Frequently Asked Questions About Negotiation
At its core, a negotiation is simply a conversation where two or more parties seek to formulate and settle upon a mutually beneficial agreement – whether this agreement is a multi-million-dollar contract or simply which restaurant to meet for dinner. Our personal and professional lives are filled with negotiations – across a boardroom table, the kitchen table, and everywhere in-between.
We are often asked questions about negotiation basics and the process of negotiation, so we’ve compiled and listed some of the most frequent below.
What is Negotiating? This question confuses many people.
Definition: Two or more parties trying to reach an agreement.
NOTE: They may agree, they may not. One side may get 100% the other side 0%. It may be 50-50.
In all cases you need – 2 or more parties, an attempt to reach agreement.
Not the same as compromising. Not the same as a discussion.
What is the concept of negotiating? Most people would say the “concept” is haggling. That’s what most people think of. Garage Sale style. There’s one thing to buy/sell and there’s one price. The seller trying to get a high price, the buyer trying to get a low price.
But theoretically, and at the academic level I believe you’d be told, negotiating is creating a larger pie (value) for both parties, then subsequently dividing the pie. Most people wouldn’t consider that concept.
The most correct response/reply you’d receive would be rooted somewhere in “trying to get a better deal for my side”. Simple or complex, personal or business, buy side or sell side. TableForce excels at explaining two constructs that are fundamental in getting the better deal”.
- First, that BOTH sides can do better. It’s not a zero-sum game with one winner one loser. I can make the deal size lager and create more value for my adversary.
- We use the terms “create value” and “claim value”. Very common in “negotiation world”.
- First create value.
- “How much do you want for the car?
- Followed by: what’s included (creation) i.e., extra tires, cover, washing kit, rims, ….
- “How much do you want for the car?
- Next claim value (if you claim first, you’ll scare the other side. Damage trust.)
- What’s included in my price?
- Same list, but this is where capturing (claiming) value comes in. Some well-placed comments or tactics can help one side do better than the other, while keeping them happy (often unknowing)
- I was on my way to your competition, but I thought I should stop here first. I need a better price, but I don’t need the extra tires. If you can do better on price, you can keep the tires AND I’ll leave you a positive review, OR I can introduce you to my friend whose car is just coming off lease.
- Same list, but this is where capturing (claiming) value comes in. Some well-placed comments or tactics can help one side do better than the other, while keeping them happy (often unknowing)
- What’s included in my price?
- First create value.
- We use the terms “create value” and “claim value”. Very common in “negotiation world”.
People often ask, what is the first rule of negotiating?
Never give something without getting something in return. Learn to say “if”. I’ll do something for you, if you do something for me.
Not all negotiating involves selling, but almost all selling involves negotiating.
Sell = Qualify, Demonstrate, Explain Value, Close deal
While negotiating often comes at the end, during closing, “I’ll do something for you if you do something for me.” Powerful information, clues, data, presents itself well before the close, if you know where to place your attention. In fact, it starts when we first shake hands. I start learning about you, your needs, wants, etc… that makes me better prepared to negotiate with you.
Why Is Contract Negotiation Important?
Contracts come in various forms. Most people think of contracts as formal and involving lawyer. Any agreement is a contract. Contract negotiation is more successful when both sides look for positives that benefit both parties in all areas while still achieving a fair and equitable deal. This approach will benefit both sides and provides a firm foundation to build a long-lasting relationship.
What are the 7 stages of negotiating?
- Situational analysis
- Short/long term current relationship position
- Strong/weak competition
- Market type of negotiation
- Goals
- Problems
- Needs
- Planning
- Try
- Raise the bar
- Other side of the table
- Yields/Shields
- Assigning value
- Prepare offers
- Agenda
- Control
- Location
- Time & timing
- Seating
- Participants
- Focus
- Opening
- Objective
- Tone
- Relationship
- Needs/Wants/Interests
- Starting position
- “Have we been selected?”
- Bargaining
- Yield/Shields
- “Gives and Gets”
- Habit & Loop
- Caucus
- Evaluate
- Re-position
- Tactics
- Claiming value
- Tactics
- Win-Win
- Agreement forming
- Stalled
- Deadlocked
- Re-state agreements
- Tactics
- Win-Win
- Closing
- Recognize the Close
- Summarize
- Next steps – relation
- Confirm agreements
- Contracts
We’re often asked, what are some fun negotiation examples or techniques? Here are some of our favorites!
Car Negotiation Example:
I call my friend, while standing in front of the seller.
“Hi Joe. I’m at the car dealer. She is saying $25,000, what do you think?”
“They say go lower” (prearranged)
“Lower? OK. Thank you.”
I turn to the seller and say “lower”. They don’t know how to defend.
Car sellers do this to customers all the time. They say “I need to talk to the manager (third party).”
The Intentional “Firing” Example
I bring someone into a negotiation with the intent that they will intentionally say something stupid.
“We’ve done that before haven’t we?”
I look to see how the other side reacts.
FOR EXAMPLE
They want things in 10 weeks.
I’ve been saying 20 weeks.
My “shill” says “We’ve done 15 weeks before haven’t we?”
I look for the reaction on “15 weeks.”
I gather if the other side is able to accept 15 (not the stated 10).
I now “shoot” the shill.
“Joe, that was out of line. I’m going to have to ask you to leave/hang up/…”
I now negotiate back at 20 weeks knowing fully that a concession to 15 will yield me a great win.
Tactics are designed to lower the expectations of the other side. Expectation setting is key. Setting your expectations high, while lowering the expectations of the other side.
Top 5 tactics are:
- Deadline pressure
- Competition
- Changing specifications or influencing specification
- Depending on buyer or seller side
- Use third parties
- Bosses, spouses, “ghosts” that aren’t at the table but somehow influence the final decision
- Using levels of authority
