In this short video clip, David Zehren explains why negotiators should resist the urge to offer a solution too soon in a negotiation.Read More
Here’s a simple reminder—a negotiating tip: bargaining is not negotiating.
Sure, it seems obvious and it’s not a difficult concept to get. Yet, it’s almost instinctive to think that negotiating means compromise. We’re conditioned from birth to compromise, to believe that compromise is always best, and that negotiation is compromise. Compromise has its place, but it is not what negotiation is all about.
Most of us learned from a very early age that compromise was the solution when, as kids, we’d argue about food or a toy. Our parents would split it in half and send us on our way. Settled. Done. Compromise is fast, it’s easy, and on a quick glance it looks “fair.”
As adults, there’s a strong inertia towards negotiating the same way. Each side puts what they have on the table and then split it in half. That’s what encourages us to bargain. And bargaining is not negotiating.
One of the biggest problems with bargaining and compromising too early in a negotiation (say, for example, at the beginning of it) is that it avoids more creative solutions that might well have satisfied both parties fully. Compromise assumes that one party’s satisfaction must come at the expense of the other party’s satisfaction. But there’s no reason to jump to that assumption—in fact it’s often incorrect.
One definition we like to give to define “a good compromise” is a solution that dissatisfies both parties equally. Why should either party be dissatisfied?
Why not look for a more collaborative solution? Indeed, finding the solution most likely to satisfy both parties most fully all but requires at least some investigation. It will nearly always be a solution that was not apparent at the beginning of the negotiation.
Compromise and bargaining has its place. But that place is not at the beginning of a negotiation. One thing that can help avoid the pull towards compromising too early in a negotiation is to make compromise a conscious choice.
By making the decision to compromise a conscious choice, you avoid the knee-jerk tendency to go there by default and you avoid starting the negotiation with compromise. Doing so puts compromise back in its place—one tool, of many, in the negotiator’s belt.
In 1983, Roger Fisher and William Ury wrote what turned into a Bible of negotiating, “Getting to Yes.” In it they defined BATNA as “the best alternative to a negotiated agreement.”
It’s a wonderful, catchy phrase for an important and useful concept. Unfortunately, we also find that many negotiators are unclear and misled by it. Many people think BATNA must mean something like “the best deal I can get”. On this view, BATNA would be about “what’s the best deal I can get in the negotiation I’m currently in.”
But that’s not what BATNA means.
BATNA asks what’s your alternative to negotiating with that particular person (ie, the person with whom you’re currently negotiating).
David Zehren suggests a slight modification to the classic “BATNA” acronym that brings clarification and focus to the key concept behind it. He suggests “BATTN”—the “best alternative to this negotiation”. BATTN is more specific. And it helps clarify that the best alternative to a negotiated agreement might be a different negotiated agreement.
David believes the concept behind BATTN (née BATNA) is a powerful concept and that nothing else explains nearly as well what each of the parties in the negotiation will ultimately agree to. If you understand BATTN—and especially if you understand the counter-parties BATTN—you very often know what the other party will or will not accept.
So, if you’re not familiar Fisher, Ury and BATNA, “Getting to Yes” is still a great and worthy read. But if you need help remembering the concept behind BATNA, try thinking of BATTN instead.
“When the tension rises between your counter party’s and your interests, splitting the difference is a quick way to relieve the tension…but it is rarely the best solution.”
The groundbreaking work of Harvard’s Program on Negotiation, and the classic best-seller, Getting to Yes (Fisher, Ury, Patton), has successfully reframed the conversation on negotiation from adversarial and tactical based arguing to ‘win-win’ problem solving. Almost everyone nods their head in agreement on the desire for win-win. And yet, even casual observation demonstrates that we often don’t behave in a way likely to produce ‘win-win’ outcomes.
Every day, negotiators miss opportunities to achieve the success they could have had…and the problem isn’t what they think it is. They settled for less than optimal outcomes because they weren’t paying attention to the most critical ingredient to negotiating a ‘win-win’. They probably don’t know what it is…and even if they did…they wouldn’t know what to do about it.
In a fun, lively and interactive course, participants discover this missing ingredient and how to use this knowledge to move from “I know” to “I can.”
When the tension rises between your counter-party’s and your interests, splitting the difference is a quick way to relieve the tension…but it is rarely the best solution. For better results we need to gracefully manage the tension to work toward collaborate. The goal is win-win and split the difference is lose-lose.
