Which strikes you as the preferred situation?
Walk away from the negotiation table, signed contract in hand feeling “ugh, thank GOD that’s over – we managed to get to the end, and no one’s really happy, so that must mean we did it right.”
OR
Walk away from the negotiation table, signed contract in hand, hearing “You know, that was really a much better experience than we expected. And a much better deal than we thought possible! Look forward to doing business with you again!” and feeling “YES! That was a great time, and we didn’t leave any money on the table.”
Of course, you want to be the hero of that second scenario, having built up your reputation as a straight shooter focused on maximizing value for all parties present.
This is what we like to call excellence in negotiation, and it’s well within your reach. What follows are seven key steps – from prep to closing – that will ensure you’re creating value and maintaining great working relationships with your negotiation counterparts.
Separate tangibles from intangibles – and understand both are valuable
Tangibles are those things easily measured: money comes to mind. Maybe clicks (that translate into eyeballs on the content, and therefore money) in the case of advertising. The cost of the rights to a totally unique and highly coveted NFT.
Intangibles aren’t so easily measured. The pride of owning the totally unique and highly coveted NFT, for example. Or the satisfaction you feel after helping create value for both yourself and your counterpart.
At first blush, if you’ve not negotiated very much, it’s easy to brush off the intangibles as meaningless. But how many times have you avoided apologizing because it hurt your pride? Or perhaps over-spent on a gift to showcase your generosity? If you’ve ever been in the midst of an ugly divorce, you very likely understand the concrete and financial implications of intangibles like pride, sentimental value or attachment and the like.
The key here is to understand that much, much more goes into creating value than just the dollar amount on a signed contract. Of course that matters, and, if you can take the intangibles into consideration (both yours and the other party’s), you’ll be far more prepared to close a stellar deal.
Be crystal clear on your priorities and goals
Too many people flub a negotiation because they’re not even sure what they want out of it. They don’t know when they’re negotiating against themselves, or when it’s time to walk away.
First things first: you absolutely must know what your priorities and goals are. Say you’re negotiating a compensation package for a new job. What do you have in mind? Salary, paid time off (PTO), health insurance, flexibility to work from home or at the office, the ability to travel on the company’s dime…
You get the picture.
Whatever you’re negotiating, take time to write down your goals. We have checklists for you for just that purpose on your dashboard (check out the Strategic Tools).
If you don’t know what you’re looking for, you’re not going to get it.
Do your due diligence to understand your counterpart’s priorities and goals
You (hopefully) have all the facts on your side of the negotiation. You can identify key issues, and prioritize them using a standard metric, be it dollars or a point value.
Now, you’re going to need to put yourself in your counterpart’s position, and try to game out their priorities and goals for the negotiation.
If you’re selling something, your goal is to get the best price – their goal is to pay as little as possible.
Remember the intangibles though. They’re going to want to look good to their associates or spouse or kids. Perhaps you can deliver something sooner than later, and expediency is a priority for them.
List out all of the tangible and intangible priorities or goals you think your counterpart may have.
Do your homework on the market
Always, always, always do your homework. If you’re selling an antique bicycle, what’s the going rate? Opening with a $100,000 ask isn’t going to get you anywhere if the market rate is more like $100.
Similarly, you’re missing out on a ton of value if the market rate is $1,000, and you’re listing for $100.
In more complex negotiations, you’re going to need to research all aspects of what your negotiating. What’s the standard for PTO? What kind of health insurance is considered excellent? Abysmal? What’s the salary range for your position?
The more you know, the more power you have throughout the course of your negotiation.
Ask open ended questions
Ok, so now you’re in the room. You’ve got your priorities straight, you’ve done your homework on the market and your counterpart.
Now what?
Throw out an extreme anchor?
Sit in silence and stare at your counterpart until they talk first?
Enjoy small talk over your coffee until they initiate the haggle?
We recommend some open ended questions. While you may have an excellent idea of what their goals are, you need to also acknowledge that you don’t yet know what you don’t know.
These kinds of questions (What are you hoping to accomplish here? How can I help you get what you need? What kind of budget is the department looking at?) help to delineate what actually matters to your counterpart. Perhaps it’s less about the dollars for them and more about getting timely customer service. There could be a future deal they want to do with your company, or perhaps they’re in a bind and need the deal to be done, like, yesterday so they can return to business as usual.
If you don’t ask, you’re not going to find out, and your position in your negotiation will be handicapped.
Negotiate across issues
Remember that list of priorities you made? Talk about them! As you go, you can ask open-ended questions specific to issues that are important to you in order to gain information and solidify a position.
Sometimes known as ‘logrolling,’ this is a key way to increase the value of whatever deal you’re in the midst of. Ok, so the dollar amount for the service you offer seems high to your counterpart. What if you throw in an extended length of contract, or discount on additional services. Easy for, increased value for them.
As you go, keep an eye out for issues germain to the negotiation at hand, and talk them all through.
Don’t solidify any one issue until you’ve discussed all of them
After you’ve worked through your checklist and discussed all relevant issues, you can get to work nailing down the specifics and getting them into writing. This is when you can ‘get down to brass tacks’ and hammer out a great deal.
There you have it.
If you use the Persuasion Lab Deal Points Checklists and follow this outline, you’ll be well prepared to create value in your next negotiation.
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