The Art of Negotiation

In business, you don't get what you deserve, you get what you negotiate.
Chester L Karrass

Copyright Leading Transitions Consulting 2012

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Negotiation is a Critical Business Skill required —in every industry—at every

level

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.
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  Prepare prior to the negotiation to
can help you to generate alternative solutions,
create a strategic plan that will give
bargain strategically and close the gap between
what both parties want to achieve. you more leverage.

 Present your position in a manner

that creates an atmosphere of trust
By understanding and avoids negative first
negotiation perspectives at home impressions.
and globally, we can improve  Present alternatives that will
both our interpersonal and increase the value of outcomes for
professional relationships and each side.

will be better prepared when  Bargain more effectively by

faced with different situations understanding how to shift power

without aggression.
and opportunities.
Lynda Barreca  Be better equipped to avoid sub-
conscious behaviours that provoke
negative concessions.

 Recognize when it’s time to Fold.

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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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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 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
win the deal? (Where would we stand
agreement? Does failure to reach an agreement cut you out of future
if deal fell through?) opportunities? And what alternatives might the other person have?
What is Our BATNA?

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?

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Preparation Check List – Business Negotiations (Continued)

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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?
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 People will often make a purchase decision when it is
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?
What expanded scope of problems can you (your
product or service) solve for the customer beyond
what is being requested?
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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.
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.
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.
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.
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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.

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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.

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00

Communicate Like a Pro- Sales Negotiator

Based on an article by John Patrick Dolan, Attorney at Law 2010

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.

Rule 1: Organize Your Thoughts

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?"

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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.

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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

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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 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.

CONCESSION STRATEGY 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'

DISTRIBUTIVE A distributive negotiation type or process that normally entails a

NEGOTIATION 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.

HAGGLING 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.

INTEGRATIVE Negotiation with the intention of incorporating the goals and aims of

NEGOTIATION “all” the negotiating parties to create maximum value through

collaborative negotiation. Also known as Win-Win Negotiation

LOSE-LOSE 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.

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Glossary Continued

NEGOTIATION PROCESS 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.

NEGOTIATION A negotiation exchange that involves making negotiation

LOGROLLING 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.

POSITION 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.

TRADE-OFF 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 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?"

WIN-WIN NEGOTIATION 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.

WINNERS CURSE 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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