Negotiation is a balance between the science of preparation and strategy development and the art of connecting with the other side’s needs and wants. The trick is to know just how much you have to ‘give’ in order to get all of your needs met (and with solid negotiation habits… some or most of your ‘wants’ as well).
Better habits will lead to better results in all of your negotiations whether it is a business deal, a personal purchase or even ‘Where are we going for dinner?’ decisions made under the stress of being hungry and in a hurry with family and friends!
SNI has a proven method for maximizing your objectives in a negotiation while maintaining a careful eye toward improving relationships. We firmly believe in using a system for negotiation not only because it improves performance, but also because it makes it repeatable and sustainable across an organization.
Our relationship based approach to negotiation is based around the core principle – the best way to get what you want in a negotiation is to help them get at least some of what they want.
Below are a host of negotiation tactics, strategies, and skills based on our negotiation training that will surely positively impact your negotiations.
Negotiation Strategies for Getting What You Want and Need
Don’t ever overestimate your weakness, nor underestimate the other side’s.
Many negotiators give in too easily when they believe they are weaker than the other side. One aspect of preparation is to identify the strengths and weaknesses for both sides.
You need reliable transportation, and you want a car that is $2000 over your budget. It is not unreasonably priced, but it is $2000 over your budget.
- Experts don’t haggle here. They weigh the other side’s needs (to move cars) and wants (to make commission) and with that leverage, they walk in and make a reasonable offer below their target price (leaving room to move).
- When faced with options to maximize the price (or switch to a less desirable car), the experts stick to their initial offer for a specific car.
- The experts point out how their offer meets the salesperson’s need to sell a car today.
- When the price starts to drop, the expert sticks to their offer and asks if the desired price is possible.
- If/when an expert does need to make a concession, they remember the three keys to making concessions- move slowly ($100 up), show pain (“my wife won’t be happy”), and ask for something in return (“but I’ll need free oil changes for the first year”).
And so on until they reach their target price. Sticking to your first reasonable offer and using the laws of concession forces the other side to start conceding in an attempt to get you to ‘trade’ with them. Resist the temptation to change your offer until you get your primary goal(s) met.
Scripting Your Exchanges
It is always a good idea to write out your needs and wants, along with their relative values, to plan for the exchange of value in a negotiation.
You are in the final stages of a salary negotiation with a great candidate for your team, and the candidate asks you for $5000 more than your budget for the position.
Experts:
- Already know what they are going to say when this situation arises. They plan to:
- Ask the candidate to reconsider the offer.
- If that is rejected, the next ‘offer’ should be worth far less than $5000 but should still be a move in the right direction. Ideally it’s a combination of moving in salary along with other variables.
- Trades such as an extra week of vacation, a 1% bump in 401(k) contributions or stock, ability to telework, flexibility in schedule and subsidized parking cost you less than the hard cost of that $5000 that is not in your hiring budget. These solutions will have less impact on your cash flow.
Writing out your strategy is the science and knowing when/how to offer these exchanges is an art. Fortunately, it is a strategy that you can learn and practice to get better. Here is another technique to help you practice this strategy and close difficult deals.
Offering 3 Options
An excellent closing strategy is to offer three options. Buyers like to feel in control. By presenting three choices: a premium package, an enhanced package and a basic package, you can usually influence the other side to choose your preferred option by simply offering it as the last choice. Three options balances people having a feeling of choice with not being overwhelmed by too many choices (paralysis by analysis).
You are selling a subscription service and the other side is asking for your most expensive package at a 20% discount.
Let’s assume that you have a basic service at $1200, enhanced service at $1500 and premium service at $2000. Your customer is trying to get you to offer premium service at $1600. You can’t mix and match components of your services a la carte, so:
- Offer the premium service hard at full price. Set the bar high.
- Next compare it to the basic service. They don’t want that.
- Ask questions and listen to their needs/objections.
- Make an offer to meet most of their needs and wants with the enhanced service at the price of $1500 saving the customer more than the 20% discount they requested while meeting most of their needs and wants.
Most negotiations will end with the other side choosing their price point (the enhanced service) or your value (enhanced at $1500 or the premium service at $2000). A nice win-win.
Negotiation Tactics for Dealing with Difficult People
Some negotiators bargain in a difficult way because they are in a bad spot, while others use power, tricks and tactics because they often work! In either scenario, you can counter the positional or argumentative negotiator by changing your mindset about these difficult deals, and utilizing some of their own tactics to neutralize them.
Here are some quick tips for dealing with tactical negotiators.
Neutralize your own emotions.
Take a deep breath. This isn’t about you. You have prepared well and you are negotiating in good faith.
Your customer says “I thought the customer is your first priority!? You have to help me out with a discount on this job so I can win US BOTH more business.”
