Tag Archives: negotiation strategy

Negotiations – You CAN predict what will happen next!

A common myth in negotiations is that you can’t predict what your counterpart will do next. I disagree. Use the approach professional buyers use. You can predict the behavior of your counterpart when you follow a negotiation process.

“How can you have a consistent process? Aren’t negotiators like drunks? You can never tell what a they will do from one minute to the next.” [Strategic Negotiations, Brian Dietmeyer]

You can predict with fair amount of certainty what will happen next. Negotiations don’t have to be unpredictable. Professional buyers anticipate the potential outcomes of the negotiation by being prepared and following a few simple steps.

Negotiations – The 4-step process

  1. Research- Acquire as much information as you can about the product or service. Most people do this intuitively.
  2. Target Range – think about the potential range of a successful negotiation. Most people also do this intuitively.
    1. what does a really great deal look like?
    2. At what point will you walk away?
  3. Identify your alternatives. Many novice negotiators miss this step
    1. What are your alternatives if you can’t come to an agreement?
    2. Never agree to a price that is worse than one of your alternatives
    3. Remember – doing nothing is an alternative.
  4. Strategy List. Novice negotiators often miss this step.
    1. What is important to you?
    2. Are there concessions they could give you that cost them nothing or very little but carry a great value to you?

Predicting what will happen next

How does this 4-step process help predict what your counterpart will do next?  It doesn’t. Unless you repeat the same steps for your counterpart. Applying the process from your counterpart’s point of view is the secret negotiation sauce.  Take time to look at the negotiation from 2-views, both yours AND your counterpart. Novice negotiators haven’t even thought about this important step.

  1. Research
    1. What research are they looking at?
    2. Where are they getting their information from?
    3. What assumptions are they making?
    4. Are their assumptions accurate?
    5. Can you correct assumptions that are inaccurate?
  2. Target Range
    1. What might a great deal look like for them?
    2. What is their walk away point?
  3. Alternatives
    1. What are their alternatives to “no deal”?
    2. Remember – doing nothing is an alternative for them too.
  4. Strategy List
    1. What is important to them?
    2. Are there concessions you could give that cost you nothing or very little but are a great value to them?

Think about how helpful it is to have this information during your negotiation conversation. This simple process works on negotiations for $100 or  $40 Million. Once you start looking at the negotiation from your counterpart’s view you can predict with greater confidence what will happen next. You will start asking deeper questions

  • Who is making the final contract decision? In some cases, their internal negotiations are more difficult than their external ones.
  • What is most important to your counter-part? You will start thinking about components of the negotiation beyond price. Is delivery, terms, order size, inventory, or brand more important to them?
  • You will look closer at all the potential concessions? Do you have a strategy for how and when to offer your concessions?

Start with a plan. Negotiate respectfully, ask the good question and listen. You will find in your next negotiation you can predict with a fair amount of certainty what will happen next.

Negotiation Strategy List

Think about your last big negotiation. Did you develop a negotiation strategy list ahead of time? Remember that point when your counterpart asked for a concession? A lower price, better delivery time or longer payment terms? How did you respond? Rosemary Coates, a negotiation professional with THINK Inc, taught me to use the phrase, “There may be a path to that.” If you have a negotiation strategy list, which includes those items you have not yet negotiated, you can offer a trade. 

For example, you might respond “would you consider sharing your customer contact list and giving us three personal introductions?”  Assuming they are a fan of your product or service they can give you a valuable concession that costs them nothing and would mean a great deal to you. 

How to prepare your negotiation strategy list

Before going into a negotiation, be clear on what a “win” is for you. The negotiation strategy list is your secret weapon. It gives you the opportunity to keep the negotiation conversation going. Professional buyers know at some point in the negotiation you may face an impasse. You can hit a log jam in your conversations and suddenly find you are going nowhere. 

The negotiation strategy list is a creative list of negotiable items that add value. They could be cost related. However, they do not have to be. It might be shorter lead-time, social media marketing support, payment terms, new technology, or even referral for additional business. Include as many variables as possible.  There are a few things to remember about your list:

  • create it early in the negotiation process and brainstorm with your team
  • be creative
  • prioritize the list
  • create a list for both you and your counterpart

If you have a couple extra minutes for research, listen to this podcast interview with Laurie Guest. We discuss more ideas on how to prepare a wish list or pick list for your negotiation strategy list.

Brainstorm – include your team

Include everyone you can think of during the brainstorming process. Large organizations leverage cross-functional teams. Representatives from different divisions are invited to provide input. Sourcing teams can include representatives from planning, finance, forecasting, manufacturing, engineering, and marketing. Input from the members of the cross-functional team is the key to successful contracts for organizations large and small.

Remember even if you are a small organization or an ‘entrepreneur of the one’ you can leverage the brainstorming process.

  • Create your own board of advisors
  • Find a Negotiation Buddy – a mentor, your spouse or significant other 
  • Hire a Negotiation Coach 

Be Creative

The longer the list the more flexibility you have with the negotiation. The cross-functional team collects ideas from every member. The brainstorming session is designed so everyone offers at least three ideas. Nothing is sacred. No idea is ruled out. My writing coach Ken Wachsberger teaches the same technique for freewriting: “Even the crazy ideas get included. This creative process will inspire additional ideas or new twists to previous ideas. Go crazy. Have fun with it.” 

The longer the list the better.

You won’t use everything. However, the list gives you the flexibility to respond to a request for a concession. The professional buyer motto is “Always trade; never concede.”

Prioritize the list

Once you have your negotiation strategy list, prioritize the items. Categorize each item as A, B, or C status.  This is the reality check. 

Category A items add the most value to a negotiated deal.  They can also be the “low hanging fruit” or items that would be an easy concession for your counterpart. 

Category B will be the items that would be nice to have but less valuable than category A

Category C have less value than category B but are still good for the final contract

Review and Refine

You will get the most value from your strategy list when you review and refine the list throughout the negotiation process. As additional information becomes available during conversations with your team, your counterpart or other sources it can spur new ideas for the list that can add value to the final contract for both you and your counterpart. 

List the items that mean the most to you, broken apart and ranked into bite-size pieces. Now you can strategically negotiate a great deal. 

Rinse and Repeat

Follow the same steps for your counterpart. What is on her strategy list? What negotiable items can you think of that mean a lot to her but cost you very little or nothing? Put an equal amount of time and thought into her list as you did for your own negotiation strategy list. Look beyond the obvious. Think about her constraints, needs, and assumptions. 

Negotiation Concessions

The key to a successful negotiation is the negotiation strategy list. In most negotiations, you will eventually face the request for a concession.

  • Will you take less?
  • We don’t have the budget.  
  • We can get the same thing cheaper.

The best response is: “We understand the constraints of a budget before we give up let’s continue the conversation and explore some options. With a little creativity, there may be a path to an agreement that provides value to both of us.”

Go to your negotiation strategy list and start working to a “path to an agreement”. Never concede always trade.

Have more questions, please reach out! Penny is available for coaching you through an approaching negotiation and to develop a negotiation strategy you can always refer to.