While negotiation is one of the most crucial business skills to develop and develop well, it must be said that it is for many a rather painful part of the corporate world. Due to a potentially long list of reasons, a lot of otherwise extremely capable business people at all levels – from the junior salesperson all the way up to the CEO – simply don’t like it.
I have had many colleagues and friends tell me over the years they are just not good negotiators – or “bargainers”. You probably hear that latter term used more often on the personal front, like when you are on vacation and you get to haggle with a vendor over the price of some souvenir – something that many people simply dread.
While not quite the same thing as being seated opposite a potential client or vendor in an office setting, there are certainly some parallels. And studies will tell you this lack of comfort – or this extreme discomfort – comes in large part from lack of preparedness.
There are those who many would call “born negotiators”, but upon closer look what the majority of those so-called “born negotiators” possess is simply the gift of gab. That alone won’t actually help you too much when it comes down to the finer art of deal-making. What will, however, is the preparation. The true born negotiator is, in fact, the one who properly prepares for every encounter.
So let’s start on that note before going into four other essentials that will help you find your negotiation comfort zone.
1. Do your homework
As the old saying goes – fail to prepare, prepare to fail – and this is definitely true at the negotiating table. I’m sure these particular words of advice will sound rather obvious, but we often forget that the reason something turned out to be easier than you thought it would be, or worked out in your favour, is because you prepared well for it.
A quick diversion here to make the point: public speaking. Again, those “born public speakers” are actually not those who have simply mastered the basic tips and tricks, but those who prepare well for each speech or presentation. You cannot after all be a good public speaker by turning up and asking what you are supposed to talk about, then trying to smooth talk your way through it.
The reason something turned out to be easier than you thought it would be is because you prepared well for it.
Instead, you research the material that will go into your presentation, pull it together in the most logical and engaging manner, then practise it till you make it look like there is no better authority on the subject than you. In other words, you worked extremely hard to make it look easy.
What does this mean for the negotiation process? Well it can be a number of things. And how you prepare depends on what side of the table you are sitting at (buyer or seller, for example) or what the negotiations are about.
Whatever the scenario, you need to prepare accordingly. Find out everything you can about the person or persons you will be holding discussions with; get as many details as you can about the product or service you might be buying and talk to others who have purchased it to see how much they paid; find out what you can about the pain points the potential buyer of your product or service is looking to address; and so on.
2. There doesn’t have to be a winner and a loser
A frequent mistake people make when it comes to negotiating is to go in with the mindset that there has to be a winner and a loser – or that someone has to or will come out with a significant advantage. The problem is that anyone going into a negotiation feeling they must win or come out on top is unlikely to compromise enough to seal a fair deal; and equally, anyone concerned about “losing” is going to naturally be on the defensive, and may end up passing on a very legitimate and fair offer.
In his book, “Negotiation Boot Camp: How to Resolve Conflict, Satisfy Customers, and Make Better Deals”, Ed Brodow says that he enters every single negotiation looking for a “win-win” outcome. Go for what you want, he says, but be prepared to give away what the other party wants too. Barrow says that not only will deal success rates improve with this attitude, but the style is essential to a positive working relationship between both parties long after negotiations have finished. And this is a very important point, because the closing of the deal is often just the start of a very important working relationship or partnership, and you wouldn’t want that to begin with one party having hard feelings.
3. Know what you’re worth and then leverage it
As the seller, this one starts by taking an honest look at what you are bringing to the table. If you are offering a product or service that is available elsewhere (which is pretty much always the case), then what is it that makes your package more attractive, and how exactly does a deal with you bring more value than a deal with one of your competitors? Only by knowing this can you find and then subsequently exploit any leverage over your competitors who are also negotiating with your prospect.
As buyers we are most of the time naturally sceptical, and we are all used to getting the same spiel from competing vendors. How are you truly different? Are you, in fact, any different? This one is very much based in reality. That is, if you are better than your competitors, you should be able to show that in the form of results through case studies or client references – or with the strong reputation you enjoy in the market. If you are on par with your competitors in terms of offering, then it quickly becomes a price war, which is often not much of a help to anyone’s business.
The point is this: knowing what you’re worth may be a bit of a wakeup call for you. You may not like what you see. In which case it is time to work on that product or service to improve it in order to give you that leverage next time. In other words, a good negotiator does actually have something of value to negotiate over, and no amount of smoke and mirrors will help cover up a mediocre offering.
4. Get the information you require
Being a good negotiator is a lot like being a good detective – you need to ask the right questions and listen carefully to the answers for clues that will help solve your case. Or in this instance, help you close a deal with favourable terms. Call it “smart listening”, but what it is about is uncovering what you need to hear. And maybe you won’t uncover it too easily, in which case you have to probe with more questions.
That 70/30 listening rule is a great one (that is, listen 70% of the time and talk 30% of the time), but it means nothing if you are not getting the information you need. You have to be persistent and even dogged here. If the conversation is going in circles and you are not uncovering what you need to uncover, then you have to keep at it. Try different approaches, ask different questions, and if needed get much more direct.
You will never feel as though you are 100% informed. You simply cannot be. As a buyer, for example, it is only after you start using that product or service that you will see what the real value is. But it is your right and duty to get to a fairly comfortable place with respect to informed decision-making, and if that involves poking and prodding till the cows come home, so be it.
That 70/30 listening/talking rule is a great one, but it means nothing if you are not getting the information you need.
5. Be prepared to walk away
Somewhat leading off from point 4 above, do always be prepared to call quits on a negotiation. In fact, in your mind you should be more prepared to do this than find a deal. Too many things can go wrong with a purchase or a sale or a partnership, so without a satisfactory level of comfort, it is not worth it. Having the “walk away” option is one way to ensure you don’t say yes under too much pressure.
Now this is not to imply in any way that you should be too quick to call it quits. Negotiations will often be drawn out and require a lot of back and forth and will generally have a fair number of hurdles that need to be overcome. Those win-win scenarios that bring the most long-term benefits are almost never quickly and easily decided. In fact, the bigger the deal and the greater or more impactful the long-term gains may be, the more there is to discuss through in advance. In short, the more there is to win or lose.
It’s hard work
There are great business lessons to be learned from reading about Houdini. He was known for making his escapes look so easy and effortless that people were sure he was aided by some sort of magical powers. The truth, however, is that his tricks were often incredibly gruelling and required tremendous physical ability, and Houdini practised and prepared until the execution was perfect.
Negotiation is one of those things that the more prepared you are, the more confidence you have, and the greater the likelihood of a favourable outcome. So of all the tips presented here, I will stress that point 1 is the one you need to keep in mind above all others. Each and every negotiation you go into will be different, so you want to exhaust yourself with preparation to make the discussions all that much easier.
Neil Petch; Chairman at Virtugroup
With a history of business successes, Neil Petch is well known in the UAE and beyond as a visionary entrepreneur with a passion for helping others establish and grow their own businesses. Neil founded Virtuzone in 2009 and quickly established it as the region’s leading company formation expert, before launching Virtugroup, a holding company that has a wider mandate of supporting startups from establishment; to successful market entry; and all the way through to exit.