The 3 Keys to any Successful Negotiation">
The art of negotiation depends on our ability to communicate effectively. The way we listen is important - Most people are not apt at listening to understand – they instead listen to answer. They are simply forming an answer in their mind while listening and waiting for the right time to interject and insert it.
Another problem is the value we give to different information we hear, based on the order we hear it. We tend to place more importance on the initial information we hear than information that follows – something that has been proven by studies over the years
So when you apply this to negotiations over price, the initial amount mentioned becomes the bar as do initial contractual terms set out - and both sides negotiate based on this number and these contractual terms.
And in small and medium business, we commonly negotiate everything from terms of our office lease, to prices to improve our margins on raw materials. These negotiations can have a big impact on the profitability and even the viability of our business, so it’s important to get it right!
Here’s the key mistake we make – setting up the initial terms or price, which are then negotiated. On projects for instance, clients will ask for an estimate or ball park figure – and as soon as you give it, the other party is now controlling the negotiations.
The best strategy is to say nothing
So to have more control in negotiations, the best strategy is to say nothing. Don’t blink, listen intently. Above all, don’t offer more information than you’re asked to provide. Remaining calm, professional and even poker-faced if possible, give you the best chance of success.
You have a tremendous advantage when the price, terms & condition and other points for negotiation are provided by the other party. You know approximately what they want or need and you know their priorities.
Now here is where the magic starts. Don’t jump in with a counter offer – again, silence is the best strategy. Then try to look a little disappointed and something remarkable can often happen. The other party senses that their offer is not acceptable and then negotiates a better price and better terms for you by themselves. When they do this, you know they’re eager to reach a settlement, so you have leverage to negotiate even further.
If you’ve done your homework and you know what will work for you and what won’t – you are well placed to negotiate a favourable deal. But your bottom line is something you never share with the other party.
Where you want to set the bar, must remain your secret – The trick is to get the other party to divulge that information – and remaining silent is the best way to do that. As it is with sales, – “he who speaks first, loses”. You will inevitably end up with a much better deal than you would otherwise.
A fair deal will have both parties disappointed
When a negotiated deal is win/win, there is usually disappointment on both sides, because neither side gets exactly what they want, so prepare to be a little disappointed.
Determine just how disappointed you can afford to be, before you begin. Do your due diligence and create a list of ‘must haves’ and a list of things you don’t really need – as you can trade these for your ‘must haves’ at the bargaining table.
That way, you know what you absolutely need to complete a deal - and if negotiations fall short of this position, you must walk away from the table.
