Hey $avvy people! We have another AWESOME guest post this week on negotiation. If you are new to negotiating or not very confident in your abilities, this article should really help! Becoming a good negotiator is a very $avvy move, it can save you an enormous amount of money over your lifetime. -T$C
4 Tips for a Successful Negotiation
I always hated negotiations. Vividly I remember graduating from college and getting my first ‘big-boy’ job offer. I hoped the salary was going to be higher, I mentioned it to my dad. He said, “You should tell them you want $3,000 more.” I was afraid they’d say no. I was afraid they would decide not to hire me. I accepted the job. Fear took away my leverage.
The idea of negotiating intimidated me. It still does sometimes. I negotiate contracts and purchase agreements for a living. They all start with a knot in the pit of my stomach. I worry about being too strong or too weak. It could destroy the deal before it’s even been dealt.
To calm the nerves, I read and study negotiation tactics constantly. I read articles written by FBI Hostage Negotiators, blogs from top Real Estate Agents and listen to podcasts by master Sales Professionals. I even subscribe to the mailing list of a Hedge Fund Manager (James Altucher 10 Things Not to Do in Negotiations). Using these lessons, I’ve developed a beginner’s guide to negotiations.
Negotiations occur daily. When your boss gives you a project or wife asks what you want for dinner, it’s a negotiation. When your kid asks to feed Play-Doh to her baby sister, well, at least she asked first. We don’t always realize these conversations are negotiations. In my studies, I’ve found a few tricks to create fruitful negotiations.
1) Listen & adapt during a successful negotiation
This is the discovery phase of the negotiation. Understand what your counterpart wants to accomplish. Listen to learn, not respond. Absorb as much information about the deal and the person as possible. The discovery phase of negotiation can last anywhere from seconds to days. If you’re negotiating a nuclear trade deal with a foreign dictator, it will take days. If you’re negotiating a deal with your spouse on who has to change the poopy diaper, it will probably just take 1 sharp glance.
Listen first because you’ll need to quickly adapt your style. Some negotiators call this strategy “Mirroring”, but I like to use Adapt. During this phase, you’ll begin to make your opponent’s argument for them. Depending on your style, you can choose one of two directions:
Some negotiators set a goal in the beginning of a talk to get a “No” from the other party. Usually, it’s done in a sarcastic manner. This is a tough strategy. It can turn a cooperative partner into an agitated opponent very quickly. This could also come across as condescending if done improperly. Let me give you an example of a time it worked:
I called my cable company to negotiate a better price a few weeks back. The customer service representative told me I was already getting the best price possible. I asked, “You’re ok with losing me as a customer?” He sensed my sarcasm. He said “No.” He transferred me to the Customer Retention department. I got them to knock off about $17/month. An 11% discount! It’s $200 per year in savings. Not amazing, but not bad.
I like this strategy better. It’s been more fruitful for me. This strategy is also much friendlier. Here, the goal is to get the opponent to say “That’s Right.” You must fully adapt your style into theirs. You change the pace of speech to match, adjust your posture to mirror theirs and use similar words. Then, you make their argument for them. Here’s an example:
I had to negotiate a new deal with my company’s pallet supplier. The salesman is a really happy, friendly guy. He reminded me of a used car salesman. He was using the famous “let me check with the boss” line. I adapted my style towards his, smiled while he talked and nodded my head as he did. I’d use the same jargon he used. When it came down to the deal, I made his argument for him: “Rick, I know you’re already giving me a great price on pallets. Your service is next to none. And, you’re not sure how much room you have to give.” He responded “That’s Right, Jeff” and I knew I’d made progress. He knew he didn’t need to sell me. I took away all of his leverage by adapting to his style. I made his argument for him. The total deal ended up saving the company about $250K annually. I didn’t get a better price on the pallets. However, I was able to get was free delivery on purchases of 550 pallets or more.
During the negotiation, you’ll run into moments of silence. Silence is good. If you’re dealing with a salesperson, they’ll want to talk and fill the dead air. Why do you think used car salesmen leave you alone for so long while they ‘check with the boss’? It’s to force you to deal with the silence without giving themselves an opportunity to break it by putting their foot in their mouth.
I have a step by step guide on this section of the negotiation here: 7 Flawless Tips for Negotiations
2) Negotiation terms & conditions
The Art of Negotiation is perfected in the terms and conditions. These are the pieces of the deal beyond price. It costs a lot to focus on price alone. The ‘Terms & Conditions’ can make a great deal. Remember the pallet example? The deal wasn’t made in the purchase price but in the delivery.
Experts preach on having a longer list of demands. This is basically the same advice. All aspects of the deal are negotiable. Each term or condition is a mini negotiation within the deal. You’ll win some and you’ll lose some. It’s inevitable. These are the building blocks to a great deal. Some give and some take creates a win-win deal.
For example, when receiving a job offer, the salary isn’t the entire deal. You can negotiate vacation time, working from home allowance, performance metrics and timeline for promotions. Same goes for your cable bill. You can negotiate premium channel upgrades, and discounts on your leased hardware. Everything is negotiable.
3) Preparation makes a huge difference
Over-preparing is just as dangerous as under-preparing. If you over-prepare, you’ll end up with tunnel vision. You will miss out on some huge opportunities. The things you need to have prepared before a negotiation are:
- Who are your negotiation opponent’s competitors and what do they offer (price & service)
- “How” and “What” open-ended questions to extend the Discovery/Listen phase
- Your “No” questions and your “That’s Right” statements
- The worst possible deal you’ll accept
4) Humility goes a long way in a negotiation
In negotiations, humility is best. You are not the best negotiator. The person across from you has knowledge and information you don’t. Learn as much as you can. Learn as often as you can. Read, study, and practice negotiating.
Wrap-Up the Negotiation
I still hate negotiations. They bring on an uncomfortable level of anxiety. The rush of closing a deal is well worth the headache and struggle. Remember, you’re negotiating with a person. People want to be heard and understood. If you can deliver on those wants then you’ll hold all the power you need to make a mutually beneficial deal. Hopefully, you found this Beginner’s Guide to Negotiations beneficial.
What successes have you had with negotiations?
What strategies have worked best for you?