Be A Better Negotiator

The mere mention of negotiating causes people to tense up. Whether it’s a fear of confrontation, loss aversion, or lack of practice, many would rather settle for less and make negotiations quick or avoid negotiating altogether.

However, understanding basic concepts and becoming familiar with a few simple techniques goes a long way to getting what you deserve — for yourself or your business.

Let’s break negotiating down into three areas. Good negotiating is patience, flexibility, and controlling the flow information.

Patience

Good things take time. Whilst swift negotiations are nice, you want to ensure you have enough time to really think about what you want and work through details with the other side.

• Preparation is key. Whether it’s your boss or your partner, you should discuss your options and have a clear understanding of the negotiating strategy. For salespeople in particular, there can be pressure to get a deal over the line to demonstrate achievement, even if it’s not the best deal you could have gotten or even detrimental to the company in the long run. Before negotiations begin, all internal stakeholders should have a clear understanding of the ‘worst’ terms that would still make for an acceptable deal. Without knowing these, it’s easy to make concessions that you hadn’t planned to just to get a deal over the line — particularly if the negotiations have been complex and drawn out.
• Don’t put a clock on the negotiations — explicitly or implicity. If you do, the other side can wind down the clock and corner you into making concessions you don’t want to in order to get it over the line. Likewise, you can use it to your advantage too. Ever buying a car? Wait until the end of the month and pick the salesperson who looks like they’re working hardest — it usually means they’re trying to hit sales targets and you can use that urgency to your own advantage.
• Be an active listener. When most people listen, they’re waiting for the next opportunity to speak and are mentally planning what they want to respond with. The best listeners, active listeners, clarify that they understand what the other side is saying and try to glean more information about key points. You can do this by responding with a question, paraphrasing their message with an inquisitive tone. That urges the other side to clarify what they previously said and delve deeper for you. Part of this is being genuinely interested — don’t fake it!
• Learn how to disagree without being disagreeable. It’s a negotiation, you’re not supposed to agree on everything. But how you disagree can have a big impact on the outcome. A large part of this is emotional intelligence, remaining calm and clear when needed. You should come across as relaxed and positive. Think open body language, your tone of voice, and a smile, even if you resent something that was just said. If negotiations are positive, you can ask them why such a thing is important to them. Or you can say “that’s not a good fit for us, because…” and then lay out your requests. If a truly unreasonable request comes your way, you can parry it back with a calm “how am I supposed to do that?” or if you’re comfortable enough, remain silent. More often than not, the other side will fill the silence and either negotiate the request down themselves or give up more information than they need to.

Flexibility

You’re not going to get everything you want, that’s the nature of negotiating. You should aim high, but have reasonable expectations of where you’ll end up.

• List your red lines and your concessions. Before you begin, take the time to write down a list of what you want, what you’re willing to compromise on, and what you’re absolutely not willing to compromise on — the ‘red lines’. Now, do the same for the counterparty — these might be educated guesses at this stage, but can be refined as more information is revealed through conversations.
• Be willing to be flexible, but never give anything up for free. If you’re asked for a concession, always tack on an ‘if I’. For instance, “I’ll pay in cash, if i am given a 15% discount”. Turn their request for a concession into the counteroffer they should have given you.
• Have a plan B. To negotiation nerds, this is known as your ‘Best Alternative To Negotiated Agreement’ (BATNA). Knowing what you’ll do if you can’t reach an agreement with the counterparty, and even leveraging it as part of discussions if it’s genuinely a strong one, means you’ll be less likely to accept unfavourable terms. Knowing what the other side’s BATNA is also an advantage for the opposite reason.
• Squeeze more juice if you’re able to. If you’re approaching the final stages and it’s going better than you expected, you can always ask for more in exchange for concessions that you’re willing to make. It’s important to phrase it as a win for the other side, like “if I give you more, what could I get in return?” for the best results.
• Know when to make the first offer, and when to wait. The initial phases of negotiation are establishing the ‘Zone of Possible Agreement’ — a window of key terms within which a deal could be struck. As a rule of thumb, if you have more information than the other party, you should make the first offer. If you don’t, you should wait for them to make the first offer. Understanding this is using ‘anchoring bias’ to your advantage. Most negotiation takes place around the first number put forward, the ‘anchor’. If you make the first move, it should feel uncomfortable — your proposal should include things that you’re expecting to concede on later. If they make the first move, you should defuse and dissect the offer. Simply asking how they came to that number will reveal a lot of information. If being more firm is your style, you can confidently reject the offer and ask them to try again. They might just start negotiating with themselves and argue the number down.

Information

In negotiations, knowledge is power and leverage. Not in an evil way, but the more you know about the counterparty — their goals, motivations, emotions, pressure points etc — the more likely you are able to get the best deal possible within the boundaries of a win-win situation.

• Align incentives. And make sure that your success is aligned to theirs. You want to outline a vision of mutual success and then detail an agreement that fulfils that vision, ensuring that risks, costs, and rewards are distributed fairly across the parties. You can map out different scenarios to test this out. “If X happens, are the costs/rewards fair for both of us?”
• Know and test your assumptions. When you’re excited about something, it’s easy to assume best-case scenarios for a variety of variables. If these assumptions are wrong, it can drastically turn a seemingly good deal into an outright terrible one. If you can identify these you can either test them, find proof, or insert provisions into a contract to cover worst-case scenarios. It’s always helpful to ask someone else to run through an agreement you’re working on to help highlight any blindspots you might have, too.
• Document everything. Don’t take word of mouth on anything important, ever. Assume it’s useless unless it’s in writing.
• It takes a village. In an ideal world, you’ll have a full negotiating team for any deal, each intentionally playing a different role. There’s a solid list here. Personally, if I’m leading conversations I like to have an ‘observer’ and a ‘critic’ in the team. The observer remains quiet and takes everything in — that frees them up to dial in on non-verbal cues and will pick up things the leader misses. The critic intentionally takes a negative viewpoint on everything — both your side and their side. Their role is to highlight weaknesses of your approach and share them with you privately, and critique the other side’s approach inside the room.
• When negotiating numbers, use a couple of psychological tricks. Similar to anchoring, if you use a range when negotiating numbers (like salary), then take the number you were going to offer and make it the bottom number in a range. If you are asking for $60,000, ask for between $60,000 — $70,000. It makes you sound flexible, and starts the negotiating at the higher number rather than the lower one you would have pitched anyway. The second trick is to make these numbers specific rather than round. Change $60,000 to $61,324, and have passable logic in why you’ve chosen that specific number. You can base it on any data — average salary based on location, experience, the industry — as long your methodology sounds convincing if/when the other side asks how you came to that number. Giving a specific number makes it seem like you’re the expert and have more information, thus you have more leerage.

Negotiating is part art and part science. Love it or loathe it, it’s a part of life for everybody. Just remember to gather information, be flexible, and be patient.

You never know, you might get more than you bargained for.