First and most importantly, positioning is everything in negotiation. The way that the situation is initially approached, and when, are more influential on outcomes than all of the other negotiating tactics and techniques combined.
(Technique 1 and 2 are absolutely critical even before you start a negotiation.).
1. Have an alternative
- 1 1. Have an alternative
- 2 2. Negotiate when the sale is conditionally agreed and not before, if buying the opposite applies.
- 3 3. Aim high – Aim for the best outcome. When buyers aim low, they tend not to go first.
- 4 4. Let the other side go first – Try to avoid ‘going first’ on price if you can. (Buyers will often be trying the same tactic.)
- 5 5. List all of the other side’s requirements before negotiating – Get the other person’s full ‘shopping list’ before you start to negotiate (buyers usually do the opposite – they like to pick concessions up one by one indefinitely)
Whether you are buying or selling, if you can’t walk away because you need the deal so badly or because the other side is the only game in town, then you are at a serious disadvantage.
If the other side believes you are the only game in town then you have the advantage.
No other factor is so important: the more you need to secure the deal, the weaker your position, so avoid negotiating when you need the business badly (for the same reason, never find a house and fall in love with it before you sell your own).
The same will apply to your customer, which is why buyers almost always give you the impression that they can go somewhere else – even if they can’t or don’t want to.
This also means that when selling you must create an impression that there is no alternative comparable supplier.
You have to create the impression that your product or service is unique, and that the other person has nowhere else to go. The way you sell yourself and your product
Tactile and it comes into play before you even start to negotiate. If your product offer is not unique remember that you are part of it.
You can still create a unique position for yourself by the way that you conduct yourself, build trust, rapport and empathy with the other person.
Establishing a position (or impression) of uniqueness is the single, most effective technique when you are selling, whereas denying uniqueness is the most powerful tactile of the buyer.
2. Negotiate when the sale is conditionally agreed and not before, if buying the opposite applies.
negotiate when the sale is conditionally agreed and no sooner (buyers tend to try to negotiate before giving you any commitment – don’t let them)
Or, put another way; don’t get drawn into negotiating until you’ve got agreement in principle to
Find more concessions later, and ensure a better finishing point for the customer.
If you are not sure that the customer is conditionally committed to the sale, then ask a conditional closing question e.g. “If we can agree the details will you go ahead?”
If you’re buying, then the opposite applies: start to negotiate for concessions before agreeing you want to buy (try this when you next buy something – you’II be amazed at what you can secure without giving any commitment in return).
3. Aim high – Aim for the best outcome. When buyers aim low, they tend not to go first.
If you’re buying, aim very – even ridiculously – low, but do it
Starting point is to the eventual finishing point, the more difficult it is to give the other person concessions along the way and ultimately arrive at a win-win outcome.
Many negotiations are little more than a split-the-difference exercise. They shouldn’t be, but that’s often the underlying psychology and expectation.
So it’s logical that to achieve the best possible finishing position you should start as ambitiously as you can (without losing credibility of course).
If you have the option to hear the other person’s offer first, then do so. It’s a fact that whoever makes the opening offer is at a disadvantage.
If you go first, the other person can choose to disregard it and ask for a better offer. And the other person avoids the risk of making an offer themselves that is more beneficial than you would have been prepared to accept.
It’s amazing how often a buyer is prepared to pay more than an asking advice, but avoids having to do so been
Price than he anticipates if he hears what the buyer is prepared to offer first.
4. Let the other side go first – Try to avoid ‘going first’ on price if you can. (Buyers will often be trying the same tactic.)
If you know the other person’s starting point before you have to give your own, then this is clearly an advantage to you. For example, if selling, ask the other side if they have an ‘outline budget’.
Sometimes, you will be pleasantly surprised at what the other side except to pay (or sell at) which obviously enables you to adjust your aim. Letting the other side go first is a simple and effective tactic that is often overlooked.
Side to ‘go again’ or at least re-think their expectations or stance, which can amount to a huge movement in your favour, before you have even started.
5. List all of the other side’s requirements before negotiating – Get the other person’s full ‘shopping list’ before you start to negotiate (buyers usually do the opposite – they like to pick concessions up one by one indefinitely)
Establish in your own mind what the other person needs, including personal and emotional aspects. Everything that is part of or related to a deal has a value.
Everything has a cost to you or your organization, even if it’s not on the price list. Negotiation isn’t just about price and discount.
It’s about everything that forms the deal. It’s about specification, colour, size, lead-time, consumables, contract length, penalty payments, get-out clauses, delivery dates, stock-holding
All these and more are called variables and each one affects the cost. Some affect the cost more than others; buyers and sellers nearly always place a different value on each.
It’s critical therefore to know exactly what your buyer wants before you start to negotiate. Get the full list of issues written down and commit him to it.
This is vital if you are to keep a track on the values of the deal and the eventual outcome. You also avoid your position being eroded bit by bit by the late introduction of concessions required.
Your buyer’s personal and political requirements are important too, and the bigger the deal the more significant these factors are.