For many of us, the word ‘negotiation’ conjures up images of fat cats in pin-striped suits, smoking cigars and shaking hands on shady deals. No one wants to be that guy.
Thing is, we negotiate our way through almost every day of our lives. Ever made dinner plans with friends? Convinced the kids to shut down the X-box? Tussled over ownership of the remote? Any time you have had to compromise is an example of a negotiation.
As expert negotiator, Chester L Karrass, famously said:
“In business, as in life, you don’t get what you deserve, you get what you negotiate.”
So, if you want to get your way at least some of the time, you’re going to need flex those negotiating muscles.
Unfortunately, despite all the daily practice, many business owners feel that when it comes to the higher-stakes negotiations that arise in their business life, they fall woefully short.
The secret weapon for negotiating well
What’s the most essential ingredient for effective negotiations? One word. Confidence.
A lack of confidence in your negotiating skills, will seriously limit your success. You’ve got to be able to back yourself if you want to get the best deals from suppliers, resolve issues within your team and sell your products or services to your customers.
Preparing well and having a process around something often significantly increases confidence and reduces performance anxiety.
That’s why we mentor our clients to follow our 6-steps for successful negotiating. With practice, this framework will see you lift your negotiating game and more easily find that ‘sweet spot’ where everybody wins.
But first, what is negotiation, really?
Negotiation is simply two or more people making a decision by way of discussion. Usually the two (or more) parties involved have some shared and some opposing interests. You’re trying to find a way to ‘meet in the middle’.
A successful negotiation is one where everyone is satisfied. Ideally, you reach an agreement where you’ve given up something you didn’t mind losing, which delivers value to the other party. That’s what you might call a win-win!
6-steps for successful negotiating
Step 1. Know what you want.
Before you take a seat at the table, you’ll need to have worked out:
- Your ideal outcome – If you knew you couldn’t lose, what result would really make your day? Aiming high will often help you settle in a better position than you would by setting your expectations lower.
- Your bottom line – everyone has to give up something in a negotiation, but you must set clear boundaries around your non-negotiables.
- Your BATNA (best alternative to a negotiated agreement) – if you find yourselves at an impasse, what will you do? Identify all the alternatives and choose the best one of the bunch – that’s your BATNA. It’s the ace up your sleeve that will allow you to walk away from the table if you need to.
Pro tip: Order your list of priorities so that you have your non-negotiables at the top and your less important interests at the bottom. This should make it easier to know what you are willing to let go of.
Step 2. Understand the other party
What do you already know about the person/people you are negotiating with? What might their BATNA be? What leverage might they be able to use to their advantage? Use any intel you have to try and predict as many likely or possible outcomes as you can imagine and prepare a response.
Step 3. Listen to what the other party wants
Once you are in the room, engage in active listening. This will help you understand what the other party wants. What are their interests? Why do they value them? Play detective and keep an ear out for things they want that you are prepared to give.
Pro tip: Encourage them to do most of the talking by asking open-ended questions (ie not one that allows for a simple ‘yes’ or ‘no’ response).
Step 4. Try to discover if there’s a way you can both get what you want
This is the ultimate goal. Negotiating isn’t about leaving your ‘opponent’ in the dust. Remember, you’re trying to get both of your needs met.
Step 5. Make your offer
The opening offer is known to ‘anchor’ negotiations – that is ‘set the stage’. You want to be the one to suggest a reasonable solution that also gives you some ‘wriggle room’. Don’t forget (if money is involved) that price isn’t the only factor. There may be other details that could ‘sweeten the deal’ for those sitting across the table from you. Don’t be afraid to be bold. You don’t get what you don’t ask for.
Pro tip: Now is the time to STOP TALKING. Put your offer on the table and let them be the ones to feel pressured to fill the silence.
Step 6. Edge closer until you find the mid-point
Now you ‘play tennis’. They will come back with a counteroffer or suggested solution. Take your time to really consider it. Think about what adjustments you could make to their proposal that would make it work for you. Put the ball back in their court. Keep going until your standing at the net, shaking hands.
How to you know when the deal is close to being ‘done’?
There are a few signs that you’re getting close to the mark:
- The counter-arguments are getting weaker
- The other party’s body language suggests that they are tired or ‘resigned’
- You start agreeing more than you are disagreeing
Once you notice these signs, make the move to close the deal. Start by re-stating the elements you have already agreed upon and the concessions you have both made. Then you can make ‘closing statements’, eg “That might work”, “Do you have a pen?” or “Where do I sign”.
7 tips to strengthen your negotiating position
- Remember: everyone at the table is convinced they are ‘right’ – the person on the other end of the negotiations is just like you – utterly convinced that what they want and need is more important. The reality is that you’re both right and you’re both wrong.
- Stay calm and friendly – keep overly negative or positive emotions in check to hold your position. Aim for a balance between firm and likeable. Building rapport with the other party helps build trust.
- Get comfortable with uncomfortable silence – as I mentioned earlier, there are times in the negotiation where the best thing you can say is… nothing. Few things make people more uncomfortable than silence. Some people fall over themselves to fill it. You never know what that might ‘buy’ you in concessions.
- Be patient – there’s often no hurry (even if you are dying for the conversation to be over!). Take the time you need to get all the information out on the table. It will help both sides if you can understand what each other wants and needs.
- Be prepared to walk away – remember that ace up your sleeve (your BATNA)? Occasionally you’ll be glad you had one. Being genuinely able to let the negotiation fail could potentially put you back in the driver seat, if the other party has no better options. Alternatively you have a decent ‘Plan B’.
- Only negotiate with the actual decision-maker – sometimes people will send in a ‘lesser’ negotiator to wear you down. Too late you find out that you’ll now have to start another round of negotiations with the person who has the authority to sign off on the agreement. Better to find out up front to save your sanity.
- Present and receive any offers in writing – don’t make the mistake of getting ‘verballed’ – thinking you’ve got their agreement only to have them back down or make changes down the track. Get everything in black and white and This avoids misunderstandings or ‘back pedalling’ later.
It’s a deal
There are few business skills as essential as being a good negotiator. It’s something that’s going to keep coming up in your business, so it’s a good idea to take every opportunity to practice. The framework outlined above should help you to feel more prepared and therefore more confident that you can take the lead in working out mutually workable solutions. Who knows… you might even find that you enjoy it after all.