What is Negotiation & What are the Best Negotiation Tactics?
The word “negotiation” can be a scary word for many people. It often evokes the feeling of confrontation in the mind, like going to war. However, negotiations are actually just a series of communication tactics that are necessary and crucial in every point of life. Negotiation plays a vital role from personal life to high-powered business deals.
Here’s an important question: How do you personally feel about negotiation?
If you also feel like you’re going to war and feel challenged while negotiating, this guide will help you be a better negotiator, and that’s good news. As students learn in our negotiation training sessions, a good negotiator is a better communicator, listener, and deal maker.
“Negotiation and discussion are the greatest weapons we have for promoting peace and development.”
What Exactly is Negotiation?
Negotiation is a professional discussion between people who are trying to reach an agreement. It is always fundamentally about human interaction and the questions we are trying to solve as a negotiator.
A better negotiator engages with other people in such a way to achieve better understanding and better agreements.
Negotiation is not just about dollars and cents, or getting deals. It is aIn our negotiation training, we teach about providing actual value to the other party.
Difference Between Negotiation and Bargaining
This is a misconception that negotiation and bargaining are the same. If that’s the way you feel, I’d invite you to consider a different point of view.
Bargaining is usually about pricing. A good example is what happens in the vegetable market. Negotiation is about pricing and money, but also includes quantity, quality, time, value. There is one winner and one loser in bargaining, but negotiation can often be a win-win situation. It is all about finding a favorable solution for both parties. This is an important shift, and good sales negotiators are masterful at this.
Bargaining is like debating, which requires good manipulation and verbal skills to win that situation. Negotiation requires those skills as well, but may also focus on ethics, fairness, the proper settlement between two parties.
Foundation of Negotiation
In our negotiation workshops, we learn that there are three seeds of negotiation - we might call these the 3 C’s of negotiation:
Connect
Convey
Convince
These are the basics of the negotiation that you should understand first. Most of us negotiate like a salesman (I will tell you later why you shouldn’t be a salesman). They always try to convey their products/ services then convince them to buy or accept the offer.
What is your take on this? Do you think that the client will be convinced about your services/ products?
No. The party will never convince if you directly try to convey. Therefore, it would be best if you connected with them before conveying.
People spend 90% of their energy in conveying, and people are convinced only 10%. So when you connect with people 10%, then there are high chances of convincing and can be your lead.
Probably, now you might think about how to connect?
Here are steps to connect with people.
Step-1
The first step is WIIIFM which means What is in it for me?
The person or the party will never tell you their expectations. Their background thinking is always What is in it for me?
If in the foreground, when their expectation will meet the reality, they will buy it.
There should not be any mismatch between the parties. If anything is there, the connection can not be established.
Step-2
To understand your client deeply, you have to identify NIC, Need, Interest, Concern. As a negotiator, don’t think about your NIC. Try to find out your client’s needs, interests, and concerns.
That will help you to connect with your client.
The next step will help you to find out your client’s NIC.
Step-3
“Seek to understand first then to be understood”
First, understand them, their problems, and concerns. Then, ask them probing questions, open-ended questions. Listen to them carefully.
These questions will lead to navigation to the root cause of their challenges. Then try to give a solution to their challenges.
The degree when you solve their problems, the client has already bought your products
Now I will tell you why you shouldn’t be a salesman.
Never try to be a salesman; try to be a consultant. So that you can provide them solutions as a consultant according to their needs, challenges, and what they are looking for?
When you have done the proper gap analysis and need analysis, that will help you to offer the right products/ services. Of course, the client will also be happy to receive that.
I will tell you a story from Bhagwat Geeta (A Hindu scripture)
Shri Krishna and Arjun were discussing the Battlefield. Arjun has lots of challenges, and he is not ready to fight with his own family members, Arjun said to Shri Krishna.
Shri Krishna has many solutions that he can give to Arjun. But he listened to Arjuna carefully, until Arjun was convinced that Shri Krishna understood me completely, then the connection took place. After the connection, when Shri Krishna Conveyed his message, Arjun was convinced to fight.
Fundamentals of Negotiation
To negotiate appropriately, we need to understand some basic concepts of negotiation. The following concepts will help you to become a better negotiator.
BATNA
BATNA is “Best Alternative to a Negotiated Agreement.” Sounds complicated. Right! Let’s break it down for you.
BATNA is the best thing you can do in case of a failed negotiation.
In simpler words, BATNA is whatever you have decided before making a deal or purchase. For example, if you plan to buy a mobile phone not more than “X” rupees. And you do some homework such as specifications, camera, RAM as per your requirement. That helps to make your purchase perfect.
All these concepts and preparations that you made before are considered as your BATNA.
So, BATNA is your standard in your negotiation table, which will protect you from accepting unfavorable deals. You will only accept the deals if it is better than your deals.
A good BATNA improves your negotiation power. You are not required to concede much when you have the best alternative because you don’t care if you get the deal. But, if you haven’t prepared your BATNA, you are likely to accept them when the other person can make increasing demands. In this case, you are likely to accept the deal.
That is the reason, whenever needed, improve your BATNA.
ZOPA
ZOPA is the Zone of Possible Agreement. The common ground between the negotiators is referred to as ZOPA.
It can only be possible when there is some overlap between the expectations of different parties. An agreement can never become successful if the negotiation occurs outside the ZOPA. So, it is always essential to understand one others needs, interests, and values.
Let’s understand ZOPA with an example.
Joy wants to sell his car to Emma for a minimum of $6000. That means Emma should be ready to pay a minimum of $6000. If Emma is willing to pay $6500 for the car, there is an overlap between both parties. If Emma offers only $5500, there will be no overlap; there can not be any ZOPA.
