The Art of Negotiation. In business, you don't get what you deserve, you get what you negotiate. Chester L Karrass

Transcription

1 The Art of Negotiation In business, you don't get what you deserve, you get what you negotiate. Chester L Karrass

2 1 Negotiation is a Critical Business Skill required in every industry at every Whether it s discussing a product sale, a major deal, satisfying an upset customer or diffusing an internal conflict negotiation is inevitably at the heart of the process. But few people understand the structure, techniques and approaches available to them as they seek to positively influence an outcome. level This tool box will provide you with some tactics that will guide you to achieving better negotiation results for both sides of the table. It will help you prepare your strategy, identify your strengths, and understand the positioning from the other s perspective. Using these tactics can help you to generate alternative solutions, bargain strategically and close the gap between what both parties want to achieve. By understanding negotiation perspectives at home and globally, we can improve both our interpersonal and professional relationships and will be better prepared when faced with different situations and opportunities. Lynda Barreca Prepare prior to the negotiation to create a strategic plan that will give you more leverage. Present your position in a manner that creates an atmosphere of trust and avoids negative first impressions. Present alternatives that will increase the value of outcomes for each side. Bargain more effectively by understanding how to shift power without aggression. Be better equipped to avoid subconscious behaviours that provoke negative concessions. Recognize when it s time to Fold.

3 2 Tool Box Contents You must never try to make all the money that's in a deal. Let the other fellow make some money too, because if you have a reputation for always making all the money, you won't have many deals. John Paul Getty Identifying Your BATNA Negotiate Like a Pro Communication Tips Top Sales Negotiation Mistakes Glossary of Negotiation Terms

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5 4 Preparation Check List Business Negotiations (Continued) What is the level of Deal Importance to us? 1) Valuable Opportunity 2) Urgent Need 2) Good Potential What are the consequences I you fail to win the deal? (Where would we stand if deal fell through?) What is Our BATNA? If you don't reach agreement -what alternatives do you have? Are these good or bad? How much does it matter if you do not reach agreement? Does failure to reach an agreement cut you out of future opportunities? And what alternatives might the other person have? How should we value our BATNA? (costs benefits, both short- long-term) How can we improve our BATNA? What do we perceive the other side s BATNA to be? How could we make their BATNA less attractive? (raise doubt) What must be uncovered /understand early the discussion with the other side? What packages (bundles of options) can be proposed to meet their interests and our interests very well? What Concessions will we make What Concessions cannot be made?

6 5 Preparation Check List Business Negotiations (Continued)

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8 7 How urgently does the customer need your product or service? Is what the customer is asking realistic? Are they asking for more than they expect? How do you differentiate yourself from other sales representatives? What can you do to demonstrate that you are an expert in respect to the product and the market? What is you value proposition and how does it fit the customer s needs? Resist the temptation to automatically reduce your price or offer a discount Communicate clearly how you, as an individual, are a unique resource to the customer and use your own unique personality to your advantage Most customers will not have full knowledge regarding the product/service or market trends demonstrating advanced expertise can put you ahead of the competition. What value differences (vs competitors) does your product or service offer? What Value-Add can you offer that will encourage the customer to buy from you? Who do you know in the customer s organization that can offer a referral? What expanded scope of problems can you (your product or service) solve for the customer beyond what is being requests? Are there elements of your product/service that better fit the customer s needs or solve problems in the short or long term versus competition? Or Can your product solve more than 1 problem now the others cannot? Above product or service what can you offer? Example could be in contract terms and conditions or service value. People will often make a purchase decision when it is referred to them by someone they know and trust. Developing contacts within the firm will also give you a better perspective about the motivations and politics inside the customer s company By uncovering core underlying issues your value to the can skyrocket by helping the customer to crystallize needs and visualize solutions to problems they may not have originally discussed. What expanded scope of problems can you (your product or service) solve for the customer beyond what is being requested? Even in a depressed selling cycle -It is better to walk away from a sale rather than make too large a concession or give a deep discount your product or service.

