Negotiation skills are vital in any business. At all stages of business, there are negotiations and deals to be struck. Having a negotiation strategy before you enter into meetings is a something you must be equipped with.
Before we get into the building blocks of a negotiation strategy, there’s one important point to make first. In my experience, many deals are done on the basis of matching personalities, not only the monetary cost.
If you are going to be dealing with a supplier and you get on well on a personal level, this can go a very long way. It’s easier to communicate, sort out problems and issues and therefore the relationship will often be more profitable.
Keep this in mind in your negotiations, it’s not always just about the money.
The Art of Negotiation
The start of any negotiation should be the preparation. If you’re prepared you’ll find your success rate will be much higher than trying to negotiate on the fly.
Start with L-I-M:
- Firstly, understand what objectives you would LIKE to achieve. What’s your perfect deal?
- Next, make sure you’re clear on your own mind, what objectives you INTEND to achieve. . Prioritise these objectives in case you have to sacrifice one or two. Knowing what these are will help to keep you focussed.
- Lastly, make sure you know what the MIMIMUM is that you’re going to accept. If you can’t achieve your minimum, you’re prepared to walk away from the deal and live to fight another day.
The Negotiation Strategy
Your strategy is key, are you going to work towards a win-win and a win-lose?
A win-win strategy is usually the best approach. It leads to collaboration and flexibility and is the best option for a long term relationship.
A win-lose strategy can lead to bad blood and discontent. It has its place which is usually in deals that are a one-off but be sure it’s a onetime deal as if you need to come back, you may find yourself wanting.
It’s Not All About You
Listen to the other side and what they are looking for in a deal. Try to understand their perspective and see what you can do to bridge the gap.
Is what they are asking for reasonable? What can you do to accommodate? Can you meet them half way?
Gaining a good understanding of what and why the other side needs what they need puts the deal in a much stronger position of being agreed.
Methods of Persuasion
There are 5 styles of persuasion with just one or perhaps several being used in a negotiation:
Logic: Simple and effective, lay out the facts. Explain the positives and the negatives and talk each one through.
Bargaining: Discuss back and forth trying to find the middle ground. This approach is a positive one as it shows willingness to work together. Knowing what you’re prepared to give up and feeling out what your counterpart is willing to give up, stands a good chance of ending in a deal.
Emotion: Someone that likes you on a personal level is easier to do work with. On their part, they’re more likely to do a deal if they like you, so try and find some common ground. Kids the same ages, schools, favourite films…all work towards finding what you have in common.
Threats: Not the best or the place to start but threats are effective. Usually the most effective when you have something you can take away from the other party. For example, you are a client, order significant numbers from this supplier and you threaten to take away your business if they don’t accommodate. Be realistic in this tactic, there’s no point in trying to squeeze a supplier to sell to you at a loss so make sure your have realistic expectations.
Compromise: Of these five styles, this is likely the best. Through dialog and discussion, listen and compromise, this will give the best deal and likely a longer term relationship.
For each negotiation you’ll have to find the best method or maybe it will be a mix of a few depending on how the talks unfold.
Your own personality will play into talks and negotiations and you should take that into account. If you’re more of a “down to business” person, logic may be a better approach.
If you’re more personal, using emotion may suit you.
Find your own style and use that to your own benefit. Below is a handy guide to keep:
Contributed by Alan Bracken – ABTS Logistics