The Negotiation

46Now we consider the actual negotiation meeting. The opening phase allows you to condition their expectations and gives you a chance to understand their position, even though it may be some distance from their true position.
Keep in mind that generally, the more you ask for the more you will get. You can manage the other party’s expectations, but you must be credible. The negotiation will proceed against the declared opening position, so it is important to pitch it correctly.

Now we move to opening, testing, moving and agreeing phases. These should flow into one another, but you should be aware of what stage in the process you are at, and alter your behaviour accordingly.

When two parties meet for negotiation, they normally begin with the usual pleasantries, and then move on to the business in hand, with a position statement by each.

This opening phase is important because it allows you to condition their expectations and gives you time to understand their position, even though it will probably be some distance from their true position.

Bear in mind, the more you ask for, generally the more you will get. You are reducing the other party’s expectations, but you must be credible, and consider the loss of face if you settle far from your opening position. But the negotiation will proceed against the declared opening position, so this is important.

The skill is in setting your opening position at the right level through your preparation and planning, and then responding to their position in the best way.

Remember to try to avoid setting down markers early. You want them to do that. But you can suggest a few scenarios if you need to get things moving.

Suppose you want a 10 % reduction against their quoted price, then you could suggest 20% and gauge their reaction. If they reject outright, then ask them to name a figure. Or say “what figure do you have in mind?”

At this stage use open questions “who, what, when, where, why, how?” You are fishing for information about their parameters and target. By doing this you should begin to get a feel for their parameters. Refer to your planning notes – you should have a list of questions to work through.

Then move to the testing phase. You are explaining your position while testing out where they may be movement. Listen carefully to their responses. If you have a colleague, have them listening, and showing you a note if they have picked up a clue you may have missed.

An old adage is that “you have two ears and one mouth and should use them proportionately”. Take the time to consider what is proposed, think it through, and mull it over.

Test any assumptions you have made about their position. Ask questions several different ways-don’t just accept a negative response, try again a different way.

Push for concessions in the variables in the package you want – better delivery, stronger customer service, sale or return?

What can you offer – better payment terms, higher volume? What are these worth to the other party? Remember to get a return for any concession you make.

Remember the negotiating principles we discussed earlier – maybe go back and look at them now.

Try to control the agenda, so you can follow your prepared plan. Keep track of where you are against your plan. Set high but credible targets, and remember that everything is negotiable.

Watch the other party’s body language, facial expressions and posture for important clues, and keep yours (and your colleagues) under control.

Be aware of concessions being offered or buying signals from the other party. Sometimes people are so focused on their own list they miss important signals.

Keep in mind that you are trying to influence the other party to accept your position, and signalling that you will not be easy to move from your stated position.

Don’t be afraid of silence in a negotiation. Sometimes your opponent will talk into the silence and make a move, comment or concession out of turn.

You need to keep things warm and pleasant, but consider these tactics that you could use if appropriate;-

Undermine them by querying assumptions they have made, facts they have stated, conclusions drawn. Query their credibility, qualify their authority to make the decision for their organisation. Suggest they change their stance, ask how they would feel about an offer like that if they were in your position.

If you need time to think, play for time by deliberately misunderstanding them, make an incorrect or biased summary, ask for clarification, and introduce a new variable which may change things. Or get your colleague to do one of those things on an agreed signal.

Another tactic is to discuss a certain proposition, say on volume, get the best deal on the table that you can, then increase the volume you can buy to the real figure. You may well get an improved offer.

You are trying to get the maximum amount of movement from the other party, while minimising your own movement. Any concession made should be “taken ownership of “. Do this by repeating the concession achieved and thanking them, but in a low key way. You want to ensure you have ownership, without flagging up the number of concessions made. “60 day delivery, thanks “…….5% discount, thanks “

Once you have them moving, keep up the momentum. Be careful not to move too far. Keep your concessions small – an inch at a time, even if you are prepared to move further on this point.

If you need to keep things moving, or start them moving, try this;-

Make a summary, highlighting the points where you feel there is still movement …

“So let’s see, we have agreed 60 day delivery, 5% discount, and we can still look at payment terms which are 30 days now, perhaps we could consider 45 days? Then we still have customer service level and packaging to cover. Once we have an outline agreement we can look at order volume, we may be able to increase that “

Or propose the movement you are prepared to concede and ask for what you want from them.

“So let’s see, we have agreed 60 day delivery, 5% discount, and we can still look at payment terms which are 30 days now, perhaps we could consider 45 days? I think we can look at order volume, we may be able to increase that, and maybe you could do something on customer service level”.

Emphasise what you have conceded if you need more movement from them. Then ask them what they offer can in return for what you have done already, inferring they have not matched you.

Put pressure on them by using deadlines, talking about competitive offers you may have received, or try the emotional approach.

But avoid backing them into a corner – people kick out if they are cornered, and you will turn their movement into a full stop. Always leave them somewhere to go, or offer them a way out.

Remember the points you can give them at no cost to you. But make them sound like real concessions on your part.

And keep track of the value to you of their concessions.

An important principle, especially if your two organisations are in a long term relationship, is “win, win “. While your job is to get the best deal you can for your company, it is not your job to push your suppliers close to the edge. A viable arrangement for you both is healthy for continued business.

Watch out for the time when you need to switch to agreement. Ideally you have what you wanted, and do not want to move any further. You feel you have pushed far enough and may jeopardise the deal if you go further.

You can indicate you are ready to close by summarising, by proposing next steps, and collecting your papers.

If the other party starts to do these things and you do not have what you want, then you need to make a final offer. This must not look like yet another offer, or you will be pushed further.

Sometimes you will not reach agreement and must agree to differ. It may be that you propose to consider concessions and meet again. In this case you need to summarise common ground and agree next steps.

Whatever the outcome it is important that everyone is clear what has been agreed. A summary should be made at the meeting and confirmed in writing by one of the parties, as soon as possible afterwards.

Sometimes at this point the other party might let slip some useful information about the position they would have been happy to accept. If this does happen, take note for the next round of negotiations.

Now review your performance and measure your success, so that you can improve your negotiation skills. Consider what you have achieved, and what lessons you have learnt.
Often you realise during or after the negotiation that you could have achieved more on a particular point, so review how you could have secured that extra concession, what you could have done differently.

And take note of what you dealt with well, so that you can consolidate that skill next time. If you had a colleague with you, you should offer constructive feedback to each other.

Write a summary for yourself of what you did well, and what not so well, did you achieve your targets, were they set too low in hindsight? Review your summary when you prepare for your next negotiation.

Always leave yourself time to plan for a negotiation as this is the most important phase. The more preparation you do, the more effectively you can negotiate .Your role is to get the other party to see and accept your point of view, so you need to be clear in your own mind what that is.

Comments

The Negotiation — 28 Comments

  1. I think discovering a lesson like this means discovering real life. I therefore grateful and looking forward learning more of such a life situation lesson like this.

  2. IT is becoming ore interesting mr tutor. i know the inner we go the harder it is and has to fill our mind with more decisive action so we can absorb the amount of knowledge you are giving us and i send my greatest thanks to you all who are posting the lessons with great health to all for future.

    • Negotiation is indeed very important in business as company, commerce in all difference ways if you refused for negotiation that is will be wrong, if you assumed to do any business you must have to negotiate.