8.2 Exchange Value – Explanation (OBN-VL)
8.2 Exchange Value – Explanation
What is Value? Everyone talks about value – but what is it?
First, understand that value is a creation, and you are the creator of that value. The value must be shaped, but how do we shape value?
Remember, when we give something away, its value is diminished. When we insist on getting something of greater or equal value in return, its value is enhanced.
We can increase value by linking it to the satisfaction of one or more needs:
The more needs satisfied, the greater the value. The higher the need on the need hierarchy, the more value we provide when we satisfy that need.
So, the overarching rule of Value Exchange for successful Negotiation is simply:
For everything we give, we must get something of greater or equal value in return (a trade).
Profitable, sustainable agreements come from a process of value exchange rather than concessions with little or nothing in return.
High-performing negotiators know that to reach profitable and sustainable agreements, they must surface all of the needs of their negotiating partners, as well as their concerns and potential objections, and then negotiate the entire agreement rather than deal with issues one at a time as they arise.
High performing negotiators create a plan that includes:
All your negotiating partner’s needs, as well as suspected business, personal, and technical needs.
A START, GOAL, and EXIT strategy.
A strategy for value exchange that conveys the desired message — “I am willing to be flexible and innovative, but I need to receive value back in return for value provided.”
An understanding that exchanges should be given slowly and reluctantly, but starting with a significant exchange, then getting increasingly smaller to deliver the message that “there is little else to exchange.”
An appreciation for the role tension plays in the process, and a willingness to leverage that tension rather than avoid it.
Ideas for innovating with negotiating partners to keep the decision based on total value and ROI rather than just one negotiable like price.
Steps to Exchange Value
1. Create a value exchange strategy.
Expert negotiators understand what has high value to the customer and what it is worth for the sellers’ side. They identify what to exchange, and what to obtain in return, with a focus on high value, low cost exchanges. They also have a plan for a series of decreasing exchanges to deliver the message that they are flexible, but “the end is near.” Be sure to plan the START, GOAL, and the EXIT, for a planned yet flexible approach.
2. Name the exchange, and clearly articulate the value and/or cost.
Follow this with the benefits to the buyer.
3. Clearly state what is expected in return.
Resistance is likely, so top negotiators are prepared to state a demand at least three times. Reciprocity is key to success.
4. Make value exchanges in installments.
Many negotiators expect a number of rounds, which creates a feeling of collaboration and willingness to work together. High performers start with the largest, most impactful exchanges, but don’t offer everything at once.