The Negotiation

Topic: The Negotiation


Now 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.