Effective Negotiating Skills

What is negotiation?

Let’s begin with a definition of negotiation. Not a dictionary definition because this comes from the practice of negotiation, not the theory:

Negotiation is the process by which we search for terms to obtain what we want from somebody who wants something from us.

Negotiating is a trading game. There is only one way to play the game; that is to trade what we want from somebody else for what they want from us. The best way of being able to do this is to know what we want and what we are prepared to give to get it. It sounds simple but most people enter negotiations without planning their desired outcomes and believe that it is a matter of ‘whoever is stronger will succeed’.

Successful Negotiators Plan

Before your next negotiation ask yourself:

  • Am I quite clear in my mind what it is that I am trying to achieve?
  • Have I sorted out the information that I will use in discussion (because it will stand up to counter-argument) from that which I can’t use, (because it won’t)?
  • Have I written down the strengths and weaknesses of my position?
  • Have I considered what I am going to say when they talk about these weaknesses and put forward their own case?
  • Have I listed the benefits to them of accepting my proposal? Equally, have I listed the unpleasant consequences for them of accepting it? How am I going to counter these objections?
  • Have I listed the unpleasant consequences for both sides if my proposal is not accepted?
  • Have I thought not only about what I am going to say, but also about how I am going to say it? To whom? When?
  • Some of the best things to plan are the variables you will use to bargain with during the negotiation.

Planning Variables

Each negotiation will, if done properly, be concerned with trading concessions against each other. There are usually more issues and variables than can be used for such trading than is immediately obvious. A good negotiator should consider all possible variables before the meeting, calculate or estimate what each would cost, then decide which he/she would prefer to use and which others he/she would be prepared to use if it came to the crunch.

It cannot be emphasised too strongly that the essence of good negotiating lies in obtaining concessions from the other party which totally or largely compensate for those you have extended.

What variables can I use?

  • price
  • discount or rebate
  • bonuses
  • delivery times
  • financing arrangements
  • training
  • packaging
  • spare parts
  • deposit arrangements
  • balance arrangements
  • credit terms
  • guarantees

There are many more and you will undoubtedly be able to produce a core list of variables for your most common negotiations.

  • What would each one cost us at different levels of business? What would it cost them?
  • What would each one be worth to us? What would it be worth to them?

These two questions are crucial in effective negotiations because they start the thought process of: “What is cheap for me to give away but valuable for the other party to gain?

Also, “What do I value that is cheap for them to agree to?” Once you have the answer to these questions you will quickly realise that negotiating can be as much an art as it is a science.