SWOT Analysis
SWOT, or “Strength Weakness Opportunity Threat.” It is a crucial analysis that you must be prepared before going for a negotiation. You can access every aspect; it may be positive or negative.
If you think deals will be in your favor and you will get benefited, you may close the negotiation phase. And if you believe there are not enough things in your favor, in this case, you may negotiate a better deal.
BAFO
BAFO stands for Best and Final Offer. It is the official closing of any negotiation. It contains every bit of discussion, terms, and conditions you have discussed during the negotiation.
Before leaving the table, ensure to get everything in writing which you have agreed upon.
10 Crucial Points to remember during negotiation
“Never negotiate out of fear But never fear to negotiate.”
1. Don’t go blind.
Be adequately prepared before going to the table. Read their financials, press reviews, complaints, websites, blogs, social media.
2. Identify your must-have
3. Think twice before lowering your price
4. Always remember the silence is a powerful tool
5. Be relaxed about talking about money
Do you have a project budget?
Range in your mind
What is your fee?
What did you pay the last time?
Ask for details
6. Don’t work for free. Instead, give them a free sample.
7. Be selective and trust your gut
8. Determine your MAR(Minimum Acceptance Rate)
9. Start with quoting a high price
10. Seek a mutually agreeable outcome
Stages of Negotiation
Whatever work we do needs a system or a structure. To achieve a desirable result while negotiating, we need to follow a structured approach.
The followings are different stages of negotiation
Preparation
Discussion
Goal clarification
Target towards a win-win outcome
Agreement
Course of Action
1. Preparation
In this stage, you need to prepare and plan your goals. Whatever the consequences may be, you need to stick to your goals, terms, and conditions
At the same time, you have to anticipate the same things for the other party. Be prepared for any type of conflict that could possibly happen. What are their goals? What can they ask? What might be their hidden agendas? What are the outcomes they are expecting?
Ground Rules
It’s vital to define ground rules with the other parties.
Where and when is the meeting going to be held?
How many members will be there while negotiating?
Time limits for the negotiation
2. Discussion
During this stage, each member of both parties will understand the situation by asking questions, listening. It is helpful if you take notes during the discussion for further clarification.
Here you need to follow the 80-20 Rule where you give 80% for listening and 20% for speaking.
3. Goal Clarification
After discussion, disagreement of both parties’ needs, interests, the goal should be clarified. Clarification is a crucial part of the negotiation process; it may be likely to lead to misunderstanding. None of the parties will get the desired outcome.
4. Target towards a win-win outcome
This should be your ultimate goal that both parties feel like they gained something from the negotiation process. Both sides should feel that their opinion is also taken into consideration.
5. Agreement
The agreement should be crystal clear to both parties as per their needs and requirements. It needs to be made clear to everyone what has been decided.
6. Course of Action
To carry out the decision as per the agreement, a course of action has to be implemented.
This is all about negotiation and tactics that everyone needs to know. Negotiation is crucial in business, during a salary negotiation, while buying a house or buying a car. This is a must-have talent for everyone.
As per data by procurement tactics
40% of adults in the US don’t feel confident about their negotiation skill
A negotiator only remembers 20% of what the other party has said after a minute of negotiation.
In the US, women earn only 84% of what men earn as they have equal capability, same position, and the same hours. This is because women feel uncomfortable during salary negotiations.
Twenty-eight thousand people search on google ‘How to negotiate salary’ every month.
Negotiation Tactics
Tactics play an essential role in the negotiation process. Of course, it is difficult to identify and apply for multiple times, but the main focus is to provide the possible amount of value to the table. There are many tactics that exist. Few commonly used tactics and strategies we will discuss below.
1. Brinkmanship
It is a negotiating technique where one party aggressively puts all their terms to the party. The other party has only two choices: either they accept or walk away.
Successful brinkmanship creates an urgency in the mind of another party that they have no choice but to accept the offer. There is no alternative to this proposed agreement.
Sometimes brinkmanship is risky. Occasionally it may provide more yield in case of favorable negotiations. It may hamper long-term relationships between the parties.
2. Bogey
Negotiators use this technique to pretend that this is a very important deal though this is not so important. This is one of the more complex tactics because it is difficult to understand the instruction and intention of your counterpart.
The best way to adopt this tactic is to ask questions. You should immediately ask questions: why is this issue important for you? Why do they change their stand suddenly?
Ask questions in such a diplomatic way that they will reveal how important the deal is for them or allow you to provide the solutions.
One thing we shouldn’t forget is that information is a powerful tool in any negotiation. It is more in the case of Bogey.
3. Snow Job
In simple words, the snow job tactic is to distract and confuse the other party. To make things happen, you need to reveal a bunch of information with facts and figures.
Negotiators often use technical language or jargon to mold a simple answer in a complicated way.
4. The Nibble
This technique is generally used at the end of the negotiation. After spending a lot of time negotiating when the other party will agree to your terms, you will start nibbling.
Nibbling means asking for something extra items one at a time. Actually, these things are not discussed before. The main aim is to gain more from this deal.
5. Lack of Authority
When dealing with negotiation, always try to ensure that the counterpart has the authority to make the decision. If at any point they tell you that they are not authorized to make a decision, refuse to continue until the right person comes.
Talking with this kind of person unnecessarily wastes your time and effort.
6. Deadlocks
This tactic is used to provide a deadline to the counterpart and force them to take the decision. It creates pressure on the other party’s mind.
Isn’t it a serious thing that we need to consider? Please share your thoughts about negotiation below in the comment section.