Negotiation

Negotiation literally means “a discussion aimed at reaching an agreement” or “the action or process of transferring legal ownership of a document”. It is a process by which compromise or agreement is reached avoiding any argument and dispute. The principles of fairness, mutual benefit and maintaining a relationship are the keys to a successful outcome.

Usually we avoid negotiations with the following background reasons:

1. We give excuses to ourselves,
2. We don’t have time for negotiation,
3. People laugh at us,
4. We don’t want to look cheap,
5. Fear of embarrassment.

However keeping these reasons aside, negotiation is very important because many we can save a big amount of revenue for ourselves or the company we are working for. Many a times, companies earn only 5 to 6 percent profit. It is quite difficult to double the profit by doubling the sale, however profit can be doubled by saving half the cost using successful negotiation.

Negotiation is just a “game” where both parties aim to achieve a win-win situation. In a negotiation, there are only two conditions for losing a deal:

1. If you walk-out or
2. They walk out.

Practically none of the party wants to walk-out before having a deal. Therefore, it necessary always to be nice while negotiating and always be prepared to “crumble” at any stage of the deal. There is no need to worry about being liked while negotiation and always negotiate as not negotiating might make the other party less happy or reflect your weak impression.

Ideally, there are two times of negotiation:

1. When they make an easy offer or
2. When you have a complaint regarding services.

Phases of Negotiation

In order to achieve a desirable outcome, it may be useful to follow a structured approach with negotiating. The process of negotiation involves following stages:

Planning

Before any negotiation, a decision needs to be taken as to when and where the meeting will take place and who will attend. This stage involves ensuring pertinent facts to clarify your own position. Undertaking preparation before the meeting will help to avoid any conflict and unnecessary time wastage.

What to Prepare

Before the meeting, always have a preparation of the subject and have a market analysis.

1. Set your walk-away point and never ever go beyond it,
2. Don’t set a loss on your deal,
3. Don’t put yourself down,
4. Remember! There will always be another chance.

Factors to be Considered in a Negotiation

There are two things to be remembered:

1. Walk-away point and
2. Opening Offer

Walk-away point comes internally seeing the product, services or budget analysis.

• Opening Offer comes from external factors (market analysis)

Market only affects Offer not the Walk-away Point.

Tradables

Tradables are the “extras” or areas where a salesman or a buyer can “give a little”. The obvious one is price but there are many others too. They can include aspects such as:

1. product/service specification,
2. cost of goods/service
3. payment terms,
4. delivery and
5. quantity etc.

Always give tradables, a value. They are classified broadly in three types:

1. Extras you must have,
2. Extras you should have,
3. Extras you could have.

While preparation, make a list of tradables with value against each because they are,

1. a part of bargaining process,
2. important to have a win-win deal
3. can be used in future deals as well.

Weaknesses

In a negotiation, always:

1. Think about other persons’s weaknesses,
2. Don’t dwell on your own weaknesses,
3. Always give negotiation, one more try.

Find weakness of the product of the seller and product for trading, later on.

Opening Offer

The opening offer is the first specific statement of what you’re looking for in a negotiation. After you’ve set your goals for the negotiation, you can consider the opening offer. Following things must be kept in mind while making an opening offer:

1. Don’t open first,
2. Get the other party to open first,
3. Say as little as you can,
4. Ask questions to make them open first,
5. Ask for various possible options,
6. Ask their budget, there might be a good news.
7. Justify your offer with reasons,
8. Don’t open with a round number rather give a precise number ( instead of quoting 60$ say 57$, it might kill further argument)

Tactics

Tactics in negotiation include detailed statements, actions and responses to other’s statements and actions.

Five possible tactics can be applied in negotiation:

The Vice

Vice is a “buying tactic”. In vice, one has to keep pushing the other person “you have to be better than this”. You have to keep tightening the screw.

If vice is applied on you, you can counter it by saying” how much better to be precise” or trade at each stage by” if you can do ___ then I can do ___”.

Salami

Salami is like “slicing” at each step of negotiation and keep asking for little things like discount, free delivery, extras etc.

Salami has a simple principle “what mine is mine, what yours is negotiable”.

If it is applied on you, it can be countered by “ if ___ then ___” and don’t afraid to back-up if deal is not favouring your interests.

Knocking the Product

It is a “buying tactic” in we have to keep on finding the weaknesses in the product by asking questions for later compromises.

If applied on you, it can be countered by saying “ that’s why the price is so low”.

Reluctant Buyer/Seller

1. Try to be a reluctant buyer or seller.
2. Find out exactly what they are looking for,
3. Don’t let them sneak things away from you at the end,
4. Neither is forced to make a deal, you can always pull back.

Nibble

1. Nibble is a slightly dishonest technique applied at the end of negotiation which includes unforeseen extras involved at the end.
2. Don’t leave loose ends in conversation to not let nibbles intervene at the end.
3. To counter any probability of nibbles, you can ask in half-way “are there any extras that I need to know about”.

Negotiate Towards a Win-Win Situation

Creating a win-win situation is the ultimate goal of negotiation.  This is the best result which might not always be possible. It aims at achieving an outcome where both parties have a feeling of gaining positives as a result of formal negotiation. Compromises are positive alternatives to achieve beneficial results which need to be considered for achieving a win-win condition.

Agreement

Agreement can be achieved once understanding of both sides, viewpoints and interests have been considered. It is essential therefore for both parties to keep an open mind in order to achieve an acceptable solution. Agreement should be perfectly clear for understanding of both parties.

Extracts from the Book: Mastering the Art of Mesmerizing Delivery

Read “Exactly What to Say” to know 16 compelling phrases which can be used in a conversation or dialogue to captivate others with the power of words.