To layer the Buttery Nipple cocktail effectively, start by pouring the butterscotch schnapps into a shot glass. Then, carefully layer the Bailey's over the schnapps by pouring it over the back of a spoon or using a pourer with a slow flow, directed at the inside edge of the glass. This technique allows the Bailey's to gently rest on top of the schnapps, creating a layered effect and ensuring a smooth flavor transition from one ingredient to the other.