By Deb Calvert, President, People First Productivity Solutions
By the time two parties to a negotiation are sitting across the table from each other, the negotiation may already be over. If you didn’t plan ahead, chances are that you’ve walked in to a fait accompli, a done deal, a ship that’s already sailed. If the other party has prepared in these ten ways and you have not, then you’re at an extreme disadvantage. It’s unlikely that you can recover from this inferior preparation. But there’s always the next time.
Here are the ten ways to prepare so that you don’t find yourself in those dire straits. When you prepare in these ten ways, it will be the other guy – not you – who is left behind.
1. Ask questions before it’s time to negotiate.
If you wait until the negotiation begins, you’re going to get answers that are intentionally limited. During the negotiation, people withhold information. Before a negotiation, ideally in a non-threatening needs assessment, learn all you can about what the buyer values and what alternatives the buyer has to doing business with you.
2. Know what the other party values.
It’s absolutely critical to understand what the other party values. Don’t make assumptions. Different people value different things at different stages in their lives. What mattered in the last round of negotiating may not matter as much this time. Do your research, ask questions, test the waters to probe and suss out what matters most to the other party.
3. Be prepared to anchor what matters most to you.
Do internal research, too, to determine what matters most to others in your own organization. When you know what the terms need to be, you will be in a position to make the first offer and anchor any counter-offers that follow. For the most important terms of the agreement, it is usually better to make the first offer.
4. Consider how to manage urgency in your favor.
Time pressure can work against you in a negotiation. If you have a tight deadline, chances are good that you will make overly-generous compromises just to get a deal done. Preparing ahead of time means you can start the negotiation sooner and avoid letting the other party run the clock down so that you will cave in to the time pressure. To manage the feeling of urgency, attach terms to the deadline – a percentage increase, for example, that expires or a range of selection that is only available for a limited time.
5. Know your own position and interests.
Your position is what you want to achieve in the negotiation. Your interests are the underlying motivations, the reasons why you’ve assumed this position. You need to know both so that you don’t miss an alternate solution that fully satisfies your interests even if it does not quite match the position you assumed. That may be okay, and it will give you significantly more flexibility if you have the “whys” in mind.
Likewise, it helps to know the position and interests of the other party. If you haven’t been able to determine this ahead of the negotiation, be sure to ask “why does this matter?” questions throughout the negotiation.
6. Build in a few giveaways and concessions.
If you plan ahead, you can include a few terms in your initial offer that you know are expendable. This is called “log rolling,” and it’s a common practice in negotiating. When you plan ahead, you can avoid being pressured into trimming something that was vitally important. Instead, you’ve added some fat that can be trimmed without taking away from what really matters to you.
Think, too, about equivalent concessions. Unlike log rolling which amounts to giveaways, concessions are framed as if/then trade-offs. You’d pre-plan for these, for example, by considering what you’d ask in return for expected add-ons that the other party might request.
7. Frame the conversation so you set the scope of the negotiation.
Before the negotiation, frame it up so that you’ve set and communicated what the scope of the conversation will be. Open the negotiation by reiterating what you’ve already outlined. This is a little like setting the agenda for a meeting. It sets boundaries for what is on the table and what is off the table.
8. Know your own BATNA and the other party’s, too.
BATNA stands for “Best Alternative To a Negotiated Agreement.” Your BATNA is your back-up, your Plan B or second-best plan. It is important to know this before you walk into a negotiation. A strong BATNA means you have a good back-up plan, another customer who can and will come close to the terms you’re attempting to win here. A weak BATNA or no BATNA puts you in the undesirable position of really needing this particular deal. You would, of course, make different decisions in a negotiation based on how strong or weak your own BATNA is.
Learning the other party’s BATNA is also helpful. If they have a strong alternative to doing business with you, you’ll know that you need to weaken their perception of that alternative and/or include deal sweeteners to widen the gap between doing business with you and with the alternative. If they have a weak BATNA, you’ll know that you can hold fast to the terms you’ve set.
9. Determine your walk-away point.
Rather than making decisions like this in the heat of the moment, plan ahead and set parameters that you will stick to for where to start and where to end the negotiation. At a minimum, pre-determine your walk-away or reservation point. As a seller, this is the minimum price you’d accept or the minimum contract term. As a buyer, it would be the maximum price you’d be willing to pay or the maximum contract term you’d agree to. This is your walk-away point because if the terms exceed it, you will walk away from the negotiation. No deal.
10. Know who will do what during the negotiation.
When you will be joined by others from your company for the negotiation, plan ahead for who will do what. Will there be a good cop/bad cop dynamic? Who is the final approver of terms? Who fields questions? Who will make the initial offer to anchor the conversation? You’ll also want to be sure that everyone on your side of the table is informed and in agreement about the other nine preparation steps on this list. And, just to be sure you stay aligned, set up a signal so you can call a time out and regroup as needed.
With these ten steps, you will be prepared and confident walking into any negotiation.
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Written by Deb Calvert,
Sales Expert for ManagingAmericans.com & President, People First Productivity Solutions.
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