Negotiation – Have You Planned Your Next Move?

Man Playing Chess Game

Top negotiators know that a good preparation means that half of the battle is won. Preparation in this context is a mixture of research and planning, whereby all possible scenarios are run through and nothing is left to chance. A thorough preparation could make the difference between realising a profit or a loss, excellence or mediocrity.

Continuing on from previous article in the Negotiation series, we are now going to look at a specific structure to adopt in such situations, and if followed, you will be able achieve a significant improvement in your negotiation skills and results.

After working with so many clients on this topic, I have developed a specific program on Negotiation. So whether you are a manager or leader, work in Sales or Purchasing, or aspire to be in one of these roles, as well as perhaps just someone who negotiates daily in their private or professional sphere via other avenues, then read on.

Following you will find a distilled excerpt from my program, as it is not possible to include it all within an article, however by starting to implement these tools, you will be able to see results straight away.

  1. Determine your ideal outcome (as touched on previously)

In his famous book “7 Habits of Highly Effective People”, Stephen Covey says “Start with the end in mind”, which means before you start any endeavour, be crystal clear on its purpose, and what you want to get out of it. This is especially important in negotiation and is the first step in its preparation.

Sadly, too many people step into a negotiation without having any clear idea what would be the best scenario they are aiming for.

Therefore, ask yourself, what is your ideal outcome for your negotiation process? This is not what you think would be a ‘realistic’ outcome, nor what you think you could get away with. But rather, in ideal conditions, it refers to what you would be extremely happy with if you would be able to achieve it. Once you are clear on this point, even if you won’t quite get there, it’s highly likely that you won’t be far away from it either.

  1. Identify issues to be resolved and plan on how to discuss them

As you think of your ideal outcome, define your plan, which will lead you to achieving the results you want.

Use a step-by-step approach to perform the aforementioned activity. What would be your agenda and the specific points to be discussed? It goes without saying that all discussion points should give you an advantage in the negotiation, which means that by discussing or mentioning them, it will strengthen your position.

Let’s say that the quality of your product or service is your competitive edge, then this should definitely be part of the agenda and emphasise how this is actually saving the buyer’s time and money or giving them a (priceless) peace of mind.

If there are sensitive issues to be discussed, such as raising the price, make sure you highlight the reasons behind it and find at least one benefit for the buyer in accepting it. I can imagine that you are surprised while reading this now. Benefit for the buyer in raising the price? Yes, indeed. There is a reason why the buyer purchases the goods or services from you and not from someone else, even if they deny it, and you must know that reason. If this is the quality, then the benefit in raising the price could be for example to ensure the quality is maintained or even increased by incorporating the latest innovative features on the market. This will also give your customer a competitive edge. And ultimately, who doesn’t increase their prices these days?!

  1. Develop as many options as possible to achieve that outcome

Having your ideal outcome in mind and developing as many options as possible will allow you to be flexible, because having a fixed/rigid negotiation position might create a confrontational situation with your negotiation partner and it could bring the process to a halt.

An example here would be, if you negotiate a contract as a seller and the buyer is asking for a price reduction and there is no other way than to grant it, than you could trade it off for a reduction in payment terms, which would translate to a cash flow improvement for you. Think about it, what would be another option if you have to reduce the price? A blanket order perhaps, or a higher minimum order quantity? The removal of an extra feature or service that wasn’t of value for the buyer anyway?

As you can see, developing multiple options during your preparation process, not only it will allow you to have some aces up your sleeve, but your negotiation partner will also perceive you as forthcoming, which will result in strengthening your business relationship with them.

Best is to look at your outcome as an overall result, as opposed to have one single measurement for your negotiation success (for example the price). This is how you will find more than one way to achieve it.

  1. Determine your Best Alternative to a Negotiated Agreement (BATNA)

As much as it is important to determine your ideal outcome, you will also need to define your lowest point in the negotiation process. If you are in a crowded market place, or for some reason not in a power position within your negotiation (such as a strong buyer market), you may find yourself far from your ideal outcome. This is where it is crucial to determine in advance at which point you should walk away from the negotiation, rather than agree to conditions that will make you lose.

To illustrate this, let’s follow up from the previous example. If your buyer is already paying in advance and is ready to place a 12 month blanket order, but the price is below your break-even point. Would you still sign the contract if you would actually lose money by honouring it? Most probably not.

Therefore it is very important to be clear during your preparation as to what is the point where you would refuse an agreement, also known as Best Alternative to a Negotiated Agreement (BATNA).

So what would be a better alternative to this agreement? Another customer who values your product, service or idea more than this one? At a deeper thought level – perhaps this process is prompting you to strengthen your competitive edge, which will improve your market position.

Or perhaps you didn’t find the true desire out of your negotiating partner yet, by which, if fulfilled, cost won’t be an issue any more? More on this point in my next article.

To your negotiation success!

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