whenever you’re a member of an Affiliate Program there’s usually extra incentive to recruit members underneath you. Rewards range from a percentage cut of Profits to one time payments.
Two-tier affiliate programs pay affiliates in two ways. They pay direct sales generated by affiliates, and also pay affiliates for bringing new affiliates into the program.
Here’s how it works.
If you are an affiliate of a program that pays you 45% commission when you made a sale, they will pay you also 10% or a flat fee of the total earnings of the affiliates that sign up directly under you.
But you should be cautious of any affiliate program that…
- Stress on the earnings you can make by recruiting affiliates than on the earnings from selling products or services.
- Pay a very low first-tier commission but a very high second-tier payment. These programs may fall under MLM, Pyramid schemes, or Matrices (more on this later)
Multi-tier affiliate programs - Multi-tier affiliate programs are similar to the 2-tier programs; but Multi-tier affiliate programs reward affiliates who sign up other affiliates several levels "deep".
For example, if Affiliate-1 recruits Affiliate-2 and Affiliate-2 recruits Affiliate-3 who makes sales and get commission, then Affiliate-1and Affiliate-2 get reward either from the efforts of Affiliate-3.
Affiliate programs can fall under a lot of categories and they have different types of rewarding system. As said above some programs are single-tier affiliate programs, some are two-tier affiliate programs, some others combine several different rewarding types into a single affiliate program. Affiliate programs can be very lucrative if done correctly, and I know a lot of people who make a nice income purely from working them.
You don't necessarily have to refer other people to be able to make money from affiliate programs, but it will usually help you to earn MORE cash than what you’d get by your own efforts.
One thing you need to succeed in affiliate programs is to make sure you are interested in the product you are promoting and capable to talk about it from experience. On my site you will see banners and links for Site Build It. I used the FREE information provided by this program to learn how to succeed in affiliate marketing. I used its free tools to build my website. So, of course I have knowledge of how it works, what people are saying about it, and most of that it gives you all the tools need to succeed as an affiliate. I feel it is the best program online so I can promote it and I'm receiving emails from happy people thanking me for doing it.
What Are MLM, Matrices and Pyramid Schemes
Have you ever wondered what the difference between these programs is?
MLM, pyramid schemes and Matrices operate almost similarly. However they differentiate each other in the importance of recruiting others to join the program. With these programs recruiting downlignes is their major concern. The more people you recruit the more benefit you will gain. In general they promote expensive and mediocre products, if there are any products to promote.
MLM - In MLM, the participants always gain from their investment. The catch is in the value of the product that the participant receives. In general the product is very expensive and with no significance. Also, some MLM’s promoters cheat their customers. This is the reason that MLM is not legal in many countries.
With so many MLM programs on the market these days, originators have tried to make their programs more desirable than others. For this reason you can find some legal MLM programs in some sense.
In a regular MLM program, your monetary gains are based entirely on how good you are at marketing the program. However, most people aren’t' very good. So it would benefit the less talented if they had help from the talented.
Matrices - Matrices are MLM programs but they work differently. Basically, if the number of people who can join under you is limited in any way, then it's a forced matrix. The idea being, if you refer any extra one will go under someone else. The best implementations put the extra person under one of the people YOU have under YOU. Therefore it helps the person under you, which helps you too.
The term is tossed around a bit, and sometimes not used at all. However, that is what defines a forced matrix. Sometimes numbers are used to describe a forced matrix more thoroughly, such as "4 X 4 forced matrix" for instance. This could mean that you can only have 4 people directly under you and only 4 people under those 4 who you receive commissions from.
There is a hybrid idea that has become common now, where by a person can deliberately place a referral in another line of their choice. A sort of traffic control attributes that helps originators get their referrals interested. This has been an attempt to make regular MLM more appealing.
The benefits of either are about equal. With a forced matrix, you stand to earn an income faster, but increases in income are slower because your referrals get forced further down the line from you. With regular MLM you have a stronger base, and sustaining it is generally easier, but first profits can be slow.
Some programs they don’t even have a product for you to sell, just empty promises of returns once you sign people up. Sign them up for what exactly?
Pyramid Scheme - With a pyramid scheme everyone in the hierarchy chain receives payments from people recruited by them (below them in the chain) and makes payments to those (above them) in whose recruiting line they fall.
This structure where commissions depend primarily on recruiting more and more members at increasingly lower levels is unsustainable and will eventually collapse.
Pyramid Schemes are illegal in many countries. We all know how these schemes work, or at least get the general idea. A person (the originator) starts by sending a message to several people. Usually people he/she knows. The message in some round about way, will tell everyone to send him $5 or so, and then send the message to someone else. All the while adding names to the list, and each new recipient must send money to the first person, second person...etc
There are a million variations of the Pyramid Scheme, but the main attribute that defines a pyramid scheme ( also known as chain letter) is that there is no product, it's just people sending money. The term "Pyramid Scheme" is derived from the fact that it starts with one and the size of those involved increases as you move towards the bottom.
How is MLM different from a pyramid scheme? After all, on paper any MLM looks like a pyramid in reality right? The differences are very simple. In MLM there is a product being sold. Income is generated from "commissions". It's actually a pyramid scheme, except that the participants get something back regardless of whether the people they refer actually pay for something.
To start with there is nothing wrong with MLM programs. There is however a stigma attached to it because so many people have been burnt by them before. When you think about it though it makes sense, refer people to a product and get a commission it happens in everyday life all the time. Then those people you found go out and get sales and you get a smaller percentage but are still rewarded for your efforts of finding that person.
I hate MLM programs not because I can’t make money with but in most cases they don't deliver what they promise. There are legal MLM programs with good products and it's your JOB to find the one that can make you money.
Do some people succeed in MLM? Sure, and many of them are honest people. But they work incredibly long, hard hours, and are blessed with a natural charisma that allows them to draw people to them. This is something very difficult for the average guy to duplicate.
Affiliate marketers who are serious about building a business should be reading and learning about business fundamentals, the latest sales and marketing techniques, strategies for networking and business development, building your own website is your best way to succeed. Act like an expert on your field, and people will follow you.