Entrepreneurs and experts reveal the secrets behind striking the best deal
“Almost every aspect of the business landscape is negotiable,” says Andrew Simmons, managing partner of negotiation specialists The Gap Partnership. In recessionary times, this can work in your favour, as the pressure to get the most out of relationships and realise value from deals is higher than ever.
So whether you’re faced with suppliers looking to hike prices, clients extending their payment terms, fixing a price for new business or dealing with an employee’s request for a pay rise, understanding the art of negotiation will considerably increase your chances of a positive outcome.
There is a lot more to negotiation than open-ended questioning and other sales tricks, and a few key principles will stand you in good stead no matter what you’re bartering over. We have distilled the advice of a number of experts into 10 top tips for perfecting this crucial, and sometimes undervalued art.
Preparation is everything
“You can’t wing negotiations,” says Mark Jacobs, marketing director of sales and business management training company, The Mdina Partnership. “You’ve got to know your audience, what they want and what questions you need to ask.”
The first step is to understand what’s driving the party you’re negotiating with, and where their priorities really lie.
Tailor your response
Figure out what type of individuals you are dealing with and talk to them in a language they recognise. In short, find out how to push their buttons. Kevin Dougall, managing director of AP HR Solutions, uses a four-colour system to make an initial assessment of a person: a blue person is formal, precise and analytical, and needs a lot of data before they can make a decision; a red is purposeful, demanding and competitive, and more intuitive; green people are caring, relaxed and patient, and don’t like to rush things; yellows are warm, expressive, sociable and often persuasive.
Once you’ve determined who you’re dealing with, adapting your approach will make negotiation easier. Blues, or thinkers, will want lots of information, reds, or knowing people, just want the bare bones, while yellows and greens prefer stories or diagrams. However, it’s important to understand what type of person you are, too. “If they’ve got a strong [red] knowing person, putting your own strong competitor or thinking person in against them is not going to work,” says Dougall. “Instead, look for your own [green or yellow] pleaser, or feeling person, to help make the other party feel like they are winning. You need to adjust who talks to who about what.”
Listen carefully
“Nature gave us two ears and one mouth, and in life – generally, you’ve got to use them in that proportion,” says Dougall, adding that this is the best way to understand who you’re up against. He recommends asking the other party what they want to get out of the negotiation, and advises an initial face-to-face meeting to discuss this before getting into the specifics.
Simmons believes knowledge is power. “The more you say, the more you give away,” he says. “Exercise control, be quiet. Ask lots of open questions. Let them talk, listen and take notes.”
Be mentally prepared
We give 55% of what’s going on in our head away through our body, and face-to-face is usually the preferred medium for negotiation. So you need to take the right mental approach. If you feel subordinate, it will be hard to cover this up and will set the wrong tone from the outset. Even your most junior staff should be encouraged to think of negotiation as a business-to-business discussion.
“Whatever’s going on in your head will come out of your body,” says Jacobs. “If a junior salesperson is trying to sell something to someone senior, their approach might be subservient. That is a terrible negotiating position.”
Instead, those entering into negotiations should think: “We all need each other.” Know the value of what you’re offering, and how it helps the other party. Once your head is clear, you will feel in control and can take the lead through questioning.
Discuss, don’t sell
Negotiation should be a discussion of how to achieve a mutually agreeable outcome, not a selling exercise. “The classic sales pitch is ‘look what we can do for you’,” says Jacobs. “What you should be saying is: ‘This is what we do and what we can offer. How can it help you?’ This gives you something to negotiate with, as they’re telling you why they want your product or service.”
Also try to identify trade-offs – things you can offer that are of a low cost to you, but high value to them, or “coinage”, according to Jacobs. Let’s say you’re selling IT systems, and part of the offering is two days’ on-site help from your engineer. You could give them three days, because you already pay for that person, so a day here or there doesn’t cost you much. But if you usually charge your engineer out at £500 a day, that’s valuable to them. In other words, how can you help them to help you?
“If it’s your product or service on the table, the key issue is trying not to move on price,” says Jacobs. “So what can you agree to give them that means they still buy at the original price?”
Take some time out
Don’t be afraid to ask for a break in negotiations to collect your thoughts. “You need time to go away and reconsider,” says Dougall. “Unless you’re up against an absolute fixed deadline, be prepared to ask for time out, and use this to recalibrate your thought processes.”
Understand your position…
