Each one of us will have a different image of this scenario. Through years of negotiating I’ve learned that there is no single best way to negotiate and that good negotiators are not born. We negotiate every day whether it’s booking a hotel room, closing a large commercial deal or buying a house. Once you understand the principles, you’ll be able to use them easily.
I have used the principles outlined below in dozens of negotiations, ranging from closing a 60 million dollar telecom deal to avoiding litigation in a software license dispute to resolving a restaurant issue in my favor. Let’s look at some examples of “good” negotiator’s traits.
Almost everything is negotiable. Learning to negotiate is like learning a language; small steps developed over time lead to expertise. Maybe you’ve been unable to confirm a business appointment. If so, did you establish that you were talking to the right person? Did they have the discretionary authority you needed for a satisfactory answer? Did they see the value in your future business or something you might be able to do for them in return? These are some points that should immediately come to mind before you begin the negotiation.
Companies don’t like to lose customers so sometimes a well-crafted letter to the right person can reap rewards. On more than one occasion, airlines have reimbursed me for expenses due to late luggage. In these cases, the airlines wanted me to remain a happy customer. They negotiated an expense reimbursement in exchange for a favorable emotional response (and the likely future revenues down the road).
Neglect the other side’s perspective at your own peril
Remember the other side agrees for their own reasons, not yours. Let me give you an example of what I mean. You might get a better deal on a car on a rainy day or near month-end only because your purchase at that time will help the dealership reach its quota and the sales representative will earn a larger bonus. In this case, they might take less on the last couple of units sold. I’ll give you another example. A company may give you better terms or prices, not because your negotiating tactics were so persuasive, but because the supplier wants to show off the closing as a good faith, negotiated agreement in front of regulators. When they behave like good guys their behavior may result in less oversight from the same regulators. If you recognize this in the beginning, it may help your negotiating tactics. My main point is this: think about what the other side wants out of the deal.
Ask for more: be assertive but not aggressive.
Like a good salesperson, a good negotiator must have a thick skin. It’s no coincidence that good salespeople are often good negotiators and that great negotiators are often great salespeople. Beware of the easy “yes” as you may be leaving value on the table. In my experiences in negotiating large broadband network deals, if I don’t hear a no or we can’t, I may not have asked for enough and could be leaving money on the table. Another advantage of a negative response is the opportunity for reciprocity. In other words, if you can give a little on your demands, the other side may give a little on theirs. Still another example of being assertive may take place in a restaurant after poor service. You may want to have a quick negotiating session with the manager stating something like; ”I’m sure an establishment such as this would want it called to their attention when…” You get the point.
Can you do any better?
This is related to my point above about hearing “no” and is one of my personal favorites. There are multiple ways to enhance the value of an offer. For example, it may be an extended warranty added in at no cost or an accessory or a maintenance agreement. The key words here are “any” and “better”. Ask and you may be pleasantly surprised.
Create an environment for an open dialogue
It’s ok to disagree, but not because of personality clashes. Positions and interests can become the obstacle and it will be to your advantage (and is in your direct control) to create an environment of open dialogue and objectivity. Let me again reference our friends in sales. People like to negotiable with people they like and respect. It’s worth the effort to cultivate rapport and trust. Many times the negotiator can persuade his or her company to move off an initial position. I once was in negotiations over a multi-million dollar dispute with a vendor and some harsh words where exchanged in the early meetings. They called me in as the “outsider” and I soon got to know the negotiator on the other side. A few months later, we settled without lawyers for an amount better than we expected. Forget home turf advantage. Sometimes showing you are willing to take on a little inconvenience such as traveling to their location makes a big difference. In the more sticky negotiations I’ve been involved in, I often made two or three trips to their location to everyone one of theirs.
It helps if you can keep their best interests at heart. Understanding or attempting to understand, the opposing position can bring results. As stated above, in negotiations, the other party most often agrees for their own reasons, not yours.
