Picture your business week and consider the number of times you have to negotiate: with existing employees and new hires, with suppliers and vendors, with long-term clients and new prospects. If you are a business leader or project manager, you’ve got to level up your negotiation skills — it’s non-negotiable.
In this post, we discuss five easy ways to help you improve your negotiation skills.
To make a practical agreement with any party, you need to understand their needs. Most people often learn about the other party during the negotiation process, but you’ll have a better outcome if you can gather this information beforehand.
The more prepared you are before the negotiation, the better you’ll be at making decisions. Thus, doing your homework gives you ideas regarding your counterpart’s needs and wants.
Here are some tips to help you know more about the other party:
- Ensure you’re dealing with the decision-maker – Some negotiators may decide to wear you down by sending a lower-level negotiator your way. After agreeing, your negotiator then reveals that they don’t have the final say. To avoid such situations, research in advance by checking out the person’s job title on LinkedIn. Identify a person with the authority to make a final call on the issue at hand.
- Understand your counterpart’s other options – When walking into the negotiation, the client might try to issue a threat of using your competitor. While this threat may be real, it’s often a bluff to make you lower the price. To prevent that from happening, you should know the other offers your negotiator might have (including what others charge) before you meet them.
- Know their interests – Start by understanding what the other party deems essential, including their underlying hopes, needs, concerns, and aims. This understanding will help you to make a deal that satisfies the interests of your competitor.
In a negotiation, you should articulate your value proposition. A value proposition is a statement that identifies clear, valid, and measurable benefits your customer will get by purchasing your service or product.
You need to know how to raise your offer’s value without adding anything to it. In other words, you want to increase the perception someone may have toward your offer.
Remember, it’s common for the opposing negotiator to turn down your offer because they can’t see its value. To counter this rejection, you should attach implied or intrinsic value to the service or product and explain how it offers valuable solutions to the customer’s problem – a sales methodology known as value selling.
When the other party asks, “Why should I purchase your product?” your value proposition should be the response.
To create a perfect value proposition, you need to have a deep understanding of your idea or product, know its comparisons with competitors’ products, and your opposing negotiator’s needs and wants.
Put yourself in the shoes of your customer by asking these questions:
- Who is she or he and what does he need?
- What problems do they have that need solutions?
- What improvements do they look for?
- What does the client value?
From the customer’s perspective, answer these questions:
- How does the idea, product, or service solve a specific problem or provide an improvement?
- What specific value or hard results does it offer the consumer?
Continue thinking from your customer’s perspective and ask how your idea or product provides more value than the competitor’s?
Put together the information you’ve collected so far and answer this question on two to three lines: “Why should I purchase this idea, service, or product?”
You can start your sentence in any of the following ways:
“I would like to purchase this idea or product because it will ….”
“This product is better than other competing products because…”
Now, put it all together by turning the customer’s answer in the steps above into your value proposition.
Compromising is a common approach in a negotiation where both parties usually give up something they want to get something else.
Compromises are common in win-lose situations and particularly when there’s a fixed pie up for shares, and whatever piece one party gets, the other party loses.
Here are the two conventional approaches used in compromising a negotiation.
A standard method is to go back and forth with an offer until you meet in the middle. This approach often occurs around a single issue, like the cost of a product.
For example, Juan wants to buy a house whose market value is $220,000, but he thinks that’s a bit too high and so he presents an offer of $180,000. Antonia, the seller, thinks that’s too low but wants to sell the house pretty soon.
So, Antonia offers to sell the house for $200,000. Juan accepts the new offer and buys the house.
In this case, Juan paid $20,000 more than what he wanted, and Antonio sold the house for $20,000 less. But each person’s goal was to exchange the house.
The second method is to charge a slightly higher price for a product that isn’t of much importance to your prospect. When they want to lower the cost, indicate that you can get that product out of the proposal. Since the item is not a priority, your prospect will most likely consent to your suggestion.
But since you had assigned an extra charge for this item, it’ll lower the final cost significantly without altering the base price of your most essential work.
Whichever approach you choose, plan for it in advance to have more leverage when entering into a negotiation.
Effective negotiations begin with understanding your needs and those of your client. Once you know this, the rest of the process is a cakewalk.