9 8 BATNA (Best Alternative to Negotiated Agreement) By Lynda Barreca, January 2012 Don't put all your eggs in one basket." To a negotiator, this wise old proverb points out that when you go to a negotiation with only a single proposal to the table, you may likely end up with a rotten deal, or no deal at all. You need to have an alternative plan waiting in the wings. Not every negotiation moves easily into settlement or agreement. Whether you are negotiating with a friend, family, co-worker for a significant personal for business deal - this is where BATNA comes to the rescue. BATNA means 'Best Alternative to a Negotiated Agreement. This is your alternate plan when the talks start to wobble out of control. It can also be your trump card in the game to make the deal happen to your advantage, or walk away from it altogether. Example: Scenario 1 - You are a buyer who goes to your regular supplier to purchase urgently needed parts to complete a project. The supplier recognizes your urgency; he sees that he has a chance to take control of an opportunity to get what he wants. You want the lowest price possible while he wants the higher price. You have no fallback. The supplier holds the power trump card. Scenario 2 You prepare for the negotiation with your buyer. Before meeting you speak with two other suppliers of the same products. Then you meet with your supplier. You calmly sit back and let him sense your urgency and give you his higher price. Now watch his eyes when you spring your BATNA about his competitor s willingness to solve your problem. Power is transferred to you you are holding the trump card. When you prepare for a negotiation it is important to identify alternative solutions. Creating a BATNA comes from planning and preparation. It is a twofold process. First, you have to determine all your available options. Then, you must also realistically estimate the other side s position and alternatives. Each is equally important to be able to gauge the strength of your options versus the other side. From that point you have to think strategically to uncover ways of strengthening an option to make it your best available option.

10 9 A strong BATNA is like an insurance policy. It provides you with two possibilities. Either you settle an agreement with more favourable terms, or you have the option to simply say, 'No dea1!' Your plan should be a flexible approach. It is important to keep in mind that both your approach, and your alternatives, should be able to bend in the wind and weather the unexpected storm. A wise negotiator enters the talks with a preconceived idea of the best alternatives available to both parties, but must not be bound by them.

11 10 Communicate Like a Pro- Sales Negotiator Based on an article by John Patrick Dolan, Attorney at Law 2010 Rule 1: Organize Your Thoughts To negotiate effectively, you must be able to communicate effectively. Unfortunately, most salespeople and businesspeople don t realize the importance of solid communication skills to the negotiation process. As a result, they lose sales or don t get the best possible deal. However, as a salesperson, you are not doomed to the mixed messages and meanings characteristic of poor communication skills. Using the following communication skills a sales or really any negotiation can help you gain more control over the outcomes. To help you express your thoughts clearly outline in advance the main points you want to cover. Planning the list of what you re going to say is the most effective way to avoid sending mixed messages. Continue throughout the meeting to take notes and plan your responses as you go through the entire process. Not every statement needs an immediate answer. Take your time - silence can be one of your most powerful negotiating tools. Stop talking whenever you feel like you need to reorganize your thoughts. Do not start talking till what you say reflects what you are thinking. This tactic not only helps you organize what you re going to say, but it also helps you digest what your counterpart proposes Rule 2: Start Asking Better Questions What prompted you to consider a purchase of this nature?" "Who else have you been speaking to?" "What was your experience with?" "What time frames are you working with?" "What is most important to you about this?"

12 11 Rule 3: Recognize that Actions Speak Louder than Words Experts say that seventy-five percent of communication is nonverbal. This means that the messages negotiators convey have more to do with their looks, their actions, and the way they say things, than with the actual words they say. The better you become at using nonverbal communication and reading the nonverbal messages others send, the more effective you can be as a negotiator. Know they are watching you too so make sure you don t send the wrong messages by doing something that conflicts with what you want to say. Rule 4: Be Concise Most people tune out a majority of what they hear, so you should always be concise and get right to your point. Say what you mean in as few words as possible, without being blunt. To ensure your message reaches your counterpart, always oversimplify your message, and then elaborate as they ask questions. Repeat your main point several times to emphasize what s most important. To boost your negotiating power even more, practice saying everything clearly and concisely, then repeat your key points to yourself again and again Rule 5: Always Translate Your Message into Benefits for the Other Party People always listen more carefully when they believe some benefit exists in your message for them. In negotiations, focus on that benefit, even when the underlying purpose of the message is in your favor.

13 12 Top Negotiating Mistakes By Lynda Barreca 1. NOT PREPARING - thorough preparation for meetings and discussions is the absolute key to success! Conduct your research before discussions will boost your confidence and put you in a better position. 2. NOT ASKING THE RIGHT QUESTIONS - by listening to customers you can obtain and use information to best effect. Combining this with good listening skills will enable you to make informed decisions and continue to move the discussion in a positive direction. 3. NOT EVALUATING THE IMPACT OF CONCESSIONS Before you concede Ask yourself Is the outcome after concessions still financially viable for your company? 4.NOT UNDERSTANDING YOUR STRENGTH of Position or recognizing sources of power Plan in advance know your competition and uncover alternatives to offer that will give you power over the competition. 5. NOT USING TIME AS A STRATEGY 80% of concessions are made in the last 20% of negotiation time Stretching out negotiations to tire the opponent is a common tactic for good negotiators. Weariness and boredom provoke sub-conscious motives to make concessions that are often regretted the next day

