Successful negotiations are seldom by chance.
Image by Szilárd Szabó from Pixabay
Negotiations are taxing. My previous stints in sales and channel management tested my negotiation skills almost daily. The most difficult used to be the ones in which the real estate was in consideration. Real estate is still one of the things closest to the people’s hearts, and no one wants to part away with it, even at the cost of it lying idle for decades.
Negotiations start way before the two parties sit face to face to discuss. A successful negotiation needs a solid groundwork not just in terms of knowing our own limits but the other party’s aspirations as well. Although I haven’t read any books on the subject, based on my experience, I have put down some general ground rules that made a lot of difference in closing negotiations favorably and amicably.
* Do your homework beforehand: One of the omens of a disastrous negotiation is to have unknown revelations at the negotiation time. It throws you out of both your calculations and calm demeanor. A seasoned negotiator can easily see through you in such situations and leverage it to his advantage. The bare minimum requirement is knowing your own price band with all categories earmarked- good, bad, unviable, break-even, no-go, etc. Proactive negotiators always try to have some idea of the other party’s price band beforehand, thus preparing themselves with more ammunition. Information on recently closed similar deals, other alternatives at hand, competitors, etc., always give you an edge during the negotiation if used carefully and timely (never bombard it all together).
* Avoid making the first move: As much as possible, of course, since this is not entirely in your hand. When a party puts forth the quote, the discussion moves toward questioning the premises and assumptions. It is somewhat like one team trying to defend the penalty shoot-out during the entire game. Besides, there is always a risk of quoting something too generous, regretting it later. When asked to make the first quote, seasoned negotiators do not shy away in providing an absurdly one-sided quote to see the reaction and try a distant chance of it getting through. Then they finetune their strategy based on how high people jump on their seats.
* The Power Game: Negotiations are power games. When two strong negotiators sit face to face, the balance of power constantly shifts from one side to another. Coming to power, nothing gives you more of it than establishing that you are indispensable to the other party. Similarly, one of the easiest ways to dismantle the other party’s standing is to establish that you have other options as well. Pinpoint your power and use it to your advantage.
* Gauge your leverage: During the course of negotiations, pay attention to the leverage (in the other party’s situation) available in your favor. Is the party very impatient and time-starved? Are they desperate to close the deal to fulfill their other commitments? Who are the people softer to your demands? Who is the decision-maker, and how friendly or hostile has he/she been? Based on the leverage available, you can even secure a premium. While you would want to gauge all of these in the other party, do not divulge the same to them, at least as much as possible. Understanding people’s body language plays an important part in knowing what is in it there for you.
* Close it on a high for all: This is a golden rule for long-term relationship management. Understand that a successful negotiation is just the start of a new engagement. No matter how good a deal you have broken with all your negotiating prowess, never make the other party feel they had a rough one. When closing out, compliment them on how well they have done to secure such a nice bargain.
Once in a while, you may take pride in cracking a steal deal, but there is a huge long-term risk in lopsided deals in which one of the parties has been exploited due to their lack of diligence or some other weaknesses. The disgruntled party often goes into a suicidal mode (non-performance) or tries to make up with other avenues or loopholes. In fact, you should always look beyond the obvious if a deal is too good to be true. A balanced deal works the best, especially when a long-term engagement is involved.
A Manager’s Five Simple Rules to Negotiate Like the Godfather was originally published in ILLUMINATION on Medium, where people are continuing the conversation by highlighting and responding to this story.