People who are successful negotiators always have a well thought out strategy before entering into the negotiation. They are well prepared, self confident and structure the negotiation so that they remain in control of the negotiating process.
The recommended structure for negotiations is:
- Establish the issues being negotiated
- Gather information
- Build a solution
Stage 1 – Establish The Issues
Begin by agreeing an agenda for the negotiation – i.e.
- What needs to be discussed and agreed?
- Who will be involved and what will be their role?
- What timescales are we working towards?
- What are the major issues that need to be agreed?
Many negotiators make the mistake of negotiating too quickly, whereas skilled negotiators spend 20% more of their time asking questions and lookingfor alternatives.
Do be aware that professional buyers will want to gain your commitment on issues, such as price, early on in the negotiation, but you should never commit yourself to anything until you have established everything that is being negotiated.Seasoned negotiators will often bring up an issue at the end of the negotiation, when you are vulnerable and likely to agree to a one sided (Lose-Win) concession in order to conclude the deal. You can legislate for this ploy by asking the other side for their “shopping list” before beginning the negotiation and refuse to accept any last minute additions to the list.
Issues will include things like price, delivery schedule, payment terms, packaging, quality of product, length of contract, etc. At this stage, issues are kept general and no concessions are made or agreements reached.
Stage 2 – Gather Information
This is a vital part of the negotiation and you need to remember that there are four kinds of information:
- Information you have that you are willing to give to the other side
- Information you have that you are unwilling to give to the other side
- Information the other side has that they are willing to give you
- Information the other side has that they are unwilling to give you
You need to decide, before the negotiation, how much you are willing to share information and what your own information requirements are. This will set the climate for the negotiation and will determine the amount of trust that exists between both parties. Skilled negotiators are able to ask a range of open, closed and follow up questions and are able to listen effectively. They also wait until they have all their information requirements before making concessions.
Stage 3 – Build a Solution
Having gathered information, the next stage is to begin to put together a solution. Usually, this will take the form of the selling side putting forward a proposal, or opening bid. The opening bid should be ambitious, but defensible. You should always challenge an opening bid and refuse to let an unacceptable bid stay on the table.
Typically, there will then be a process of bargaining. Concessions will be traded and movement take place until, hopefully, agreement is reached. Concessions should not be given away for free and you should be wary about conceding on issues for which you are not prepared.
A final tip – The very best negotiators always enter into negotiation with a “three position plan”:
Best Price, Realistic Price and Fallback Price
They never, ever, accept less than their “Fallback Price”.