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Friday, July 19, 2013

4 Tips for better negotiations

Let's look cute to this stranger and see if we can negotiate several treats!
A negotiation is a process that allows parties to engage in a relationship to obtain something they need or want in exchange for something they are willing to give in return.  This occurs in everyday life.  For example, your child requests a toy and promises to be good in return.  You say if Dad approves you will buy the toy.  The child tells Dad “if it is OK with you, it is OK with Mom.”  The Dad agrees to the toy purchase.  The child returns to the Mom saying, “Dad says OK”.  A negotiation took place where the child uses promises of being good along with the knowledge that Dad always says yes.  The child wins the negotiation and the desired toy.

Tip #1 - Negotiating starts at your first interaction

We learn negotiating skills very early in life and try to improve them as we age.  The one piece that is not immediately recognized is that negotiations start with first contact.  The parties start to develop an understanding of each other, their personalities, their likes and dislikes.  They may learn something about how much a side is willing to give and how important the item or service is to that individual.

Negotiating requires development of a relationship with the other party.  The better you understand the other side and their needs the better you can relate to them.  Secondly, negotiations require a bit of salesmanship.  The ability to communicate the positive attributes make the item or service appear more attractive and thus worth more.

You are negotiating even before you start formal discussions.  What you say in early discussions and any information you provide may send clues regarding what you may accept or how you will react.  Convincing the other side of the value of the asset helps create a desire for the products or services.  The more they want or need what you have, the more you may get in the transaction.

Tip #2 - Learn as much as possible

Learning as much as possible about the topic helps you obtain more of what you want.  For example, suppose you are selling something at a garage sale.  The item may have some historical value and possibly is an antique.  Someone expressing interest may view it as just something old and would attach a much lower value.  Your knowledge shared with the person can help demonstrate why they are offering too little for the item.

The same goes for deals in the work place.  The more knowledge you have about the subject under negotiation, the better your counter arguments.   Logic and reasoning can make your offer seem as a more correct one.  In short, the more you can prove your point with data, the better your chances to win the other side over to your arguments; i.e. you get more of what you want.

Tip #3 - Watch where you set your anchor

An anchor is a set point that helps keep the discussions closer to a value of interest.  For example, you go to a restaurant and the menu shows a price of $250 for a bottle of wine.  The next price down is $80 for a bottle that is likely suitable for the meal.   You are thinking of the high price of the first item, which may make the lower priced bottle appear acceptable.  The higher priced bottle serves as an anchor and causes you to evaluate everything else on the menu relative to that high price.

The same is true in a negotiation.  You can make an offer of a higher price or a lower price.  These can serve to anchor the discussions or they can be deterrents.  Unrealistic offers (i.e. extremes of higher or lower), may cause the deal to fall apart because the offer is not reasonable.  The perception that no logical argument will bring the sides closer together can end the negotiation on the spot.  Selecting defensible terms (on the high side or low side) allows for better discussions potentially yielding more of what you want.  The key is to be reasonable and be able to show why the offer is fair. 

Tip #4 - Do not be afraid to walk away

WIN-WIN deals last longer, work better, and are optimal if you can achieve this as a goal.  This requires the parties to work together and understand the other side’s needs.  It is imperative that the parties take time to understand what constitutes a win for the other side.  You learn this information in various interactions by asking and discussing the other side’s needs.

Sometimes, the other side is not willing to be reasonable and has a winner take all strategy of negotiations.  You must always be prepared to walk away from a negotiation if the deal does not work for you.  You may not get what you wanted, but you do not end up with a poor deal that you will live to regret.  The other side may change their tactics if they see you willing to walk away.  So, always keep it as an option.

Other articles on the subject: Bring something to the party and win twice maybe even thrice. 

Taffy Williams is the author of:  Think Agile:  How Smart Entrepreneurs Adapt in Order to Succeed to via Amazon