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Now we come to the problem of stacking, the bane of level commissions. The concept is easy. For example, a distributor realizes that instead of receiving five percent on the sales of his first level, he can receive ten percent by sponsoring his wife as his first level and placing the rest of his organization under her. Then he realizes that he could make fifteen percent by sponsoring his mother under his wife and so on.  A second method is for four friends to get together and sponsor person B under person A, then C under B, and D under C.  Then all four of them sponsor all of their prospects under person D, splitting the three-level commissions.

What’s wrong with that? The reason a company sets up a level commission is to reward the upline for building the organization.  Stacking defeats this objective. If everyone stacked, no one would receive any downline commissions!  If stacking becomes rampant, the net effect is the same as simply paying a one-level commission with no downline commissions.

It’s interesting to talk to people who stack and point out to them that if their downline stacks, then they won’t make any money. Almost universally, they’ll tell you that they don’t allow people in their downlines to stack!  If a company wants to have a level commission and have it work the way it’s designed, the company must find a way to eliminate stacking.

There are three ways for companies to deal with stacking:

1. The most successful method is to make it unprofitable by creating rules that make it unprofitable. For example, you can make a rule that specifies that in order to receive commissions, distributors must have $1,000 of volume in the downline and no more than half of that anoint can come from any one downline leg.  Now, in order to stack four people, the distributor has to put a second leg under each of them that generates $500 or volume. It’s possible, but expensive.

1. The second method is enforcement.  The company watches to see if anyone is stacking and punishes those who are. (Trust me--the upline will inform the company if someone is stacking.)  The problem with this method is that a company never wants to put itself in the position of having to punish its distributors; it’s bad for relations.  Besides, sometimes it’s perfectly legitimate for a distributor to sponsor his wife, but the anti-stacking police can’t always determine whether what has happened is stacking or legitimate business.

1. Ask distributors not to stack. I’ve never seen it work, but several times when I’ve told companies that their commission plans are susceptible to stacking, they don’t want to follow either of the procedures above, so they just make this request.

Source: “Understanding Multi-Level Commissions and Their Role in a Successful Company (Revised edition) by Mark L. Rawlins.

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