Negotiation is simple to define – it is nothing more than the process of seeking to reach an agreement based on mutual interests. But developing the ability to negotiate effectively requires a good game plan.
In the win-win negotiation of relationship selling, both parties strive for solutions that bring mutual gain. Real negotiation involves understanding the needs of all participants and encouraging fair compromise. Real negotiation is not about power plays, nickel-and-dime price concessions, or squabbles over trivial details.
The win-lose concept of negotiation is inappropriate in today’s ‘Marketplace. Old style negotiation promotes adversarial interaction through one-upmanship. Some positive aspect of the sale is generally lost when one side beats the other into submission by sheer stubbornness, force of will, or trickery. Short-term advantage comes at the expense of long-term benefit. The buyer may sacrifice quality or service; the seller may sacrifice repeat business or referrals.
Nowhere is win-win negotiation more apparent than with Total Quality Management methods. The goal is to establish strong, cooperative, and lasting relationships between buyers and suppliers. Suppliers know that achieving high performance standards earns regular purchase orders and customer loyalty. Buyers get what they want, when they want, at the price they want, without having to incur the hassle of ongoing bids. Quality-driven companies often refer to their suppliers as “partner,” “team members,” or “internal customers.” Their negotiation list includes joint R&D projects, single-source supplier agreements, just-in-time delivery systems, cost-plus-percentage pricing, and multi-year contracts.
Although salespeople negotiate throughout much of the sales cycle, negotiation becomes more formal at certain points. During the planning phase, the salesperson lays the groundwork for effective negotiation by determining the range of negotiable issues in question. The objective is to identify the customer’s history of needs and buying practices as much possible.
During the approach and need discovery stages, both sides must reach a satisfactory comfort level before the actual negotiations begin. Building trust and establishing credibility are as crucial as uncovering needs and wants. Careful questioning and listening can reveal that the other party desires something you are able to give away without losing anything of substance to you.
Making the presentation, overcoming objections, and getting commitment can be treated as one unit in the negotiating process. This phase is a matter of finding mutual interests that will form the basis of an agreement. Ideally, the salesperson and the prospect together try to identify the problems, brainstorm for solutions, and set objective criteria for problem resolution. If both parties can satisfy their real interests (similar to dominant buying motives), the commitment is a natural outcome.
Win-win negotiation implies fair play, but it does not mean you should forget about strategy. The side with the most information is stronger. The side with the most time pressure is at a disadvantage. Therefore, you should appear as knowledgeable and flexible as possible, without revealing any deadlines.
Do not narrow the negotiation to one issue because this sets the scene for a win-lose outcome. Lots of chips and options on the table facilitate give-and-take. Then all parties feel they have gained something.
Never make the mistake of assuming that others want the same things you do. A common misconception is that everyone considers price the major issue. In fact, if a company needs your product or service and you have other strong points, price may be far down the list in importance. When a prospect drops the “hot potato” of a very low budget, try to determine if this condition is a legitimate limitation or just a smoke screen to see how quickly you will discount the price.
Probes, restatements, and trial balloons are powerful negotiating tactics. Probing questions help to clarify, explore mutual interests, and test agreement. Restating what someone else says demonstrates that you are listening and insures accurate understanding by everyone. Restatements also give you time to think of your next move. Trial balloons are “what-if’ questions that test the climate without actually making a proposal which might be offensive or impossible to fulfill. They work as a problem solving technique and a diffuser of conflict.
No matter how ethical and empathetic a negotiator you are, you will undoubtedly deal with some people without high principles. As they attempt tricks and unreasonable demands, you must avoid angry responses that you could later regret. Instead try counter-tactics. Here are a few touchy situations:
“Nibbling” is that annoying situation when a customer asks for something extra after agreement has been reached. Before you concede and cut into your profit margin, smile, sit back and remind the customer what an incredibly good deal he has already received. Most people really don’t expect “something for nothing.”
Sometimes in a team negotiation, members of the team play roles. One pretends to be angry about a specific aspect and walks away. The one who stays acts friendly and understanding, asking to be given a break because the partner is so hard to deal with. An effective counter is to recognize the charade and even bring it out in the open with “You wouldn’t play ‘good guy, bad guy’ with me, would you?” The partners are usually embarrassed into playing fair.
When the prospect declares that some item is non-negotiable, be sure you are listening to a real concern and not a “red herring” or a “decoy. “ Determine the true intent of the request or you may later feel as foolish as Br’er Fox after he threw Br’er Rabbit into that awful briar patch, exactly the place that scheming rabbit desired most.
Ultimatums, trade-offs, and deadlocks can bring negotiations to an unsettled end. Just remember before you abandon the project that “no” does not necessarily mean the real negotiation is over; to a good negotiator, no is simply an opening negotiating position. Look harder for the win-win solution.