Simply stated, game theory is the study of mathematical models. It is mainly used in economics, political science and psychology. Originally, it addressed zero-sum games, in which one person’s gains result in another’s loss. Game theory is a study of the ways in which interactions produce outcomes, because of this, it could be applied to selling.

The mathematical theory of games was invented in the mid-forties. Since that time, there has been quite an evolution as to how it is used as a tool to help determine outcomes based on the predictability of the players and circumstances associated with a scenario or event.

Game theory can be applied to analyze the various ways a scenario will occur, the motive of the players involved, along with predicting, with a level of accuracy, the outcome of each player.

In sales, if a salesperson can anticipate what the customer and competitive salespeople/s will do, using the principles of game theory, they can alter their actions to constitute their best chance for a successful outcome given the information and assumptions available regarding a specific sales situation.

A crucial aspect of game theory involves the information that players have when they choose a strategy.

A player in a game chooses their first action by considering the possibility of responses and counter-responses that will result from each action. For example; the game of chess would be considered a game of strategy. However, the game of black jack would not. In Chess, both players are required to make decisions. Both players should take time to analyze each other’s moves and contemplate future moves. In blackjack, the dealer is required to follow a protocol and is not allowed to deviate. In this case, you know what the dealer will do, based on the cards that are face-up.

Redesigning or re-evaluating a sales strategy using the concepts of game theory is how the salesperson could potentially gain a competitive edge.

Research has suggested “the customer” will start an interaction 80 percent of the time with one of the same four opening comments. The reasoning behind this is the predictability displayed by the customer and their propensity to retain constant in their patterns and habits.

Game theory has its foundation from the Nobel Laureate mathematician John Nash.  Nash suggests that most players in a game are “rational.” That being said, it is sensible to be able to accurately anticipate what to expect from each player: i.e. the customer and competitive salesperson/s are rational.

Once the predictability of the customer is identified, the salesperson can utilize game theory on how the interaction should unfold and how they can alter it to improve their outcomes for success.

By taking the time to make a hypothesis of the customer’s comments, reactions and responses in a given situation, the salesperson’s ability to increase their performance and enable them to be one step ahead of the customer and competition is greatly enhanced. This preparation however is contingent on the salesperson’s incentive. Is the salesperson motivated to take the time to complete this “due diligence” to gain an edge?

The better adept the salesperson is at this process, the better they will be at answering the following questions:

“If my customer opens the conversation with (fill in the blank), I should respond by saying (fill in the blank).”

“If I think competition is doing (fill in the blank), I should do (fill in the blank).”

“If my competition thinks (fill in the blank), what would be the resulting outcome?”

“If my customer wants to accomplish (fill in the blank), based on the above assumptions, I should do (fill in the blank).

By analyzing the possible responses to the above questions, the salesperson can determine the likelihood of “wins” or “losses” for each of the most probable response for the above questions. Completing this task will reveal a need to alter the salesperson’s approach and mindset moving forward. This revelation will help put the user one step ahead of the other players.

Greater contributions in the areas of estimating the customer and competitions rational, coupled with increased efforts in gaining more information should help paint a clearer pathway to success. However, what gets in the way of this success is the player’s incentive.