Comp plan manipulation isn’t a fun topic to talk about, but it’s unfortunately a very real concern for modern MLMs and something to be aware of as you plan your compensation strategy. In this three-part series, we’ll go over stacking, one of the most common forms of manipulative behavior, and what you can do to prevent it in your business. This first post will give you an overview of what stacking is and how it works.
What is Stacking?
Stacking means enrolling “fake” distributors in a genealogy tree to add levels of commission payout to a distributor’s payline. “Real” distributors are placed underneath these imposters, and their sales are amplified as they get back to the original distributor.
How Does Stacking Happen in an MLM?
Stacking can happen whenever a comp plan pays distributors on multiple levels of downline activity. (Unilevel compensation models are usually the most susceptible, since the level commission is the most prominent.) Let’s go through a stacking example to show you how it works. In Distributor A’s plan, she earns commissions on five levels of downline sales volume. So, for each level, she gets a 5% bonus on whatever her distributors sell.
Now, let’s say Distributor A is just starting out as a brand-new distributor. In most cases, she would build out her Level 1 first. If she builds a healthy organization, it would probably look something like this:
If each of them earned $100 in customer sales, Distributor A would earn 5% of each of those sales—a total of $20.
Now, let’s see the difference in a stacked organization. Because this plan pays on five levels of sales, Distributor A makes four fake accounts to enroll underneath her—one in her spouse’s, two in her children’s, and one in her grandma’s name. Then, she puts her “real” recruits (the ones who are legitimately trying to sell and build their organizations) on Level 5. This is what her organization looks like now:
Let’s say that each of her “real” distributors sold $100 worth of products. She earns a 5% commission on those sales, then, because she’s the one behind Level 4, 3, 2, and 1, she’ll get the commission from all of those levels, as well. Her earnings go from $20 to $100.
From a distributor’s perspective, this can look like a good idea—why make $20 when you can make $100, right? The problem is that people who stack are missing the bigger picture, and, from my experience, it’s always more trouble than it’s worth.
Stacking is a common form of comp plan manipulation that happens when people use fake distributor accounts to amplify their commission earnings. Stay tuned for Part 2 to learn just how dangerous stacking can be in a direct selling compensation plan.
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