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David Freedman

Huthwaite International

associate director

Read more from David Freedman

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How to negotiate a good deal


Ever been left in a situation wanting that extra bit of negotiating nous? David Freedman of Huthwaite International outlines the skilled negotiator’s top tips.

Sell first, and then negotiate (but only if you have to)

If you can sell your buyer an unchanged solution at the full, quoted price, why negotiate? However, in major business contracts, this is rare. Usually the buyer will signal the start of a negotiation by saying something like, "I'd like to do business with you if...". Poor negotiators will have already given things away to achieve this position; the skilled will not.

Never concede, always trade

Effective negotiation involves movement by both parties towards an outcome. Avoid 'giving' something without 'getting' something in return. When you need to move from any stated position, make a conditional offer, such as: "I might be able to move on X, if you are prepared to move on Y." This is particularly important towards the end. The seductive sight of a deal can tempt the unwary into unilateral concessions.

WIN/WIN is not 50:50

We're all encouraged to aim for win/win, but what you really want to achieve is 'WIN/win' – the best possible deal for them that still allows a win for the other side. A win/win outcome is certainly not a case of splitting the difference or feeling awkward about representing our interests.

Power is in the head

Many sellers feel that power in negotiation lies with the buyer. However, having worked with buyers, I can tell you that they often say the opposite. They need the service being sold and can seldom afford the deal to fall through either. So power is a perception. If you feel powerful, you are powerful, and you behave accordingly. If you feel weak, the reverse applies. If power is about perception and feelings, you can manage and control it. Later tips explain how skilled negotiators generate and manage their feelings of power.

Prepare and plan with care

Skilled negotiators do a number of things before a negotiation:

  • They develop a credible 'fallback', or 'BATNA' (Best Alternative to a Negotiated Agreement). This is not the worst case they will accept. Rather, it describes what they will do if this particular negotiation fails entirely. A good fallback prevents them feeling that they must do a deal at all costs. They identify as many negotiable issues as possible, prioritise them and develop a negotiable range for each from 'best', through 'target', to 'worst'. They also calculate the cost of concessions for each to avoid impulsive and expensive mistakes.
  • They repeat the whole process, but this time trying to think as the other party.
  • They spend time identifying 'common ground' and plan how to use it in the negotiation. Thus they manage their feelings of power and identify the possible overlaps, trades and levers to give themselves the maximum flexibility to bargain.

Identify and use your levers

A lever is something that costs you less than the value the other party places upon it. It can therefore be traded for something that you value. Comparing the priorities – yours and theirs – on each negotiable issue identifies those levers. Linking issues and obeying point two makes sure that you use them.

Logic is not persuasive

This applies in every aspect of life, as any parent will tell you! Skilled negotiators know it too. They don't browbeat the other party or use long chains of logical arguments. They have only one or two key reasons for any particular position they adopt. They do however prepare lots of smart questions to probe the other side's stance. Their objective is to create doubt in the validity of that stance – the first stage in persuasion. They accomplish the second stage – creating movement – by offering flexible trades and using their levers.

Don't just cut the pie, grow it

A good deal is a creative deal. It creates additional value to whatever the two parties each bring to the table. Ideally, that value is created at the expense of a third party – for example, the competition or the taxman! When planning, skilled negotiators generate a wide range of creative options in considering how each negotiable issue might be settled. They look 'outside the deal' for extra value.

Develop your behavioural skills

Preparing and planning are fine, but we all face impromptu negotiations with no time for either. When this happens, all we have to fall back on are our personal negotiating skills. The stereotypical image of the negotiator as a hard-faced and intractable character is incorrect. Skilled negotiators have wide behavioural repertoires and the flexibility to match their behaviour to suit the situation.

Keep all the balls in the air till the end

However tempting, avoid settling issues as you go, particularly the minor ones. The risk is that you discard your levers and the negotiation comes down to a single-issue confrontation (typically, on price) with no other issues available to break the deadlock. You need to be able to juggle all the issues so that you can bring any of them back into play at any time before the deal is concluded. Until the end, settle issues provisionally.

'No deal' is better than a bad deal

Obvious, isn't it? But not so obvious when the deal has been in the sales forecast for months, it seems tantalisingly close and all that's required to close it is a few final concessions. Because they're clear about their 'worst' position and have a credible fallback, skilled negotiators recognise a bad deal and aren't afraid to walk away from it.

For further details of Huthwaite’s negotiation research and skill development programmes click here

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David Freedman

associate director

Read more from David Freedman

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