For some people, negotiating comes as second nature. The rest of us need to carefully study and learn negotiation strategies to be sure we don’t end up on the losing end of business deals. Here are ten lessons for improving your business negotiation skills.
Today in business you don’t get what you ask for–you get what you negotiate. You see, everybody wants to know “What’s in it for me?” So for you to get what you want, you’d better be prepared to answer that question for the people you do business with by learning negotiation mastery.
I have had a good deal of success in negotiating opportunities lately, especially since I am not known as a master negotiator. I have negotiated raises that were 5 times what was offered, negotiated an executive level position worth thousands more than in the job description with triple the job security, and bartered online services worth hundreds of thousands of projected income for my company. How did a novice like me accomplish these things and learn how to negotiate in business? Here are 10 steps that I use for successful business negotiation:
Know What You Want… and What They Want
How simple this sounds, but how difficult to implement. You need to know specifically what it is you want from the transaction or negotiation. Don’t wait for the other party to state their position to determine what yours is going to be. If you want a raise, how much? A commission for click-thru sales, what percentage? Write these things down as a wish list of all the things you do want before you begin negotiations. If not you may look back and find you were coerced into accepting terms for things you didn’t need to begin with.
In order to counter effectively and find how your value matches the other side’s needs, you first need to know what those needs are. Again, be very specific in terms of dollars, percentages, times, etc. Savvy negotiators will take their specifics and read between the lines to find needs not stated, emotional gains like political wins within the company.
Lack of patience on your part can make you look like an amateur and kill a deal. Ed Brodow, author of Negotiate with Confidence, says that your patience can be devastating to the other negotiator if they are in a hurry. The reverse is true for you. Conceal self-imposed deadlines that reveal to your adversary that you might be had a little easier to meet a timetable. “Never accept the first offer,” says Brodow. “They will be more satisfied if you reject the first offer — because when you eventually say “yes,” they will conclude that they have pushed you to your limit.
Know Your Cut-and-Run Point
One of the biggest problems with auctions for the purchasers is that people get whipped into an enthusiastic frenzy during the process and bid, and ultimately purchase, something at a much higher price then they would have ever considered possible. They fail to know their ceiling bid. This can happen in negotiation too. You must know your fallback position or cut-and-run point. What’s the bottom line amount you will accept?
What Hill Will You Die On?
In any negotiation you will need to make concessions if for no other reason than to allow the other party to feel they have gotten something out of the negotiation. Decide in advance what are the key concessions you will not make—what’s really important to you. Don’t die on a hill that ain’t worth dying on, folks. If you’re being offered a position as an executive in a company, is the monthly car lease an important enough point to be a deal killer?
Match Benefits to Their Wants
For you to expect anyone to give you anything, you know you have to provide value, benefits, to him, whether in a verbal negotiation or a written proposal. Now you know what he wants, so examine your list of attributes for yourself or your company, and look for matches to the needs of your negotiating counterpart. Expert negotiators will find unfulfilled wants that the other party has that weren’t mentioned and point out how doing business will satisfy them. For instance, I recently negotiated a deal on behalf of an online business portal with a national data provider. The data provider allowed us to upload data that is normally paid for on a subscription basis in exchange for access to the expected web traffic on the portal. This traffic means click-thru sales, which we even negotiated a commission on!
Seek Win-Win Opportunities
This is a mindset that has to occur for you to be successful today. There are no more winners and losers in discovering consultative sales or negotiations. There has to be winners on both sides of the table, so look for gaps that you can fill and look how the other guys can fill your gaps. The fact is that every company and every individual is different with different needs and wants. Use that to your advantage. Something that has little cost to you in concession may be a major coup for the people you’re doing business with. Let them have it, because the reciprocal situation applies for you. Free software is an example. Software costs little to reproduce, so therefore the marginal costs to a software company are miniscule, but the value of a package could be immense to the right party. Everybody wins if all sides keep the needs of their opposition in mind instead of thinking about defeating them. Opportunities will surface that you never imagined possible.
Find Workable Compromises
This goes back to point number 4. Certain things you cannot live without, but others are flexible. Know in advance where you can be flexible and just how flexible you can be (Gumby or Plasticman?). Any time you give in on a point in one area, such as terms of payment, it is perfectly acceptable and expected that the other party will flex somewhere else. As long as you keep from flinching on your critical negotiation goals, you can find compromises that allow both sides to come together in the middle without losing anything of real value.
Never Undercut Your Value
This is a basic sales mantra that I live by, and it occurs every day when people concede on price or terms without narrowing the scope of service or demanding equivalent concessions. If you are willing to take a hit to your bottom line in exchange for nothing, your credibility goes to zero, now and in the future. If you do it once it becomes expected. Furthermore, it leads to mistrust, because you just proved you did not give your best deal from the get-go. You’ve set yourself up for the proverbial spitting for distance contest, subjecting your side to future browbeating for unjustified concessions. Any time you concede anything in a negotiation, make sure that you show value is less from your side or demand additional value from their side.
Stick to Your Guns
If you offer a good proposal and you know it, stand by it! Don’t let fear, condescension from your counterparts, or chiding language make you back off from your position. Let her blow off her steam, telling you how ridiculous your argument is while proving nothing, and then re-emphasize how she wins by doing business with you. Put the ball in her court by asking her how to show you there is no value in your offer. It’s easy to throw stones. It’s much more difficult to prove those airborne stones were deserving of flight. Don’t back down and you won’t fail the final test of the negotiation. If you cannot achieve satisfaction, follow negotiation expert Brodow’s Law: “Always be willing to walk away.” Other deals are just over the horizon, so don’t get too vested in this one.
Document the Deal ASAP
You’ve got what you want and so does the other side. “Look honey, it’s a win-win situation.” Great! Get it on paper before you pat yourself on the back and get it to the other guys for sign-off. Why? First, tomorrow his memory may recall something differently. Second, many times negotiators occur between the leaders of organizations or people who guide the operation but have no legal background. As soon as the lawyers and analysts get ahold of the agreement, you can bet that items will be questioned today that were a slam-dunk yesterday. Oh yeah, it’s true.
The next time you’re in a situation where there is give and take, remember a negotiation is taking place, whether you call it that or not. Apply these ten little principles to your situation and watch with wonder as you get that raise, secure that new job, make that next sale, or get that great deal. Then go out to your favorite restaurant and reward yourself with a hot meal for getting what you wanted—on you. You deserve it.