Negotiation – “The Resolution of Conflict by Mutual Compromise“
The conflict might be price, delivery or packaging and most people believe that they know how to negotiate. That is, to achieve their own WIN whilst aiming for a necessary mutual win for the Other Party. But do you know how the Masters think?
The Top Dogs, the Captains and Deal Makers?
The 10 main rules of good negotiating are easy to understand and follow. If you haven’t yet been introduced to them view my other article.
In my career as a salesman and contract negotiator I have had the opportunity of watching exceptional negotiators and I have come to the conclusion that what separates the common herd from the Master Negotiator can be boiled down to the following five key secrets.
It might sound trite to say Master Negotiators plan better than everyone else but the plain fact is, they do.
They plan more comprehensively- not just for the price or delivery, but who will say what, to whom and when. Not a script per se, but an essential running order of what they believe needs to happen in the right way in order to achieve the elusive WIN-WIN deal.
The MN will not only have an accurate idea of their own ideal outcome i.e: “I want to sell at a price of £1,000, for standard product ‘A’, to be ordered today with cash with order terms”. But they also honestly and robustly understand their real bottom line on each of their negotiable elements
i.e: “I could if pushed go as low as £900, for an improved product of ‘A++’ and wait as long as 1 month for the deal which could carry credit terms of 30 days credit”.
With these parameters set the MN fully identifies their own boundaries and begins to discuss with the other party (OP) their Ideal Position and possible areas of manoeuvre.
Neither of the 2 positions (Ideal or Bottom Line) will be used as opening offers as all MNs know the value of Information and Rule #6 of “Never Give Free Gifts” comes in to play at the start of every discussion.
MN are renowned for their ability to create successes apparently from the jaws of defeat. It’s always impressive and sometimes looks miraculous but mostly its down to good planning. MNs plan not only their top and bottom lines but also their real bargaining chips.
ie: What is your company’s’ policy on credit – can you give an extra 15 days? And what would you need in return?:- List price? Todays signature?
MNs know all of the points on concession for today’s deal and keep them to themselves until they know all of the 3TQ and can get the right return on the deal.
ie: Possible negotiable’s
– Discount (obviously)
– Credit – Delivery – Volumes – Rebates
– Expenses – References – Currency – Guarantees
– Warranties – Packaging – Branding – Training
– Support – Timescales – Assurances – Hospitality
Each of the above can be subjected to the who, what, when, where, and how test. ie: who, what, when, where, and how is it possible to change in relationship to credit, delivery, volumes etc…
When you can do this as preparation you are aiming for MN status. If you can do this off the cuff you have achieved superhuman status. Comprehensive planning is crucial, but intelligent flexibility is your professional goal. General Douglas MacArthur, the most successful 2nd World War US Naval Commander said “I plan thoroughly for every campaign, but I haven’t created a plan yet that survived first contact with the enemy!” This is where the other secrets of the MN come into play.
All MNs know the power of questions and by using their understanding of their own Ideal and Bottom Line positions they create insightful questions to identify the OP’s positions and requirements.
Opening questions such as “Ideally how would you like to resolve this delivery problem… ?” or “How would you prefer to conclude this difference between these prices… ?” These early ‘open’ requests for information from the MN will be viewed as Co-operative by the OP and can be made whether you are a Buyer or Seller. The WIN-WIN resolution all MNs are aiming for holds no favourites to which side of the table resolves the issue.
MN discussions always follow these 2 mantras.
Mantra #1: “Negotiation is Co-operative not Competitive” – if you find yourself manipulating, bluffing or cheating to get your own way – you’ve stopped Negotiating and may be putting the WIN-WIN at risk. Don’t forget if you invalidate the WIN-WIN it might be your WIN that goes first.
Mantra #2: “Negotiation is Pragmatic not Emotional”. Of course there are emotions involved, you may be passionate about the value you bring to the deal and insist on getting the correct return on your investment. However MNs know that to provoke inappropriate emotions only exacerbates the initial conflict. Therefore they will always avoid inflammatory blaming and accusational language, as these contributions will not only be seen as competitive by the OP (and as such non-negotiation behaviour), but can be the greatest barrier to co-operation in any Conflict Resolution. MNs always “tackle the ball and not the player” – go for the problem not the behaviour.
3. Information Guarding
Knowledge is power. A well worn cliche, but never better put to use than during negotiations. MNs will have in-depth meetings with their team to define exactly what they know and the value of this information, also what information they don’t yet know and how they will fill this gap.
Simply, information you hold can be divided into two camps.
#1 Information we hold which will help our WIN (and possibly even the WIN-WIN) if disclosed to the OP,
and #2 Information we hold which would hinder our WIN achievement if disclosed, either at the wrong time, or at any point during these negotiations.
If you are ever in any doubt always treat the Information as if it will ‘hinder’. You can always share the nugget at a later date with a suitable apology with little damage to your rapport and WIN-WIN, but you can’t “unsay” something if you give it away to soon.
MNs know exactly what information they have, the value of it and exactly what they need to know, together with the price they will pay to get it.
