Getting the right deal – negotiating skills

Many prices in business are not fixed, either for buying or selling. There are also countless arrangements, terms and conditions that are negotiable, which might benefit your business if you can negotiate effectively. Fortunately, this is a skill you can learn easily and improve with practice.

Note, however, that persuasion (selling) and negotiation are different but interrelated things. Though they may merge, people do not waste time negotiating about something that they have no interest in. So selling comes first.

Traits of the best negotiators

In negotiations, two things are important:

• Both parties want some sort of deal at the end, so compromise is essential.
• The ideal solution is often called a win-win outcome, one in which both parties are satisfied though neither may have what they would initially have regarded as the best deal for them.

Most people imagine that the best negotiators are the hardest ones. Quite the reverse is true, since this type of negotiation results in submission by the weaker party or breakdown, rather than in a mutually satisfactory conclusion. The victory may be short-lived for two reasons. The loser may seek revenge – or they may go bust because there is too little profit to survive. The best negotiators:

• appear confident,
• take the broad view – they understand the other person’s point of view, what they are trying to achieve and why,
• accept that the aim is usually to create a long-term relationship with both sides benefiting.

Simple tools

Some negotiating techniques are simple. For example, don’t avoid the obvious. Just ask for what you want. After all, your outrageous demand may be less than your opposite number was anticipating. Many people are too shy or afraid to aim high, yet it costs nothing to try.

Silence is another powerful tool to make a point or force a response, because many people find silence embarrassing. For example, too often someone will ask: 'How much is this worth to you?’ and then wait barely a moment before continuing: ‘Well, I’m sure it must be an important factor, now let’s...’ This produces no real impact and, more important, no information. Instead, learn to really use silence. Ask your questions and then wait… and wait. Eventually you will get an answer. 

These kinds of technique can enhance the process, turning a routine discussion into one that moves purposefully towards achieving your objectives.

Preparation is the key to success

Good negotiation is not something you can make up as you go along. It needs preparation. This may mean only a few minutes’ thought, or it could involve detailed discussions with colleagues. But always do it.

You must set yourself clear objectives. There is all the difference in the world between vaguely saying, ‘Let’s see if the buyer will pay me more’, and setting out to obtain a 10 per cent increase in the price. So always set four levels for yourself:

• The best you could hope for – your ideal. 
• Essential – those things that MUST be part of any deal you agree. 
• Tradable – those things that you are prepared to give away to help create a workable deal. 
• Your lower limit, the point at which you’d walk away.

Be careful of suggesting a complete package that may remove the opportunity to negotiate details in your favour.

Then plan the stages of the discussion. You cannot anticipate everything, but you need a mental plan to help shape the meeting – there is nothing worse than being caught on the hop and having to risk a rash move or reveal your hand. Preparation is the foundation of success and insurance against being outclassed.

It is easy to think you are in the weaker position when dealing with a bigger business. However, remember that the other party is always under pressure too – they have their own anxieties weighing them down, such as their boss, their bonus, promotion, or year-end targets.

The power of variables

Negotiation revolves around variables: that is, those factors that can be varied and arranged in different ways to create different potential deals. In many negotiations, the price itself is clearly a variable, but discussion may also include payment terms and timing. For instance, would you be prepared to offer a discount for cash on delivery? How would payment terms of 90 days affect you?
Your appreciation of the variables increases your negotiating power. You can use them to reward (something you are prepared to give) or threaten (by flagging your intention to withhold something).

Professional negotiators always:

• know all the variables they can control,
• discover the other person’s variables,
• treat everything as a potential variable,
• deal with detail only within the context of the total package, rather than one point at a time without reference to others.

Handling variables

It is important never to give anything away. Always trade a concession: ‘If you do that… we will do this.’ Start with a small concession and get smaller.

• Maximise the value of every concession you give. For example, make something sound exceptional, and draw out its benefits for the other party.
• Minimise value when you accept a concession. For example, grudgingly saying: ‘I suppose I could do that, though it will make more work, but okay…’ makes it seem that what you are agreeing is worth less to you than perhaps it is. Some people will use the following techniques to minimise the other parties’ concessions:
  
  They will dismiss them: ‘Fine. Next…’
  
  They will belittle them: ‘Well, that’s a small point out of the way, now…’
  
  They will diminish them: ‘I suppose that saves a little each month…’
  
  They will take them for granted: ‘I would certainly expect that.’

