Want to improve your negotiation skills?
Firstly focus on addressing the other side’s needs. Remember, it’s not about you; it’s about them. Be sure to know what your best alternative to a negotiated agreement (BATNA) is prior to entering a negotiation. Consider the other party you are negotiating with – what do they value? Perhaps some things such as delivery speed or contract duration are more important to one party than the other. By identifying this we can add value. Also try to deduce the other side’s BATNA which can help guide you as to how much power you may have in that particular negotiation.
Going into a negotiation set your goals ambitiously, these should not be your bottom line.
Most parties want to show they have negotiated price down. Consider providing a discount if the other party pays up front, this may seem like you are being reasonable and giving a concession. This is a good way of lowering your price with your first counter offer. Saying that if they paid up front, you would do a lower price or commit to a larger order.
In a negotiation, there are 3 levels, interests, rights, and power. Rights are who said what and if they are correct. Power comes down to threats. Ideally, you focus on the other person’s interests. If you can shift to the other person’s interest, it will move things forward productively. This allows you to work together, potentially into the future. An example would be rather than thinking of yourself buying a cheaper car price instead think of the car seller’s need. They may need to ship more by the end of the quarter and frame it like you are helping them.
If you want other side to take a risk highlight loss – this means that they are more likely to change to avoid potential loss. If you want them to maintain status quo highlight gain.
A compelling message might use the potential of loss to cause action and then poses a solution. If you message threatens loss to much it can induce fear which causes inaction. Gains often aren’t enough to prompt someone to depart from stays quo. We tend to feel losses double as much as gains
Ideally you want to start the negotiations and provide the opening offer as this provides you with an advantage – an anchoring point. This is against what many people’s instincts are. The key is to give MESO – multiple simultaneous offers that differ slightly with your initial offer. How the other party reacts to these will allow you to obtain more information about what they value. It is important to give the offer to the person so you can assess how they react and ascertain what they find of most value. “Say it don’t send it”. Multiple simultaneous offers can make you seem more reasonable and more likely to get multiple offers back as counter offers rather than just one.
Ideally, do not close each issue individually. Keep them on the table so things can be varied to a bigger offer. Bundle the negotiation so that you are not solely discussing price. A way of doing this is to use the word could rather than will when discussing each topic earlier in the negotiations. By bundling issues it allows you to have room to conceded and makes you appear flexible.
It is important to leave room to concede. Don’t concede before you start – even if you really want the contract and are tempted to get it by going in with a low price for your services this do not do this. Mention benefits then put your offers in expecting to concede. The other side needs to see you conceding.
Five 5s
First offer(s)
Focus on them
Frame your offer; loss words to move them off status quo & gain word to keep status quo
Flexible leave room to concede and provide multiple simultaneous offers
No Feeble offers, offers need to be specific Remember you need to know your ambitious goal and the bottom line!
