Negotiation is a skill that transcends all areas of life – being able to haggle in a market, get your kids to do what you want them to, or get the pay rise you deserve all come down to good negotiation. In business, negotiation can help you excel in a variety of business roles but it is absolutely imperative in any commercial role.
As the Head of B2B Sales, I work with sales people of all levels and have seen inexperienced hires excel at negotiation, and more experienced professionals stumble. While confidence and experience are key to good negotiations, following these steps without fail will help even the most shy new grads land big deals.
1. Anchor the Price
The person that starts the negotiation controls the conversation and also controls the price, therefore with any negotiation you want to be the first to go in with a price. This frames the whole negotiation. Any counter from your opponent will be relative to the price that you have already anchored, this anchoring bias will mean the negotiation will always go in your favour.
2. Set a Price That Gives You the Best Chance of Success
Put yourself in the shoes of your opponent, think about where their limits are, what is the highest price that they will possibly pay and ask for a smidge over that, this will give you some room to maneuver and your opponent will feel like they have got a deal when you negotiate down from the anchored price. However make sure this is realistic- if you ask for something ridiculously high they will not take you seriously.
3. Build Rapport
Before you start negotiation, you need to gather information e.g. what are your opponents underlying interests for buying what you are selling? Why do they want that price? They may have told you they need something but find out the underlying reasons as to why they want/need it.
Use this to work on a solution together that works for both of you, this will build trust between two parties. Remember to maintain eye contact, smile, shake hands and don’t even start negotiating until you are in a happy and positive state of mind.
4. Calculate "BATNA" (Best Alternative to Negotiated Agreement)
What is your walkaway price? Write this down before you start negotiating so you do not get carried away, this will depend on what your alternative is if the negotiation doesn’t happen. Are you buying an item that is vital? Is there time-pressure on you? Do you have an alternative product you can buy for cheaper or have a seller willing to pay a certain price for a product you are selling? If you have a strong BATNA, you may want to share it with your opponent. However when your BATNA is weak, you may choose to keep it secret.
5. Create Time Pressure by Setting a Deadline
Creating time pressure by setting a deadline will mean your opponent may give more concessions and make the agreement more likely.
Almost everybody approaches negotiation with the mind set- what do I want & how do I get it? But you should approach it with the mind set- what does the other person want and how do I give it to them? If you can make someone on the other side believe that they are getting what they want it’s going to be very easy to reach a transaction. If the counter party believes you are just going for what you want they are going to be resistant by nature.
There have been many books, articles and reports written on the art of negotiating. For me, these simple steps are easy to remember and implement, and work for a range of personality types. They become more natural over time and have helped me in all kinds of negotiations – I hope they work for you. What kinds of negotiation tactics do you use?