Rather than going for a short-term win or a lose-win situation, try these negotiation tactics to help you achieve an outcome that keeps everyone happy.
A lot of advice on negotiating may include hardball tactics such as using two negotiators who are tasked to play good cop, bad cop, or adding a last-minute demand not previously discussed. While these tactics may work, as business owners, we should ask ourselves: Do we want to win the negotiation as a one-shot deal, or are we looking for a long-term relationship?
Negotiating with a one-shot mentality is likely a win-lose approach. Changing this mindset to a win-win strategy can foster a more cooperative negotiation approach. It can also cement a long-term relationship with a customer, supplier or employee.
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Ultimately, effective negotiation is getting what you’re after while respecting the other person and without burning the bridges behind you. It’s a contemporary approach to doing business in the relationship economy.
Here are a few tactics to help you win at the negotiation table while preserving the relationship.
Know Your “Elegant Negotiables”
Before you start negotiations, take some time to identify what’s important to the other party. In particular, you should be crystal clear about what’s commonly referred to as “elegant negotiables.” These are concessions that are of high value to the other party and low cost to you. For example, there may be other things besides price that are of value to your proponent—items such as after-sales support, financing terms, free delivery or other trade-offs. Don’t accidentally give away your elegant negotiables without realizing their value to the other party or neglect to offer them if they can help sweeten the pot.
Schmooze or Lose
It may be a mistake to go straight into negotiations without taking a few minutes at the start of the discussion for some “schmoozing” to warm up rapport. A 2002 Northwesterm University study on group dynamics showed that participants who schmoozed with their counterparts on the phone for five minutes before starting negotiations by email ended up with more favorable outcomes. Exchanging a little personal information to establish rapport is a social lubricant that can grease the wheels of interaction and facilitate rapport. This can help negotiators overcome potential interpersonal friction during negotiations, promote trust and prompt people to find more cooperative agreements.
Exchanging a little personal information to establish rapport is a social lubricant that can grease the wheels of interaction and facilitate rapport.
Leverage the Power of the Written Word
Make it a practice to put all negotiated terms in writing throughout the negotiation process, even if they’re minor at the outset. Don’t wait until you have the final agreement in place to put the terms in writing. The more formal looking, the better. There’s something about written words that seem to carry more weight than the spoken words. This is not only practical, but it can also give a sense to all parties that some progress is being made. It may be especially useful in complex, longer-term negotiations.
Go First
There’s widespread agreement among many negotiation experts that it’s advantageous to make the first offer. This taps into the power of anchoring. There’s generally an inclination not to “bargain” too far away from the anchor established by the opening offer. A 2013 study at John Hopkins University attests to the robustness of the first offer effect . Negotiators achieve better outcomes when making the first offer than when receiving it. What’s more, the Hopkins study showed that this applies not only to Western societies but across cultures and among negotiators of varying power.
Bookend Your Desired Price
A well-known study by Itamar Simonson, marketing professor at Stanford University, demonstrates the “compromise effect,” which shows that people generally tend to choose the middle option. You can benefit from this research by sandwiching your proposed option between two alternative options: a more expensive and a less expensive one. These can be, on the one hand, your highest-end product or service with all the bells and whistles, and on the other, your lowest-end, bare minimum product or service. The research shows that people are likely to choose the middle-priced option, because they compare it to the preceding more expensive option. The middle option becomes more attractive.
A subsequent study on “extremeness aversion” confirms this finding. The principle states that people are more likely to choose the option that is a middle choice, in a list of choices, rather than choose the options that are at the extreme ends. If your prospective client is having difficulty deciding, this is a strategy that can help them put the options in perspective and move the negotiation process forward.
Conduct a Post-Mortem
One of the best ways to hone your skills in negotiating may be to learn from your own experiences. After each negotiation, take the time to reflect on what went well, what may have gone wrong and what could have been done better. Think about the strategies you used, and what lessons you learned about the process and about your presence and performance at the negotiating table. Self-reflection can be a shortcut to mastery.
Author: Bruna Martinuzzi
President, Clarion Enterprises Ltd.