Remember that some things that are important to you may be inconsequential to the other party and vice versa. You may give away something at no real cost to you in order to gain a big benefit. For example, it may be much more convenient for you if they will deliver, but any day in the week will do. Yet for them, rather than making a special journey, choosing the day means that they can fit you in with other deliveries at little extra cost.

Essential negotiating techniques

With clear objectives and an overall plan in mind, you can begin discussions. An agenda is necessary for any complex meeting. If you suggest one, describe it as something helpful e.g. ‘We might all find it useful to proceed along these lines…’ This can create a good impression at the start, perhaps allowing the meeting to proceed the way you want.

None of the following negotiating techniques is a magic formula, but together they can give you an edge.

• Contain emotions.
• Keep control.
• Be organised.
• Keep track – never lose the thread or the cumulative detail. It helps to make notes as the meeting progresses, especially on the points agreed.
• Check your understanding with summaries.
• Concentrate. Keep thinking and let the conversation run to allow this. 
• Never be rushed. Build in pauses if necessary – use a calculator to stall for time. Use language to slow things down, for example: ‘Let me think about that,’ and pause when you need to. 
• Be seen to be reasonable. You can give this impression by the tone of voice and phrase you adopt e.g. ‘That’s a good point – let’s do that.’ 
• Read between the lines. Nothing may be quite what it seems.
• Consider matters in the round throughout: be careful not to go for a final agreement only to find that the other party is still introducing new issues.
• Always regard timing as a variable: deadlines, durations and every aspect of time are almost always negotiable.
• Always question what is described as fixed: what seem like constraints can often be made into variables and included in the negotiation.
• Question assumptions as they are introduced.
• Be prepared to bypass sticking points. You can always return to them.

Aim to run the kind of meeting you want, yet create an atmosphere that the other party will see as businesslike and reasonable.

Interpersonal behaviour

There are also many behavioural factors involved in negotiation. Here are some common issues.

• Disguised motivation. Try spelling out your true meaning and asking others to do the same. It is possible to have so much double-guessing going on – ‘Why are they asking that?’ – that no one knows what is happening.
• Signposting. Do this positively. For example: ’It might help meet the timing considerations if…’ so that it is clear why you are making a particular suggestion. 
• Disruption. Sometimes people will try to distract you. An example is putting up a smokescreen of many varied demands with a view to gaining agreement to a key one hidden amongst others that are, in fact, less important. Other techniques include the use of flattery or coercion, a (contrived) outburst of anger, disbelief or outrage, pretended misunderstanding, playing for time, and/or imposing an unrealistic deadline on discussions.
• Give nothing away, like a poker player. If you sound firm, you must look firm – even if you are wondering what you can say next!

Some points need to be powerfully, unequivocally made, but it is important not to put people’s backs up. You might politely say, for example: ‘Look, I’m sorry to insist but this really is something I must handle carefully.’ However there will be times when you must be more direct: ‘It is impossible for me to go that far.’ Full stop. Do not explain or say another word. At this point, you use silence to understand the finality of your point and to make your opposite number consider conceding something.

Top tips for successful negotiating

• Make introductions and shift to business promptly.
• Begin by agreeing an agenda for the meeting.
• Exchange information. Listen, summarise and question. Don’t talk too much.
• Summarise frequently. This helps you keep the initiative and allows you to test progress while preventing misinterpretation.
• Highlight points agreed so far, building commitment to a final overall agreement.
• Get all the facts and have their full list of requirements before you make your opening gambit.
• Keep the whole ‘package’ in mind all the time.
• Always trade concessions, never give them away. 
• Keep your demands or concessions realistic or you weaken your credibility. 
• Skilled negotiators give more comments referring to feelings than facts. For example: ‘I am concerned about your suggestion on the basis that...’ 
• Skilled negotiators use fewer, not more, reasons to support their case. Unskilled ones use more, so diluting their case and giving the opposition more targets to hit.
• Understand that manner is important. For example, the way someone says that something is not negotiable is important. Do they mean it or are they trying to lead you towards a particular point of view?  
• Avoid answering anything with ‘no’ even if you disagree. If you say ‘no’, the other person concentrates on defending themselves instead of hearing your reasons. Instead, suggest alternatives in the form of a question.
• Avoid appearing to ‘win’ a point or to gloat.  
• Stay within your own pre-set limits.

Good negotiating can powerfully assist your business but it requires planning, and practice makes perfect!