Thursday, 15 December 2011

12 steps to successful negotiating

( Buy sheep sell deer) Buy cheap - sell dear

1. Put yourself in the buyer’s place.

“If you can see through Joe Bloggs’ eyes

then you can sell what Joe Bloggs buys”

What sort of personality is your buyer? Click for post on client personality types
What sort of pressure are they under within their company?
What are their personal or political objectives?
What will they consider to be a satisfactory deal?
What strategy and tactics will they be likely to adopt?
What are all the possible negotiating variables.

2. Prepare and practice

Time invested in preparation will always pay off for you. Think of all the possible negotiating variables. Ensure you have to hand all the information you are certain to need and as much as possible of the information you are likely (or even unlikely) to need. Consider your own strategy and tactics, keeping in mind the power sources that both parties have. Role-play and rehearsal can be used to prepare you for the real thing.
3. Pinpoint your “key levels” on your “main variables” + walkaway option

Before you get involved in the actual negotiation you must determine what your “Walk Away” is on price and any other critical variables - the levels at which you would literally prefer not to have the business. You will then need to determine your “Target” - the level at which you will be satisfied to deal. Finally you need to identify your “Opening Offer” - how you will start negotiating in order to achieve your target.

4. Formulate your Opening Stance very carefully
You must start the right way in order to end with the right results.

You must take a strong opening offer but you must also be prepared to justify it in order to retain the credibility of your opening stance.

“Build in” some concessions so that you can afford to make them if necessary? What sort of “personal approach” will you adopt, bearing in mind the sort of personality you are dealing with? Use your strengths especially if you have performed well in the past to pave the way for your opening offer. The position you take with your opening offer can affect the other person’s opening position and target.

5. Aim high and show confidence in yourself and your offer

The higher your target the better, the deal you are likely to achieve. But you have to believe that your target is reasonable, and you have to communicate self-belief and confidence that you are offering good value. Know every aspect of your company and your products/services thoroughly; understand what they mean to your customer; (and their customers) remember that your buyer needs your offer (or something similar) or they would not be meeting with you.

6. Get your buyer to divulge their opening offer and their full “shopping list” as early as possible in the negotiation

The onus is normally on the seller to make their offer early on in the negotiation, but sometimes you can get the buyer to reveal their opening offer (i.e. what they are prepared to pay) before you reveal yours (e.g. by asking “What is your budget this year?”) Also you should identify all the points in the contract which the buyer wants to “discuss” before you start negotiating on any of them - otherwise you can be persuaded to make a lot of small concessions which together add up to more than you intended!

7. Trade concessions (preferably at a profit) but justify each one you give or ask for
Never give a concession - and when you trade one make it seem like it hurts! Try to trade small concessions for large ones - look for concessions which are low cost to you and high value to the other person. When you make concessions you must be able to justify them or you will lose credibility (e.g. it may seem like you were “just trying it on” to start with). When you ask for concessions make it easy for the buyer to agree without losing face (i.e. give them a justification with phrases like”.... and so that is why I must ask you to agree to this; I am sure you will feel that is fair and reasonable won’t you....?”)

8. Move steadily and progressively towards your objective

Make sure you are always moving in the right direction (or at least not moving backwards!) Unless there is great time pressure then it is more important to consolidate and guarantee progress than to move fast. Check agreement constantly in a complex negotiation. Clarify understanding. Make notes to avoid later queries. Keep your objective in mind the whole time.

9. Keep the whole package in mind the whole time - stay flexible and keep searching for variables

There are not many “constants” that cannot be made into variables. Learn how to test out how fixed an apparent constant really is. Try to think of more variables than the other person because this gives you the initiative.

10. Summarise clearly at the conclusion stage

At the end of the discussion you must double check the agreement and understanding. Always summarise verbally (and maybe even in a handwritten note) before you separate and offer to be the one who produces the formal written agreement. You and the other person may remember things differently (or pretend to!), and if you summarise and confirm it prevents them from “adjusting” things in their favour.

11. Leave the other person feeling that they have done the better deal despite the fact that you are a good negotiator

This way they will want to do business with you again, but they still regard you as a professional. If it seems too easy then you will make them greedy next time. If it seems like you have extracted too many concessions then there may never be a next time!

12. Follow up and confirm quickly and thoroughly

Any delay provides opportunity for something to go wrong or someone somewhere to change their mind. Even though you must summarise verbally when you have finished your discussion it is absolutely vital to confirm officially in writing as quickly as possible making sure that your confirmation is accurate (any query at all could lead to re-opening the negotiation!). Make sure that the agreement is implemented as soon as possible.

N.B. Never close the door completely - even if the negotiation appears to have failed
It is important to maintain some sort of thread that either party can use as a lifeline if circumstances change or opinions alter e.g.:
“I’m sorry I cannot improve on this offer but if circumstances do change I will, of course, let you know...”;

“I am sorry that we cannot do business now but if your requirements change please do not hesitate to come back to me ....”;

“I am sorry that this is not acceptable but if I do think of any way in which I can meet your terms I will contact you again....”.

Negotiation is all about a. retaining credibility and b. "saving face” and you should always ensure that both people have the opportunity to do both!

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