Every step of your selling cycle involves negotiation. Early in the cycle you are negotiating for time, access and information. Later you’ll be negotiating for financial terms. But never forget that negotiation is happening, on some level, every time you meet with a prospect.
There are a number of universal negotiation practices that can benefit practically any salesperson. The first and most fundamental principle is that the person who has the highest expectation going into the negotiation tends to do better. Once two parties engage in a negotiation and state their opening positions, both parties start to calculate the mid-point, and tend to naturally (often unconsciously) MOVE toward that mid-point during their negotiation.
So a higher opening position will typically lead to a better outcome for you. While this seems logical and obvious, there is a tendency among many people, when they know little about the other side’s expectation, to discount or diminish their negotiation request from the very start. But the less you know about the other side, the HIGHER your initial position should be, for two reasons:
- You may be off in your assumptions. If you don’t know the other person or his or her needs well, they may be willing to pay more than you think. If the other party is selling, he or she may be willing to take far less than you think.
- If this is a new relationship, you will appear much more cooperative if you’re able to make larger concessions. The better you know the other person and his or her needs, the more you can modify your position. Conversely, if the other side doesn’t know you, their initial demands may be more outrageous.
The term “maximum congruent expectation” refers to the most that you can ask for and still have the other side see SOME plausibility in your position. This is an important concept designed to help you aim higher in your negotiations. In other words, open the negotiation with the most extreme position that you can present as a plausible position, based upon YOUR reasoning. The other party doesn’t have to agree with your logic or rationale (they probably won’t) but it should be clear that YOU believe it. Your congruency is vital here, because if the other party perceives that you have opened with an extreme position as a negotiating tactic, much of the effectiveness will be lost.
It will usually work against you if you start with an outrageously high or low position that has absolutely NO logical foundation, and your attitude is “take it or leave it.” You may not even get the negotiation started—the other person’s response may simply be, “Then we don’t have anything to talk about.” But you CAN get away with an outrageous opening position if you imply some flexibility.
Another advantage of asking for more than you expect to get is that it prevents the negotiation from deadlocking. Sometimes it serves your purpose to drive a deadlock, but most negotiation deadlocks are created inadvertently. This happens because one or both parties didn’t have the courage initially to ask for more than they expected to get. Therefore, they both START the negotiation at their true, final, inflexible bottom line. If there isn’t a quick deal, neither party has left “wiggle room” to negotiate further.
A final reason you should ask for more than you expect to get is that it’s the only way you can create a climate where the other person feels that he or she won. If you go in with your best offer up front, there’s no way you can negotiate with the other side and leave them feeling that they won.
- Skilled sales negotiators ask for more and they receive more. They begin the negotiation with their Maximum Congruent Expectation.
- Skilled negotiators have clear, specific resolution goals and coherent strategies for attaining their goals.
- Effective negotiators tend to make initial offers that are high, yet can reasonably be justified, and which will still leave them room to negotiate to their resolution goals.
- No deal is better than a bad deal. If you cannot bring a negotiation to a successful resolution that is truly beneficial for you and your company, then the best outcome MAY be to walk away.
- Effective negotiators know the value of asking for more than you expect to get. It’s the only way that you can create a climate in which the other side feels that he or she won.
Get the Other Side to Commit First. Top negotiators know that you’re usually better off if you can get the other side to commit to a position first. Several reasons are obvious:
· Their first offer may be much better than you expected.
· It gives you information about them before you have to tell them anything.
· It enables you to bracket their proposal.
If they state a price first, you can bracket them, so if you end up splitting the difference, you’ll get what you want. If they can get you to commit first, they can then bracket your proposal. Then if you end up splitting the difference, they get what they wanted. The less you know about the other side or the proposition that you’re negotiating, the more important the principle of not going first becomes.
If both sides have learned that they shouldn’t go first, you can’t sit there forever with both sides refusing to put a number on the table, but as a rule you should always find out what the other side wants to do first.
Act Dumb, Not Smart. To effective negotiators, smart is dumb and dumb is smart. When you are negotiating, you’re better off acting as if you know less than everybody else does, not more. The dumber you act, the better off you are unless your apparent I.Q. sinks to a point where you lack any credibility.
There is a good reason for this. With a few rare exceptions, human beings tend to help people that they see as less intelligent or informed, rather than taking advantage of them. Of course there are a few ruthless people out there who will try to take advantage of weak people, but most people want to compete with people they see as brighter and help people they see as less bright. So, the reason for acting dumb is that it diffuses the competitive spirit of the other side. How can you fight with someone who is asking you to help them negotiate with you? How can you carry on any type of competitive banter with a person who says, “I don’t know, what do you think?” Most people, when faced with this situation, feel sorry for the other person and go out of their way to help him or her.