The purpose of a negotiation is to enter into an agreement such that both parties have their needs satisfied, and are motivated to fulfill their agreements as to want to enter into further negotiations with the same party in the future.
Many people in business forget that last part… enter into further negotiations with the same party in the future.
It is common for business people to enter into negotiations with a supplier, a customer or other party that has something to do with their business.
So let’s breakdown the above purpose of a negotiation.
First, it says: enter into an agreement
Both parties must want to enter into an agreement in the first place. If one does not want to negotiate, you have no negotiation.
The second part says: such that both parties have their needs satisfied
This means that both parties must feel as if they came out ahead or walked away gaining something of value.
The next part says: are motivated to fulfill their agreements
This means that both parties are satisfied with their agreement and are more than willing to do what the negation requires. (Terms)
The last part: enter into further negotiations with the same party in the future.
Again, as I stated, the most important part of any negotiation is that both parties are satisfied to happily perform to what is agreed upon and as to want to negotiate again with one another in the future.
Your job as a business negotiator is to assure that the person you are negotiating with will want to do business with you again in the future.
Don’t burn your bridges.
Look for ways to make that final agreement more than adequate, make sure the other party walks away with a smile. Maybe by using the delight factor.
So let’s look into business negotiations and some of the rules you can apply to help you create a more win-win negotiation.
Who are the best negotiators?
Daniel Goldman of Harvard labeled individuals that have what is called ‘EQ’ (Emotional Quotient) more than ‘IQ’ (Intelligent Quotient)…this EQ is often more important in building a business. Your ability to interact and work with others to communicate, persuade and negotiate determines the success of your business more than any other factor. Your ability to get along well with other people can count as much as 85% of your happiness.
So as far as business negotiations go, below are nine strategies to get the best out of your negotiations.
1. Are you dealing with the right person?
Does the person you’re negotiating with have 100% authority to reach an agreement? You need to find out up front if there are any other people in the decision making process that you need to be in the room with you when you negotiate.
Red Flag: The worst thing you can do is to negotiate with someone for a long time and finally have that person say yes, then turn to you and say… “I now have to get the approval of so and so.”:
2. Are you and the other person committed to doing business together?
If someone is not genuinely interested in buying your services, it’s pointless in negotiating terms and conditions. And don’t think this doesn’t happen. How many times will a salesperson sell, sell, sell, when it’s clearly obvious the customer doesn’t want to buy. You must first get the other person to agree their interested, if someone is genuinely not interested, you may waste your time and theirs. Don’t go chasing someone to be your customer, often when you catch them, you wish you didn’t.
Red Flag Warning: Someone will seem interested in what is being negotiated. They keep making excuses why they are still not buying. In this situation hope is your enemy. If the other person doesn’t make a commitment after you feel they have more than enough information, cut them loose.
3. Create good lasting relationships and solid commitments.
You must also have a good relationship with your customer. If a customer doesn’t like you personally it makes negotiating more difficult, if not impossible. Also if you don’t like who you are negotiating with, it will make things more difficult.
It could be a better idea for someone else in your organization that matches the customer’s personality to carry out the negotiations on your behalf. There must also be a commitment from both sides resolving any difficulties or problems that stand in the way of a settlement. If either party is not committed to resolving any differences, it is no longer a negotiation but a ‘fait accompli’. Take it or leave it!
Red Flag Warning: If you and the other person are just not clicking, then there might be a personality conflict. He wants to zig when you want to zag; you say blue, he says red; you just can’t seem to agree on anything. If this happens either get some other person that matches closely to the personality of your client, or stop negotiating and change the environment. Go golfing, take them to dinner, go boating, fishing, anything. Sometimes a change in atmosphere will help.
4. Always aim for a win-win situation.
Will both parties benefit from a negotiation? If both you and your customer gain nothing from the negotiation then you may be wasting your time. For it to be a win-win… the customer must benefit as a result of your negotiation. He/she must walk away feeling good. The second… you must benefit as a result of a newly negotiated position.
5. Choose the right time and right place.
Make sure you give yourself the time you need to negotiate. Is there sufficient free time to talk so you are not rushed? Will you be free of interruptions? Is the other party giving you their full attention?
Make sure that the place you hold your negotiation is to your advantage. It should be quiet, with no interruptions, and preferably on familiar ground. People are always unsure of themselves in strange surroundings. Can you get them to come to your offices? By getting them out of their environment into yours or at least neutral ground, such as a luxury hotel lobby or some other elegant setting, it gets them to open up more, making communication better. Try to avoid your customer’s offices, where they feel strong and can control you and the situation.
6. Do Your Homework
Be prepared, do your homework…Know the answers to any question before it is asked. Don’t enter a negotiation and know nothing about what the other party desires or expects.
7. Win-win negotiations are only possible when everyone’s needs in the negotiation are identified, respected and agreed upon.
Most negotiations are of a win-lose mindset which implies that there is a set amount of “pie” to be divided. Each party must fight for their own piece. If both parties fight, the common solution is compromise, which despite its positive connotations actually means both parties are giving up something they may really want.
Usually people focus on the demands the other side makes in negotiating, whereas they should really try to understand their own needs and desires. Since every person has unique and different needs, several people can usually be satisfied without anyone losing. This requires their needs to be respected and agreed upon.
8. Avoid ultimatums.
A take-it-or-leave-it attitude creates pressure and limits options. Don’t paint yourself or the other person into a corner. That would make it a win-lose scenario and make the other person feel as if they weren’t getting what they want.
9. Focus on maintaining the relationship.
Separate the people from the problem. You’re dealing with business issues, always stay respectful, stay considerate and focus always on maintaining the relationship.
The way people make decisions…
Think about the way your customers make decisions. While certain customers may think your service is not right for them, it is very difficult for the a sale to progress. However, as soon as the customer begins to believe the service is right for them, the sale moves forward rather effortlessly.
A sales person or business negotiator should therefore pay less attention to selling the service and concentrate more on helping the customer justify that the purchase is right for them.
You do this by finding out as much as you can about your customer up front so that you can guide them through their decision making process.
Clearly, the most important skills for any negotiator is:
2. Listening; and
First is Understanding…you become sympathetically aware of other people’s feelings; becoming tolerant to their point of view. Try to see the situation through their eyes.
Second is Listening. Actually there are four types of listening and they are appreciative, empathic, comprehensive, and critical. It is a good idea to familiarize yourself with these different types of listening so you can strengthen and improve your ability to critically think and evaluate what your customers are telling you.
And Third is Questioning. You question for better understanding. When showing an interest in learning new things about the other person you build trust, and trust in a relationship as you know is vital, it’s also business savvy.
Finally, in negotiations there is what is known as the ‘The Law of Four.’
This ‘Law of Four’ says that there are four main issues to any negotiation and everything else is dependent on these four main issues. No matter how long or complex the negotiation, no matter how many clauses or sub-clauses, terms, conditions or details in the fine print, you will find most of your discussion and most of your points of negotiation will revolve around four main issues.
This law also says that one of these issues will present itself as the main issue and the other three will be the sub issues. It is important to seek out what the main issue is and concentrate on that one. What you don’t want to do is negotiate like crazy to finally come to an agreement and find out what you just negotiated on was just a sub-issue.