In any negotiation, your ability to get the best deal possible depends on: (a) your preparation in uncovering the optimal “gets” for your side, and (b) your success at selling the value of the deal to the other side. There are many things you don’t control at the negotiating table—your opponent’s motivations and biases, their behaviors (win at all costs, hide the ball tactics, etc.), or developments outside the conference room that impact or impair the relationship between your company and theirs. What do you control? Your behaviors.
Here is a list of the top 10 things you should do to best position yourself for blowout results in your next deal:
1. Learn their wants and needs. You very well may go into a negotiation with a decent idea of what the other side might be looking for in a deal. But that’s an awfully low standard for preparation. Don’t leave money on the table by working with an incomplete, unappealing, or ineffective vision for your deal. Your first step in up-leveling your preparation is to assemble key stakeholders from across your company, or friends or colleagues from within the industry who know about the other side, to help fill in the blanks. A negotiating “consulting team” within your company can consist of a sales group that sells to the company, a product team that is seeking a partner like them for a pilot program, or your business development group that may see strategic value in deeper collaboration with them. Where these resources exist, don’t go it alone. Tap their knowledge and develop a more complete view of desirable benefits. Informing yourself of the broadest possible scope of gives and gets will dramatically enhance your deal’s value potential.
2. Solicit and probe key information from your opponent. I’m a big proponent of taking control of your negotiation by leading the other side through a vision for a deal worth doing, and a process for aligning on terms. This does not mean, though, that you talk and they listen. To find value, you must solicit information from your counterpart. Probe their goals, must-haves and non-negotiables. What is the best way to invite transparency from their end? Demonstrate it from yours. This isn’t to suggest you share your walk-away number or anything that might undermine your negotiating position. But the reality is that in order to construct and sell an appealing if not optimal value exchange—for both sides—you must promote and model open communications. Guarded, tight-lipped negotiations will lead to a value pie with several pieces missing. Be hungry. Construct a heaping, overflowing pie.
3. Validate/complement what you’ve learned. To build maximum value in your deal, take what you have learned from the other side, and your stakeholders, and take further steps to validate and expand it. Put your natural curiosity and researching skills to work. Read their recent earnings reports, press releases, CEO speeches or presentations to connect the dots and arm yourself with the data and story to assemble that killer deal pitch.
4. Find their Achilles heel. The flip side of learning their wants is to uncover their weaknesses, including an Achilles heel. You may be working on a deal with a new supplier. You want to establish a fixed price over a five-year term with no minimum volume commitments. The supplier is looking for minimum commitments with penalties in the form of higher prices in the event of volume shortfalls. You reach impasse.
Your preparation, however, reveals that the supplier is experiencing extreme cash flow pressure. While their cash situation is likely to stabilize by the end of year 1 of the deal, an unanticipated shortfall from a cancelled order puts the supplier’s business in distress. So much so that they might consider paying a premium (i.e., willing to consider otherwise non-negotiable concessions) in exchange for more cash up front. Knowing this gives you the opportunity to structure a deal to your liking by front-loading the year 1 payment, with savings on the back end and no volume commits.
5. Paint a picture of success, for the other side. You will often find yourself in the situation where you need to illustrate and sell positive outcomes for the other party. This is particularly true when you are pushing the idea. Doing this effectively can be the difference between successfully persuading your opponent and inviting indifference or inaction. Knowing their motivations and weaknesses is the first step in getting you there. In crafting your message, be specific on the advantages they will gain in doing a deal. Importantly, package it in a way your counterpart can use it to build internal consensus for the deal with key execs within their own organization.
6. Make concessions conditional. Extending value—even significant value—to the other side does not equate to weakness, or losing. A colleague of mine once commented that:
“Good deal people get good deals done. And you aren’t close to getting it done until both sides get a little uncomfortable.”
Deals, like the world, are not always tidy. By definition, they are decidedly imperfect, explained by their consummation by “agreement” of the parties. Harnessing and delivering relevant value to your opposite will be necessary in most negotiations. The trick is you should refrain from giving something of value to the other side without gaining something of value for your company in return. In other words, the give should be “conditional.” This is illustrated by some through an “If… then” construct (if you do this for me, then I can do this for you) as referenced in We Have a Deal by Natalie Reynolds (2016) at page 54. You may be interested in a longer term for the agreement, while they may want additional marketing support. This may then form the basis for a valuable exchange for both companies.
