How to Trade Instead of Negotiate

Sales used to be all about negotiation. Two people would sit across the table from each other, haggling over the fine points of a proposal until both were confident that they had negotiated the best possible deal.

The problem is the word “negotiation”. It implies that both sides have to give up something that they really want in order to reach an agreement. We talk about negotiation as reaching a win-win outcome, but when both parties feel that they have been forced to compromise, it can feel more like a lose-lose.

There’s a better way to negotiate – one where both salespeople and customers achieve a win-win outcome. The trick is not to negotiate, but to trade.

Figure 1. The progression of a trade.

Using the trade in sales to achieve a win-win

What’s the difference between negotiating and trading? Negotiating pits one side against the other. It’s an adversarial relationship where the goal is to get the other side to give up as much as possible.

Trading is when both parties are on the same side of the table, finding a solution together. An example is offering something you both have in abundance, in exchange for something the other has that you find valuable, being fair for both parties.

Trading has many complex variables. Because there are so many steps to keep in mind, it’s often beneficial to run your thoughts by a colleague, who can help you stay on track and come up with creative solutions from an objective point of view.

How to stop discounting

Traditional negotiations often focus on price. The customer always wants the best price, and they often believe that discounts are a way a seller can demonstrate their commitment.

Discounts can often work in a counterintuitive way. Instead of making your solution seem more valuable, they can make the seller suspicious about your pricing. If you initially offer it at full price and then accept a 20% discount, why didn’t you just offer the 20% discount in the first place?

Even what seems like a small discount can have significant consequences for your company in the long run. In a recurring revenue business model, a 10% discount on a product means that after seven years, your company has brought in only half the revenue that it would have if you had sold it at full price.

The first thing to do is to replace the word “discount” with “price adjustment.” Discount is often expected by the customer just because they asked for it, and they don’t expect to have to give up anything in return for the discount. But if you reframe this as a price adjustment, it now becomes more clear that it’s a part of the trade. So if the customer is requesting a price adjustment, then you would request something in return for that price adjustment. At that point, you can have a collaborative discussion with the customer on what they are interested to trade in return.

The levers to use in a trade

There are multiple levers you can use in a trade. Make it clear from the beginning of the sales conversation that there are several things on the table, and be sure that you’re never framing the discussion as if it’s primarily about price. In fact, make it part of your goal to help the customer realize that they can benefit quite a bit more by focusing less on price and more on the other levers.

The levers above are the ones that are most often used in trading, but there are many others that should not be overlooked. These include things like case studies (can they commit to a written case study, or perhaps a personal testimonial or quote from their CEO), written reviews on review websites, or workshops with other parts of their organization for expansion purposes? All of these can greatly add to your ability to expand your sales to that same account, or to others in the future.

Remember that an experienced buyer is going to want to negotiate each of these levers separately. For example, they may want to hammer out a price before they move onto contract and payment. This limits your ability to trade. Keep everything on the table until you have come to an agreement.

How to prepare for the Trade meeting

Before the meeting, review your overall strategy and align with any internal colleagues who will join. Make a list of all the trade items that you expect them to bring up. Research who will be attending the meeting on the customer’s end. If there are several people you have not met, consider a ‘call-before-the-call’ with your champion to learn about their concerns.

At the start of the meeting, introduce all the participants. If you are speaking to anyone for the first time, make sure you share some background about “how we got here” before jumping directly into the proposal. Frame the conversation by explaining the different elements of the offer, and be sure to emphasize that it’s a win-win scenario.

The key steps in a trade

Here are the key steps to run through in a well executed trading discussion:

A great trading conversation is no longer about us versus them, but instead it’s solving the problem and getting everything on the table. When done well, everyone will leave the meeting feeling that it’s the start of a strong, positive working relationship.