4. Never Say Never
Some cynics feel that everything should be Negotiable. That’s not true. For example you can’t negotiate with the Laws of Physics (ask Star Trek’s Scotty if you are unsure), the Laws of the land are non-negotiable to such a degree you can’t even unconsciously (or mistakenly) create a contract for an illegal act. Even some Company Policies will be non-negotiable such as sharing information with the competition, however these can be a movable feast and every MN knows they need constant evaluation to stay abreast of them.
So not everything is Negotiable, but nearly everything can be. Therefore it serves you well to avoid making definitive Negative statements and listen carefully to any negative or apparent limitation the OP gives you. For example, who would feel comfortable saying (A) “We never negotiate on price” or, (B) “No, I won’t delivery on that day at any price”?
No? Most MNs recognise the possibilities of positive resolution even when given what appear to be absolute negatives and listen for the possible signals within the OP’s statements.
Take the above 2 Total Nevers. A MN might respond with ” I appreciate that you believe your price is sacrosanct but what else could you move on?” i.e: could we prompt, or signal, a possible movement, with extended credit terms, branded packaging or even a consignment stock issue?
MNs know that people leak signals of movement even when the OP thinks they are being definitive. If you follow rule; #5 “Listen more and talk less”, you are more likely to hear the key to your WIN-WIN, even when it’s imbedded in an apparent limitation.
Most customers today in the equipment sales market want you to believe they hold all the cards. They can dictate the terms and the price.
But scratch the surface and they will admit to also needing a relationship with their supplier. Maybe only until the product has been delivered, installed people trained and performing to their expectations. And whilst they know “there is no such thing as a free lunch” they sometimes mistakenly force suppliers into onerous deals or a I win you lose deal. What happens to the losing side of a poor deal. They may appear to give in graciously but will then embark on a (sometimes surreptitious) “Revenge Cycle”: in other words they will look for ways to claw back their perceived loss during the next phases of the relationship. Your customer knows this instinctively and will be trying to minimise your opportunity to do them damage after the deal has been struck.
Therefore in these short meetings MNs will be looking not just for Buying Signals ie: Are you sure you can deliver Model X3 on Friday 12th? But they will be preparing their questions to identify the customer’s possible room for manoeuvre on these points and the costs of non compliance. For example a salesperson might ask ” which is the more important, the exact product or the delivery date?” or even “why is the 12th so important?”- “If the X3 isn’t available on that date what happens – can we still get a deal? You might be well aware that you have a warehouse full of X3s and they can be delivered well in time for their 12th deadline, but you won’t want to break Rule #4
(Never make the first offer, unless you can avoid it.) Certainly you wouldn’t respond to a question like this until you fully understand the 3TQ.
The 3TQ are the “3 Trading Questions”. MNs know that without this information they will not close any deal.
The 3TQ are
1. “What will this concession /information exchange cost me?”
2.” What is it worth to the op?”
And finally and most importantly
3. “What do I want in return?”
By the way they always aim to leave the room with the unused chips still in the pocket. Just in case they get mugged at the door or at the unplanned surprise “Best and Final ” post-negotiation Buyers meeting. We all need wiggle room and if you don’t use it now it adds to your bottom line of your relationship building possibilities later.
5. And Finally Closing…
I know it sounds like a cop-out but MNs only close when it’s right. Too many well meaning rookies are railroaded by the OP. They let the OP use time pressures, personal intimidation and threats of better competitive rates to close the deal on their own terms. MNs won’t have any truck with this. The deal gets closed when Both parties have an identified WIN-WIN. If this means taking a break from the table and private reviews, then so be it. If these reviews create a minor delay, whilst both parties go back to the discussion of the cost and value of each (nearly) agreed element of the deal i.e. the price, the product, the packaging, the delivery dates, the values expected and the credit terms to be adhered to – then the delay is necessary.
MNs know that the OP sometimes inexpertly tries to force their hand and can regret the publicly agreed deal when they get back to the safety of their lair. The temptation to re-profile the deal in their own favour without recourse to the negotiation table can be very strong. To avoid this happening and the WIN-WIN dispersing to the four-winds, MNs insist on full agreement before both parties leave the room.
Your WIN-WIN will only be delivered if the OP gets (and keeps) their WIN for the duration of your relationship. The WIN-WIN close, whilst looking like a power play, is actually a highly pragmatic and co-operative technique for the greater good of all Parties involved.
In summary, the 5 key secrets of Master Negotiators I have observed are that they:
(1) Plan comprehensively, before entering into
(2) Co-operative Discussions whilst guarding and intelligently disseminating their evaluated
(3) Information, they always listen carefully to everything that the other party says, no matter how negative or problematic and
(4) they Never Say Never – they always say it’s “Possible” and try to devise a method to achieve it, which by maintaining good Rapport with the other party, they can finally insist on
(5) Closing an intelligently evaluated WIN-WIN, which allows both parties to go away and WANT to, mutually, deliver the agreed resolution to the original conflict.
If you follow these 5 secrets and keep to the 10 Rules you too can develop the skills of a Master Negotiator and get better deals for you and your business.
Thomas Fuller is the Managing Director of the Virtual Coach. The 10 Rules and 5 Phases of Negotiation they use have generated clients $millions.