Why You Must Never Build a Pyramid into Your Affiliate System
An important point about the affiliate system is to find a way to pay the representer a commission again based on the customer's later purchases. Of course, I should open a parenthesis here to mention that there is a danger. Some people make a mistake in this method and are subconsciously directed toward a pyramid system. This is one of the big mistakes you should not make. The money received by the representer should be based on the level of purchase by that customer.
Suppose that Peter introduces a person named George to us. George buys from us, and we pay the commission to Peter. This time George introduces a person named David to us. We pay a commission to George for David's purchase, but should we also pay a commission to Peter for this purchase? Never.
You do not pay even an insignificant percentage as commission to Peter, because in that case you will get into pyramid schemes and get confused in complex formulas that are difficult to calculate. It is not a matter of software power; it is a matter of technology and the complex mathematics associated with it. Suppose you pay Peter even a small percentage when David introduces a new customer. In that case, you have to pay a commission to David, George and Peter for the purchase of this new customer, and you define different percentages for each of these people. Complex formulas will emerge as a result. If you follow this scenario, you must continually pay the commission to the people above, and it becomes quite complicated.
You only need to pay commission to the person who represented the customer directly. If you put forward the pyramid system, these complex calculations will prevent you from handling the mathematical formulas, and you will incur huge losses.
This method is theoretically simple, but it is really complex to perform. Sometimes something goes wrong with these programs, and then you must be able to arrange the numbers in such a way that the least damage is inflicted on you.
You may have a large company and follow this process until you reach a point where the number of customers is very large. It is possible to pay the interest, for instance, once a year, provided that, firstly, your software system is very advanced, and secondly, you have a very high profit margin in selling your products.