How to trade instead of negotiate
The penultimate stage of most sales processes is typically called “Negotiation”. It’s where contracts get signed and deals get closed. The problem is that negotiating implies confrontation and haggling, which usually ends with the weaker party yielding and feeling they lost. It’s no way to set a partnership up for success.
Instead, I like to use the term “Trading”, because a) it implies working together with your customer to find a solution that works for the long term and b) for most of my career I’ve worked for the traditionally weaker party (a startup) selling to the traditionally stronger party (a large enterprise).
As a seller, the key to trading instead of negotiating lies in offering your buyer multiple options, so that they can get what they want without you having to devalue what you do. The psychology behind multiple options is simple: buyers (like most humans) like to feel they are in control of their lives and having choices fulfills that desire.
Assuming you’ve offered your buyer multiple options, the best practices for trading your way to the finish line are:
Recap how you got here. While you as a seller will know the deal inside out, it’s likely that your buyer will not. After all, they have a full time job besides buying your product. Recap the impact your buyers are looking to achieve and the solution options you have recommended.
Be clear and transparent about the details. Don’t try to hide stuff. Lay out the features and services in each solution option, all the negotiation levers; price, contract length, discounts, and how they work. It builds trust and makes the outcome more predictable for you as a seller.
Check for questions. Ask your buyers which option they are leaning towards and what questions they have. No matter what they ask for, repeat it back to show that you understand it and have taken it seriously, even if it seems ridiculous to you.
Prioritize their asks. Ask your buyers which of their asks is most important to them and try to find the reason behind the ask. For example, when a buyer pushes back on price, what they really mean is, “I don’t have approval to spend over $X and don’t want to go back and ask for more because it will make me look bad”, so a good way to probe for this is, “Do you have a budget threshold you are trying to stay under for internal approvals?”.
Identify the decision maker. You want to be sure that the person you are trading with has the authority to make decisions about spending money on behalf of their company. Ideally you will have determined this earlier in your sales process as part of building your stakeholder map and mutual action plan. If not, a simple way to ask is, “If we are able to reach an agreement today, who else is going to need to approve from your side?”.
Make your trades. I like to think of trading as guiding. If they want a lower price, guide them towards the solution option that fits their budget, e.g. “Option A is going to be the best solution for your budget. How about we start there and revisit moving to Option B in 6 months once we have some data on the impact?”. If they want to protect against future price increases, guide them towards a multi-year contract, e.g. “If we do a 2 year deal on Option B, we can lock the price for the second year”. If they want extended payment terms, guide them away from discounts, e.g. “If we do quarterly payments instead of upfront, our finance team won’t approve the discount”.
Ask for commitment. After you’ve made your trades, ask, “Are you ready to move forward to signature today?”. If they aren’t ready to commit, ask why and go back to step 3 above.
Confirm in writing ASAP. Send an email summarizing the trades and send an updated contract through your e-signature software. Momentum is your friend in closing deals, far more so that setting arbitrary expiration dates that no experienced buyer takes seriously.
I’d love to know what other best practices are you using to close deals! Let me know in the comments!
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