7. Uncover asymmetrical gives and gets. You will often find that there is asymmetry in how each side attributes value to a certain item. What they might be willing to give up on the cheap, given its nominal value to their company, may be of considerable value to your company. The kind of conditional exchanges just noted can be a powerful tool for smoothing out the economic terms of a deal for both sides and in securing significant value for your company, particularly when you unearth asymmetrical trades that work in your favor. The key? You have to prepare, research, probe, question and persevere. Gems (i.e. bargain concessions and grand-slam “gets”) are out there. But you need to want to find them.
8. Expand the value pie. Let’s consider an everyday situation. Perhaps you are looking to buy a car. You and the salesperson hit a snag and simply can’t bridge the price gap that divides each side’s “best” offer. The salesperson can decide to limit the discussion to price, which likely will lead to a walk-away. Or she can start asking questions, e.g.: How important is safety and security (which may bring in to play an “SOS” type service to assist stranded drivers)? Or do you have any family members who will be in the market for a vehicle in the next six months?
These questions lead you to share that, in fact, your daughter’s vehicle is coming off lease next month and that your wife had read about the SOS program and seemed interested. Each new element provides added value to be considered as part of the deal. The salesperson may have more flexibility to discount in a two-for-one deal, and the SOS service provider, which is a new entrant in the market, is offering a great promotion for first-time users. By asking questions, the salesperson expands the pie. Rather than accept defeat, buyer and seller move toward a handshake on a deal worth far more—to each party—than either expected or intended at the outset. Always look for ways to expand your deal pie.
9. Use multiple offers, especially when things tighten up. Let’s face it, for savvy negotiators, haggling on price is part of their genetic make-up. You can expect it early and often and should assume the most competitive negotiators won’t be satisfied unless they believe they’ve “beaten” their target price for the deal. No matter how many other terms you successfully cleared, your progress can come to a sudden and fatal halt if you get stuck because you’ve valued your auditing services at $10,000 and they won’t pay a cent more than $8500.
What to do? Of course, you can walk away if simply conceding and accepting their price would make it a bad deal. Alternatively, you might consider presenting multiple options, each one of which you find acceptable. The first might be your original offer of $10,000 to perform the audit services as requested. The second may extend up to a 15% discount if they pay the entire sum upfront, rather than the half upfront with the remainder due within 30 days of project completion. Lastly, you might propose an $8500 fee with standard payment terms but with a narrowed scope of the project, eliminating say 2 of the 4 days planned for onsite interviews. Presenting multiple options can break the impasse and, importantly, create space for the demanding negotiator to extract themselves from their entrenched position and preserve their ego in landing what they may still perceive as premium deal value.
10. Always maintain your integrity, and return to it throughout the negotiation. This may seem like a no-brainer. Of course, we should have integrity. But I am approaching it not just from your vantage point, but the vantage point of your audience. We’d like to think that the vast majority of us act with personal values that are mostly virtuous. Some reinforce it by talking about it; others just let their actions speak for themselves. The notable point is that you are being observed, and yes, judged by others. How you speak, including to subordinates, how you maintain confidences, how you handle pressure, and what you do to close the deal all leave a trail of behaviors that shape opinions about you.
Anyone with accountabilities feels the strain of pushing through their initiative or plan. While it may be rare for someone to openly cheat, it is not so uncommon to see those motivated by the bottom line to flirt with the edge of the line. Know something when you do it: People are still watching you. Put your best foot forward and keep it there. Avoid name-dropping, insults, sharing too much information (whether of the personal or confidential variety), and bending the rules for the sake of getting your way or closing the deal, even when you claim to be doing so in a way that benefits the other side. Even if you are prone to such behaviors or lapses, you should not assume your audience or the opposing side is. Stay clear of it and stand firmly on principles rooted in high character and integrity. Your employees, manager, co-workers, and even your opponents will respect you for it. And you, in turn, will undoubtedly respect yourself and you’ll remain on course for getting a great deal done.
These tips for creating and selling deal value should help you be a better negotiator.
Nick Psyhogeos is the founder and CEO of Global Negotiations, LLC (www.global-negotiations.com), a consultancy dedicated to improving results for corporations and employees in their negotiations. He’s a regular contributor to Money Inc. and also the author of the recently released book, “Confessions of a Global Negotiator: A Quick Guide to the 5 Rules Business Development Professionals Need to Close Great Deals.”