14 13 ANCHORING Anchoring is an attempt to establish a reference point (anchor) around which a negotiation will revolve and will often use this reference point to make negotiation adjustments. Anchoring often occurs when the first offer is presented at the beginning of a negotiation. BATNA See Article page 8 COLLECTIVE BARGAINING CONCESSION STRATEGY DISTRIBUTIVE NEGOTIATION HAGGLING INTEGRATIVE NEGOTIATION LOSE-LOSE NEGOTIATION A negotiation process that occurs between employers and the representatives of a union to negotiate issues that consists of conditions of employment. Normally results in a written contract that is defined by specific contract time duration. Your concession strategy is a plan of the goals / positions and any interests that you will be trading with the other party. Before you enter the negotiations, have clarity on your and the other party's goals, and an sequence of which goals you want to trade or exchange. 'Concession Strategy' is more accurately called the 'Trading Plan' A distributive negotiation type or process that normally entails a single issue to be negotiated. The single issue often involves price and bargaining. Also referred to as Win Lose, or Fixed Pie negotiation -one party generally gains at the expense of another party. A distributive negotiation type or process that normally entails a single issue to be negotiated. The single issue often involves price and frequently relates to the bargaining process. Also referred to as Win Lose, or Fixed Pie negotiation because one party generally gains at the expense of another party. Negotiation with the intention of incorporating the goals and aims of all the negotiating parties to create maximum value through collaborative negotiation. Also known as Win-Win Negotiation A negotiation where all parties to a negotiation leave money or resources on the table at the conclusion of a negotiation. Compromise can be a form of LOSE-LOSE. Distributed Negotiations if neither party is satisfied.

15 14 Glossary Continued NEGOTIATION PROCESS NEGOTIATION LOGROLLING POSITION TRADE-OFF WALK AWAY WIN-WIN NEGOTIATION WINNERS CURSE An interactive process between two or more parties seeking to find common ground on an issue or issues of mutual interest or dispute where the involved parties seek to find a mutually acceptable agreement that will be honoured by all the parties concerned. A negotiation exchange that involves making negotiation concessions or the trading-off of issues so as to maximize on each side s' value. You offer the other side something that they value more than you, in exchange for gaining something from them that you value more than they do. This is the official defined stance or standpoint which will be strongly defended by a negotiator. A position is usually determined by the interests of a negotiating party in the negotiation process. A position is often defined in the contract that a party puts forward or is proposing to their counterpart. Also sometimes referred to as a Concession where one or more parties to a negotiation engage in conceding, yielding, or compromising on issues under negotiation and do so either willingly or unwillingly. Walk away is the alternative that a negotiator will act on if they are not successful in a negotiation. "What will you do if you don't agree this deal?" A win-win negotiation settlement is an integrative negotiated agreement. In theory this means the negotiating parties have reached an agreement after fully taking into account each other s' interests, such that the agreement cannot be improved upon further by any other agreement. Occurs when an under aspiring negotiator sets their target or aspirations (goals or objectives) too low at the outset of a negotiation and is granted an immediate agreement by their negotiating counterpart.

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17 Taking Productivity and Competence to the next level Of Great! Our Core Learning Programs 16 Managers Transitioning to a New Manager (Series) Delegation Skills Problem Solving & Decision Making Skills Goal Setting & Alignment Assertiveness & Time Management Appraising & Coaching Skills Leaders Leadership through People (Series) Performance Management The Art of Influence & Persuasion Leading Project Teams BUILD CRITICAL SKILLS TO MORE EFFECTIVELY MANAGE SELF AND OTHERS Excelling as Front-line Manger (Series) Emotional Intelligence & Personal Style Critical Communication Skills Dealing with Conflict & Pressure Managing Difficult Personalities Managing Change & Resistance ENHANCE LEADERSHIP CAPACITY Leading Change through People (Series) Advanced Coaching & Mentoring Team Leadership (Series) Talent Management & Succession ENHANCING BUSINESS MASTERY Exit Planning Readying a Business for Exit-Transition Strategic Planning Building Profitable Indirect Sales Channels Expanding Markets & Marketshare Coaching to Improve Business Performance The Art of Negotiation Becoming an Effective Facilitator The Art of Meeting Management Business Relationship Management STRENGTHENING TEAM POWER Team Growth Dynamics Becoming a Change Ready Team Dealing with Conflict & Difficult People Team Communication Skills Dealing with Pressure & Stress Client /Customer Service Skills