Episode #156: Success Negotiating - Part Two

In Part One we covered the four steps involved in negotiating: Analysis, Presentation, Bargaining and Agreement. Today we are going to go a bit deeper. Before getting to the negotiations stage though we need to determine our position and that of the other side. Which items are negotiable and which are not? What would an ideal outcome look like? What would be a realistic outcome? What is our fallback position? We need to do the same thing from the client’s perspective. Looking at it from their point of view, what do we think the client fallback position would be? What do we think they would consider a realistic outcome. What would be an ideal outcome from their point of view?

In the majority of B2B situations, we are not looking to master tricky negotiating techniques, because we are looking for an on-going relationship with the other side. However we need to consider some pertinent elements and also recognise when negotiating tactics are being used on us.

1. The walk away option

Establish your BATNA - Best Alternative To A Negotiated Agreement.

We need to decide at what point we will leave the negotiating table, if the client is unreasonable. We need to have established this walk away point very clearly before we start negotiating, so that we know where are the limits of patience.

2. Silence

The pressure of silence can cause people to make concessions or offer up valuable information we can use in the negotiation. Japanese people are much more relaxed about having silence in the gaps of the conversation that most other nationalities. Western business people feel pressure to fill up the empty spaces in the conversation, because it makes them feel uncomfortable. Resist the urge and just sit there patiently.

3. Authority to negotiate

We mention we need to refer the offer to a higher authority in the company.

This can buy time or let things cool down if they get heated. This can be true in Japanese companies where a lot of the decision makers are never in the room. Ultimately, they have to apply their hanko or seal to the internal document recommending the course of action, so they need to be worked on internally by those who want the deal to go through.

4. Ultimatum

This is a deal/no deal decision point, similar to the walk away. The deal may be very close to agreement, but there are usually a couple of conditions which are hard to be flexible about and these become deal breakers. The point is to know what these are in advance and try to come up with alternatives which will defang these barriers to getting to a “yes”

5. Persuade

We add value to sweeten the deal to get them to agree. There may be things on our side which are not overly expensive for us which we can tie into the deal, but which are perceived as having high value by the other side. We should have considered what these might be during the preparation stage. As the negotiations ebb and flow, we can see if one of these sweeteners are needed to be brought forth or not.

6. Time pressure

We deliberately shorten the decision-making period to force an answer. Having an “opportunity goes away” option is good for getting everyone to concentrate on doing the deal. When we know we will miss out if we don’t act, we are more motivated to make the deal happen. It is rare that there is only one buyer or one seller in the market at a point in time, so if action isn’t taken, someone else will grab the deal.

7. Delay or Inactivity

We slow things down. We don’t respond as quickly to their communication. This is similar to the “silence” tactic. By extending the time, pressure may start building for a decision. We never know what pressures the other side are on and slowing things down may force them to act quickly.

8. Add-ons

These are the additional concessions which are offered to close the deal. Research shows that 80% of the concessions are made in the final stages of the negotiation. We might have something which has value to the client but which is not a big cost to us, in order to make easier for them to say ‘yes”. It is often easier to add some additional condition, once the decision has already been taken. Having to go through all the internal approvals and gaining consensus may seem too much work relative to agreeing to this extra condition.

So there we have Success Negotiations Part One and Part Two. Go out there and be superbly prepared for your next negotiation.