When customers enroll as distributors, it can look like a win. Enrollments climb and your KPIs look great. Some of those new enrollees will love the products and share them with family and friends. But most are signing up for the lower price. As you evaluate your growth strategy, look at who pays for that discount.

The gap between the retail price and the distributor price is a rep’s commission. When a customer enrolls and buys at the distributor price, that gap disappears, and so does the rep’s income from the sale. Less income means less reason to invest time in the business, and retention drops. Time is your top competitor, and that commission is what made the time worth it.

Retail commissions typically run 20 to 35% or more in our industry. Team building commissions on a single order are usually much smaller. When a customer enrolls and buys at the distributor price, the rep who found them loses the larger retail commission and gets only the smaller team commission. Your plan now has to pay both the seller and the upline from the same pool of money, so the payout is split among more people. That leaves less for both the seller and the leaders who are growing the business.

The FTC looks closely at whether a company’s rewards come from real sales to real customers or from people joining. That means you can’t entice people into the distributor tier just for a discount. Someone who doesn’t want to build a business should want to be a customer. Someone who does want the opportunity should find it worth the cost of enrolling. Blur that line and you risk serious consequences with regulators.

When customers decide whether to stay customers or become reps, your customer pricing strategy and rep enrollment cost are two influential factors they’ll consider. Set them so that someone who only wants the products is better off as a customer, and pay your reps a real commission when they enroll one. If a lower price lures customers into becoming reps instead, their sponsor is the one who pays for it.