Count to ten and stay in your ‘safe harbor’ of asking questions in the face of objections and power plays.
Ask questions:
- Tell me about your agreement with your client?
- Do you have a contract ready for this future work?
- Can I help you with the response to this RFP?
Use hypotheticals:
- Hypothetically, could we approach this customer together? With our combined buying power, we might be able to offer more value if we can win a bigger order.
- If we agree on X can we talk about Y?
If your gut tells you it’s a tactic, name it and neutralize it.
Sometimes you think the deal is done, and then someone new enters the deal for ‘final approval’. You suspect something (we call it “Higher Authority” or the “Nibble” if they ask for something last minute), but you’re not sure. Your gut says this is a tactic.
You’re probably right.
Here’s one way to handle it…
Your longtime customer Jenny says you have to meet her new budget manager to get your agreement approved.
“This is Bruce. We want to give you the business, but you have to lower the price to get his buy-in.”
The expert greets Bruce and asks him what he needs to make a decision. Bruce replies “Lower your price.”
The expert responds with a prepared response:
- “I believe you’re negotiating in good faith, but having you come in now with only one need – ‘Lower price’…this makes me feel like you’re using a ‘good cop-bad cop’ tactic.
- “Jenny and I have had many discussions. Can we catch you up on some points before we talk about price?”
Whether they confess or deny it, you have blocked the good cop/bad cop strategy because:
- You named it. They have to adopt another approach.
- Be polite, but know that you are on moral high ground.
- Protest (gently) and take the opportunity to restate your offer (or an alternative).
You cannot be wrong when you tell someone how their behavior makes you feel. When you feel it, name it and neutralize it. Try to get back to having a two-way dialogue.
Silence is a great tactic when combined with active listening.
Your negotiation has reached a moment when there seems to be an impasse. Try staying quiet. A pleasant, unworried and perfectly calm expression while your last offer is considered can be powerful.
A customer says the following at the last minute: “Thank you for your revised proposal, we like everything about it but need it for 5% less.”
Expert response: Let there be silence. It may feel uncomfortable but it’s ok to take a few seconds to think and put pressure on them. Then, eventually, if you need to break the silence, ask a question such as “What if that is the best I can do?”
As long as you stick to your offer and stay quiet, you cannot concede.
- Encourage the other side to state their objection(s) precisely and simply listen.
- Let them talk. Take notes, and ask them to clarify.
- Make the other side work hard to justify their position (objection) by simply staying silent or using a probing encourager (such as “Tell me more”).
Use silence and thoughtful probing to break the impasse. The other side may start sweetening the deal to move toward a resolution. It is now your decision whether to move from your last offer if you decide it is worthwhile.
Use time to your advantage.
Have you ever noticed how many deadlocks (strikes, Congress, bedtime) come down to a flurry of negotiating right before the deadline? There’s a reason why people believe it’s smart to buy cars at the end of the month (or at year-end). They believe that these deals might go away. Now is the time to buy.
We often react to perceived scarcity and allow the pressure of a deadline to drive bad decisions.
A new client sends an email stating: “If you cannot meet our conditions by midnight, then we have no choice but to select your competitor.”
Slow down. Nothing about your deal has changed, or needs to change, simply because the hands of the clock change or the calendar flips. The product or service costs nearly the same tomorrow as it does today. Deadlines are usually a power play, pure and simple.
To fight it:
- Ask the other side “What’s changing? Why can’t we continue to negotiate?”
- Use a hypothetical: “If, hypothetically, we decide to continue negotiating, we might be able to enhance our offer.”
On the other hand, most people seem to fall for it. Use it whenever you can. ”This offer is good until Tuesday” works as well as any other tactic.
Negotiation Skills for Winning More Deals, Faster and Getting Better Results
We teach a systematic approach to negotiating based on 4 primary skills – Preparation, Probing, Listening and Proposing. By using these skills in a systematic way, you can negotiate more confidently and minimize your emotional reactions to the other side’s positions, tactics and strategies.
Preparation is the only aspect of a negotiation under your complete control.
Our Preparation Checklist helps negotiators capture, organize and prioritize the information you gather prior to a negotiation. Your level of effort in preparation directly correlates to your results when the negotiation concludes.
Even with little or no time to formally prepare, the Checklist will help you focus your questions on issues that are relevant to finding a mutually acceptable solution.
If you want to get paid, use P.A.I.D. to remember these 4 crucial components of every negotiation.
- Precedents – Past deals that could affect this deal for both sides.
- Alternatives – What options are available from a highest goal down to a walkaway?
- Interests – Beyond positions, what does each side really need and want?
- Deadlines – When does a deal have to be done to satisfy each side?