Take the time to close
The longer you can keep a person in the negotiation, the more you can get out of it. Few of us like to waste our time or energy. A strong motivation to close a deal results from spending time on the negotiations. People like to think that the time they invest will yield something. Have you ever been in a situation where a seller says: “make me an offer”? The principles behind this include engagement and commitment, which can work in your favor as well. Remember, the longer you can keep the negotiations going, the higher the probability of agreement. Use the tactics above on agreeableness, assertiveness and best interests and you will increase your probability of keeping the conversation going and meeting your desired outcome.
However, don’t get so emotionally involved that you can’t walk away. An emotional attachment can easily be exploited by the other side. Concepts you will hear in buying often include the scarcity factor (it’s limited, unique, the last one) and the deadline. Don’t let your inner child overrule the walk-away leverage you have. A good seller can sense an emotional hunger a mile away. I use the “sleep on it” rule for almost any major purchase or deal term. If I feel as strongly the next day, I know it’s the right decision.
Don’t try and get the last nickel.
If you try to win every battle you won’t win the war. In most business (and personal) relationships, there is a next time. People expect a certain level of fair play. What’s your reaction when you read about a lopsided football score? Usually it’s not positive a one. At the end of an agreement, both sides should feel a sense of fairness and be willing to continue the relationship. I’ve seen deals derailed because one side wants it all and think they can get it. Don’t try and get the last nickel; separate the must haves from the nice to haves.
Learn to be a good listener.
Many times, people will tell you more than you ask. A wise coach and mentor reinforced this concept to me. It’s not a weakness to listen. Pause when you feel the tendency to sound the toughest or smartest. Many times, you can learn and exploit areas you didn’t know otherwise. Maybe the company is going through a restructuring, or there might be problems in their finance department. Maybe it’s some perception about your company (or yourself) that you didn’t know before. Maybe the other side doesn’t have time on their side while you do. Being a good listener has probably produced the greatest results in my successful negotiations.
Practice ethics in every part of your negotiations.
We evaluate and make instantaneous judgements throughout a negotiation. The baseline has to include a high expectation that what you are being told or promised is going to happen. We expect the rules of engagement to be understood, consistent and the other side accountable. I expect you to negotiate in an ethical manner and you should expect the same from me. Act ethically and in good faith, you will appreciate the piece of mind you get from it.
Get clear in your mind what you want
Knowing what you ultimately want, or will settle for, is important. This concept can be broken into two broad parts: Less risk and More reward
It might mean a certain price point you want to reach, an elimination or reduction of a liability, or simply a better “out” clause.
A simple example of a better out clause might be when you enter into a long-term lease or a rental agreement but are worried about the financial commitment in an uncertain job market. In that case, being able to negotiate a clause that allows you to break the lease in the event of a change in your job status might give you peace of mind.
Think about what would give both parties pleasure and not pain
People enter into agreements for their own reasons, which may not be the same as yours. Even though it is not always a win-win situation for both parties, if it’s perceived that way there is a greater chance of success. Sometimes one party’s pleasure may simply mean less pain. An example of this might be getting a large credit card balance reduced to a lower interest rate. The debt is still there but now it’s more manageable. In that case, the credit card company feels more secure because you have a higher probability of repaying the entire balance over time.
Make sure there’s an alternative that meets both needs
Even when negotiators get along well and have a track record of closing deals together, negotiations can stall. In the case of a supplier contract a viable option might be a shorter-term agreement with language that allows for the terms to continue unless terminated with some notice. You might ask for “most favored nation status” or “right of first refusal” as a reassurance from your supplier.
The key is having those interchangeable parts at your disposal that will fit with others. Another example is weaving in side arrangements through a separate arrangement. In several large telecom deals I worked on, the best alternatives I could get were either separate marketing development fund agreements or advertising co-op arrangements. In those cases, the monies didn’t necessarily improve the cost margins for the applicable products and services in the deal, but they did improve the company’s bottom line by reducing marketing expenses. As consumers, we accept store credits in lieu of cash frequently as we see it as the easiest option for the other side to agree to.
Go Ahead!
In conclusion, If you think you’re ready, you probably are. Start today to renew your skill set. The opportunities are everywhere. Find opportunities to practice the principles you read about and that make the most sense. Talk to successful negotiators. Think. Pause. Act. So when the president of your company calls, you’ll be ready.
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