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Ten Ways to Prepare for a Tough Negotiation

By Deb Calvert (1318 words)
Posted in Sales & Business Development on October 9, 2012

There are (17) comments permalink

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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.  

 

Please join the conversation in 'This Week's Discussion'

 

Written by Deb Calvert,

Sales Expert for ManagingAmericans.com & President, People First Productivity Solutions.

Ask our Expert Panel a question in Workplace Communication Skills Ask an Expert Forum.

 

Here are some related articles you may be interested in:

You Cannot Close What Is Already Closed

Now That’s Old School Selling!

Chameleon-Style Selling

Four Ways to Transition Business Development into Sales Revenue


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Comments (17)

Velton Showell posted on: October 11, 2012

Great article and in-site, many times sales people go into a negotiation un-prepared and make it up as they go along. Hoping that the customer will say yes to what they assume are important factors. I attended a training workshop many years ago called "Customer Centered Selling Skills" it was very enlightening and allowed the kind of preparation your article describes. The issue is that a sales professional must do what is called a "Needs Analysis" of the customer prior to the negotiation. This allows the sales professional to incorporate what the customer really needs, versus what they may want into the negotiation.

Clendon Raines posted on: October 16, 2012

I have found it useful when negotiating with certain healthcare vendors to engage certain companies who can provide market information on equipment and services - for example, Hayes, Inc., ECRI and MD Buyline. They provide a wealth of information related to what others institutions are paying for on similar equipment and a side-by-side analysis of all the competitors - it gives you a starting point on setting the price. While there is a fee for their service, the savings from your contract negotiations justify their cost. Transparency and knowledge allows you to focus on other tangibles within your terms and conditions for better savings and benefits to the organization - maintenance, service, and discounts on future deals. Just curious to see what other industries outside of healthcare are using...

Jacquie Damgaard posted on: November 26, 2012

Thanks!

A clear summary of the amount of homework and pre-session thinking that is needed to do successful negotiating.

I would add, focus on what you have in common (shared, desired outcomes) and restate those any time the conversation begins to feel "competitive" in order to remind the various parties about what they have in common and, therefore, the advantage of an effective collaboration in coming to an agreement.

Edson Aliaga posted on: November 26, 2012

Important points. The idea is to propose a negotiation strategy, where we definitely win, also thinking of the best for our adversary. I think the best negotiations are those where both wins. Now we must think in the future..sometimes better to let our opponents win and then get more benefits in future negotiations....

Brett Filson posted on: November 28, 2012

in the many negotiations I have conducted, the preparation is in knowing what you have to have, would like to have and would be nice to have. If you prepare that list, the negotiations will go well. Further, it is very important to listen carefully at the negotiation to hear what the other side has to have, would like to have and would be nice to have. In knowing both sides, you can come to the best possible conclusion of negotiations. By being clear at the outset, the negotiation can go smoothly or, alternately, can be discontinued if the disparity between needs is to great.

Nancy Hansford posted on: November 28, 2012

Very informative article. Thank you!

Criselda San Andres posted on: November 28, 2012

This is a very useful read for all all professionals who negotiate in some way or another - be it with a boss, colleague, internal and external customers. I've definitely picked up something specific from here and I perfectly agree with Kim, active listening is key. And if I may add, assume the position of the other party so you know how to meet him / her at the right moment. A very good planning - as in project management - is key as well.

Marilyn Sparks posted on: November 28, 2012

Great reminder of the value of preparation. In a fast paced world it is important to take time to prepare for what is important!

Kim Hall posted on: November 28, 2012

Keys 2 successful negotiating:
Listen, listen, listen
Notice, notice, notice
Breathe, breathe, breathe
Succeed, succeed, succeed

Thank you!

Suzanne Curry posted on: November 28, 2012

Here are 3 tips to consider when you are going to negotiate.


1. Build consensus internally before approaching the other side – unified fronts are more effective than fragments

2. Anticipate the other party’s points and prepare your response before the points are raised – never respond without thinking it through

3. Create options and alternatives – nobody wants to be painted into a corner

Mary Ciambrone posted on: November 28, 2012

I have typically conducted most negotiations via telephone or conference calls. I agree with the article that preparation is key, especially for large contracts, such as with convention centers or major vendors for multiple year contracts. Showing a unified front from your team can be crucial in securing desired concessions and pricing.

Deborah Richardt posted on: November 28, 2012

I agree with Mary that no matter what format you prefer to conduct negotiations you must be consistent with your organizations goals and your team must agree and be consistent in its approach.

Anne Carey posted on: November 28, 2012

I prefer to negotiate by email. That way I have time to think before responding.

njeru mwandiki posted on: November 28, 2012

In scenarios where we have numerous alternative products, you have to be good to get the brand moving. I have sailed this boat in numerous countries and similar conditions and it is a worth while challenge.

The first impression is that you know what you have to offer and that you know the market- alternative products and why your product should be chosen above the others. To get to this point, one need to research the other players in the market and consumer behavior and preferences.

Always make your first discussion an opportunity to close sales. This is like testing the waters and if you fail, then the chances are that you are going to have one hard market to break into, trust you me!

When it is time for you to exit then move in with a proposal for how and when to do a follow-up. This is vital when the deal is already closed and to show your commitment to the deal.

Tiesha Mckeithan posted on: November 28, 2012

extremely interesting. I will look into this thoroughly

chante combs posted on: November 28, 2012

Be prepared for someone to down size your price. The economy itself is justification to meet peoples needs, with out going out of business!!

Desmond Brown posted on: November 28, 2012

This was a great article to share. It covers some of the basics often missed when heading into tough negotiations. The process can be daunting but the simplicity of these top 10 rules has helped nail down the framework for those not familiar with such territory.

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