Additionally, you should prepare strengths and weaknesses for both sides, a list of your needs and wants, a situation summary, information on the other side’s style, and a script for exchanging value in the negotiation. The more you prepare, the more successful you will be.
Probing is a safe harbor when under pressure.
Ask questions instead of taking positions or making offers too early in a negotiation. The other side might use tactics to make you concede. Rather than reacting to the tactics, probe to find precedents, alternatives, interests, deadlines as well as their goals and priorities. Your objective is to find leverage for your side.
Ask these questions to do your preparation on the fly.
- Precedents – “How did you come to that price? What are you basing that on?”
- Alternatives – “What options are you considering?”
- Interests – “What is important to you? What else? What else?”
- Prioritizing Interests – “Which is most important? Why is that important to you?”
- Deadlines – “Is there a deadline? When? Why is that deadline important?”
Notice that we are trying to flush out all of the important factors for the other side before we address each.
Here is a sample exchange:
What is important to you? Price
What else is important to you? On time delivery
What else? A strong warranty
What else? Those are the top 3
Great. Of those top 3, what is most important and why?
…
Now you have a list of the decision-making factors and can address each carefully and strategically, with a sense of how they rank in importance to the other side.
Active listening is harder than it looks.
In a negotiation between two or more parties, everyone involved wants to be heard but the parties often spend too much time talking instead of listening. The Greek philosopher Epictetus stated, “Nature gave man two ears but only one mouth so he might listen twice as often as he speaks.”
You can increase your active listening skills by connecting with the speaker.
- Eliminate distractions. Put the phone away. Find a quiet place to negotiate.
- Make a point of being ‘present in the moment’ and consciously focus all of your attention on the speaker.
- Encourage the other side to continue speaking. “Tell me more about that.”
- Take notes. When a great idea comes to you and you don’t want to forget, do not blurt it out, write it down so that you can continue to listen without the distraction of trying to remember.
You should also consider your response before replying.
- Listen to hear instead of waiting for your turn to speak. When we listen to reply, we tend to miss critical information.
- Pause for a moment to check your preparation checklist before responding to an offer or position. Don’t ‘wing it’. Use your preparation to full advantage.
- If you are asked a tough question which puts pressure on you, answer their question with a question of your own. “I’m interested in why you asked that question? Help me understand.”
Last, you should confirm what was said and agreed to.
- Restate, paraphrase and summarize the agreements at the end of a negotiating session. Focus on creating mutual understanding and a clear path to a full agreement.
- Follow up in writing to solidify agreements. Sending a short memo of understanding after a session in a negotiation creates a stronger commitment to those agreements.
- Deliver on your commitments. Nothing erodes trust and confidence faster than a missed commitment during a negotiation.
Proposing rules to maximize your wins.
When it comes to proposing, there are four critical skills to use when coming to a final agreement. It is where the results of your hard work and strategy come to fruition.
- Be strategic about the first offer. If you both know the market very well, go first in order to ‘anchor’ the negotiation at the best reasonable first offer you can make. If you get the sense that the other side does not know the market very well, let them go first. You ever know what they will say or share. At best you have an offer better than you expected, at worst you know where they stand and can educate them with precedents on the market.
- Aim reasonably high (or low). When you do make an offer, whether it is the first or not, make the best (for you) reasonable offer you can based on precedents and other information you have prepared. Reasonable is key here – if your offer is too high (or low), the other side may elect to move on to other options.
- Avoid using (or responding to) ranges. A recruiter asks you for a ‘ballpark figure’ for your salary requirements. Experts never reply with “I’m looking for something between $60 – 70,000.” The only number the recruiter heard was $60,000 and you will probably end up slightly south of that low end of your range. Why do we use ranges? Because we are not confident in our ask. Get rid of that crutch. Ask for $70,000 and let them respond.
- Don’t accept the other side’s first offer too quickly. If you immediately accept their first offer, they will feel as if they left money on the table. Even if it is a really fair deal for you, pause at least, and counteroffer if it makes sense. Often the other side will feel better about the deal because they will believe they worked for it.
- Don’t settle for ‘splitting the difference.’ It is a lazy way to end a negotiation, and the only benefit is a perceived sense of fairness and getting the deal done quickly. Splitting the difference rarely satisfies each side completely and can become a ritual of haggling to meet in the middle on future deals. Use a ‘nibble’ tactic to get something ‘extra’ so you get the bigger ‘win’.
By combining negotiation strategies with tactics and skill, you can win more deals while also developing long-term relationships. The approach above has helped organizations maximize their results since 1995 and proven that negotiation is a skill anyone can learn to improve outcomes.
If you are interested in learning more take a look at our various programs (sales training, negotiation training, influence training), give us a call (410-662-4764), or fill out the form below to schedule a call.
