The 5 Rules of the Art of Trading You Need to Know
The art of negotiation obeys some golden rules: know 5 of them and apply them in your daily sales routine.
So you’ve done all your work really well, qualified leads, booked visits, and made phone calls. He didn’t forget any follow-up and knew how to manage his relationship with the client perfectly to show all the advantages of his proposal.
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The big day of closing the deal has arrived and, as is often the case, you made a meeting to hammer out the final details. That is, it’s time to show your mastery of the art of negotiation!
Do you feel safe at a time like this? It really isn’t easy.
Usually, the art of negotiation involves 4 steps: Preparation, exchanging information, formulating options and closing a commitment.
To help you in some of these steps, we have separated 5 tips that can make a difference when closing a good deal with the customer at the time of closing the sale. Check out!
The art of negotiating is just one of the important aspects of improving your sales. Also take the opportunity to download our Complete Guide: How to Negotiate with a Client, learn how to overcome objections, get to the YES, and everything about the best way to negotiate with the client to be an impeccable negotiator!
The 5 Golden Rules of the Art of Trading
1. PICO: principles-based trading
As we said, the art of negotiation goes through several phases. One of them, the preparation phase, must be based on principles and not on personal opinions or “guesses”.
And so that you always keep this in mind, this acronym, PICO, was created with the initial letters of the main principles that you should take into account when preparing and planning for the negotiation.
- P ROBLEM: be objective and notice what problem should be solved, not to make judgments not guilty and never attack people points. Face the problems, that is, the differences and edges that must be trimmed towards agreement!
- I Interests: do not select a position and stay fixed on it. Try to understand the common interests that may converge between the parties.
- C CRITERIA: Determine what will be offered based on logical criteria that can be clearly explained, not your personal wishes.
- O PTIONS: with everything “on the table” it is time to seek options together, do not be inflexible, it will not take you anywhere. Chat, dialogue, and come together to the best options. Get ready with a range of options that can be traded, anticipating and feeling more secure.
Rest assured: without having these principles defined you will not be prepared to negotiate.
2. Force field analysis: Power, Time, Information
Calm down, we’re not talking about futuristic defense technology. The force field consists of 3 spheres:
In fact, whoever has the most information and can deal better with time will be the most powerful part of the commercial negotiation. This is because, generally, the time people have to make the decision is given, and that is: either the person is in a hurry to decide or he can wait.
Therefore, it is once again clear how the preparation and seeking of information is of vital importance in the art of negotiating.
3. Defining your trading strategy
There are some styles used in seeking the final compromise in a negotiation. And depending on which trading strategy is adopted, the results may be more or less adequate.
See the 5 main styles:
- Competition: there is no intention of reaching a mutually beneficial agreement. The objective is to have more advantages and “beat” the other negotiator. Usually one of the parties loses or there is no agreement.
- Avoidance or avoidance: the parties seem to deny to themselves that there is a problem to be overcome. It usually does not lead to any results, as the negotiation itself is avoided.
- Collaboration: the two sides talk a lot, expose facts, ask questions and are always looking for a common solution that pleases both.
- Accommodation: often one of the parties confuses collaboration with “giving in”. Yes, you have to negotiate and compromise on some points, but accommodation means that one of the parties has lost beyond reason of its own volition. Sometimes it can be a strategy to achieve long-term relationship gains.
- Conciliation: a compromise in which the parties end up giving in on some points, but in a way where the two are not so satisfied with the end result.
Usually, what is sought in the art of negotiation is to use a collaborative strategy so that the gains and losses are rewarding for both sides.
A collaboration strategy is best suited for the art of negotiation.
4. BATNA or MAPAN
Its collaborative negotiation strategy, supported by its preparation and optimal management of time and information, should lead to the BATNA (Best Alternative to a Negotiated Agreement) or, in Portuguese, MAPAN: Best Alternative to a Negotiated Agreement.
These parameters will be the basis of comparison to decide whether to close or forgo the deal. It is you who must define, before starting the negotiation, the terms of your MAPAN, thus avoiding sealing a commitment that, later, you will realize was harmful to your business or your company.
Remember, MAPANs are dynamic: it’s no use defining a MAPAN for a certain trade and wanting to repeat it in the next one, as market variables are very complex. Once again it is evident that the art of negotiation requires a lot of preparation and study.
Overly relying on their persuasive power, without properly informing themselves and setting parameters, is a mistake some still make.
5. ZOPA: Possible Agreement Zone
We talk a lot here about the need to handle information well and exchange it as much as possible with your interlocutor. The art of trading involves a lot of this and a point that some forget is to seek consistent information about minimum and maximum prices when this is possible.
There are cases where a company gives too much in its prices without knowing that the other would be willing to pay more for that offer. For this, companies must define their target prices and their reserve prices, both for purchase and sale.
For example: let’s say that a company wants to sell a certain product for the ideal price of 1,000 (target price), but knows that it can sell for at least 850 (reserve price) and still make a profit.
The other company aims to buy for 750 (target price), but would accept to pay up to 950 (reserve price) for the product offered. In this case, ZOPA trading would be in the price range between 850 and 950, which makes trading much more viable.
These were just 5 tips on the art of negotiation, a complex subject that can be mastered. Just prepare hard, get the right information, and have a defined strategy.
The art of trading: + 4 golden techniques to close more deals
Want to learn even more about the art of trading and understand it in detail? Then check out our exclusive material and learn to trade like a master salesman!
In this Scheduler material, you will:
- Find out how to negotiate with a client: in a negotiation, your objective is to reach an agreement on the proposal and the way to do this is to build value in your offer. The solution of your product or service is the key point of the negotiations and not the price.
- Sell More with Sales Trading Tips: Check out 4 golden trading rules that we recommend you do not violate during any trades. With them, your sales will be much more relaxed.