True, nobody loses big and there is relative peace, but nobody wins either. Sometimes it really is fixed pie and perhaps split the difference is necessary. However we must be slower to split the difference in case there is a possibility to generate a better alternative for both sides. Wouldn’t it be great to have a way to discover the level of tension and maintain the productive zone wherever possible?
Our negotiation skills training courses help participants learn to “stay with the tension” to optimize win-win outcomes and how to use Principled Persuasion to recognize a counter-party's legitimate needs and aspirations while pursuing her own interests with energy and determination.
There are three main components to a negotiation:
- The negotiating process;
- Negotiating behaviors; and
- Playing the game.
Recognizing and using these components will give you better outcomes.
In this video, Joe Friedman briefly summarizes these three components of negotiation and how they can help improve your negotiation skills.
Negotiation Is a Process
One big takeaway from ZEHREN♦FRIEDMAN Negotiaton Skills Training is that negotiating is a process. Even if you just recognize that fact and use that process in every negotiation you face, you will get better outcomes.
What changes from negotiation to negotiation is how much time you spend on any one part of the negotiation process.
One common mistake people make is to think a negotiation begins by putting something on the table and bargaining about it. But that's already halfway through the negotiation process.
The biggest stage in the negotiation process where mistakes are made is… planning.
Some people don’t have any negotiating process that they use—They act a certain way and they expect you to react a certain way. And even within the process, negotiating behaviors add a layer of complexity to the negotiation. So, negotiating behaviors is the second major component of a negotiation.
Playing the Game
Sometimes it’s not possible to grow the pie any bigger, it’s not possible to serve both parties, nor maximize the outcome. In those situations, you must know how to play the game.
It’s important to know how to play the game even within the context of the negotiating process. Playing the game includes tactical negotiation. Given that tactics exist to pry concessions away, it’s also important to know how to give things up.
Knowing how to play the game can be a useful part of the negotiation process and becomes even more essential where mutually ideal outcomes are not available.
Skilled sales negotiators close more profitable deals and build better, longer lasting customer relationships at the same time. If your salespeople are really good, even modest improvements to the top-line can make a big difference to the bottom-line.
Is Negotiating Worth the Effort?
If your salespeople were really good negotiators, do you think they could close deals, on average, at a 1% higher price? If that seems reasonable, consider the value added straight to your bottom line. Consider a typical example:
|Costs of Goods Sold||60|
|Selling & Administrative Expenses||25|
|Interest, Depreceiation, etc.||3|
|Net Income (Pre-Tax)||12|
Now add a modest 1% to sales revenue as a result of better negotiating, making it $101. If the negotiating is skillful and graceful, the 1% higher price won’t cause a loss of sales. Other expenses remain the same and the extra dollar of revenue falls straight to the bottom line. Now we have $133 of Net Income, and increase of 8.3%! If you can negotiate, on average, a 2% higher price, Net Income soars to 16.6%!
Here’s some good news: Skilled sales negotiators close more profitable deals and build better, longer lasting customer relationships at the same time.
I recently returned from a business trip to Shanghai. While I was awestruck by its size (25 million people), modern look (75% of the world’s construction cranes are in action there), traffic (I’ll never complain about Chicago’s rush hour again) and friendly people, I re-learned how to negotiate.
Our firm has taught negotiation skills classes to professionals for over 20 years and I was in Shanghai to teach an advanced negotiation seminar to a client’s China sourcing representatives. I arrived a day early in order to acclimate, and didn’t return home until the following Saturday.
I got two opportunities to visit several markets, where just about any consumer product could be procured. The markets were filled with locals and foreigners alike, all searching for bargains. My wife had asked me to find a particular bag, although I learned that the Chinese government had cracked down on the famous “back rooms” where “designer” handbags could be found.
Serenaded with “Mister,” “Trench Coat,” and “Backpack,” I accompanied my client on the hunt for Tommy Bahama shirts. She had visited one particular shop a number of times and was known by the clerk/owner when she arrived. She said, “My friend is looking for a bag,” and the response we got (I have learned) is quite common…” Come see my sister.”
We were escorted to another shop and taken past the back room, to a back, back room. Here’s what I learned or remembered:
Tip 1 — Go Early
Merchants seem to feed off the mayhem of the crowd. The more people in a condensed space, the more crazed their attempts to lure you in, almost pleading in one or two word questions: “T-Shirts?” “Watches?” “Luggage?” “Suits?” “Scarves?” “Watches?” “Child’s clothes?” “Ties?” “Shoes?” “Watches?”
Tip 2 — Listen to the Rap
The rap revolves around a calculator, where the first offer is made by the merchant. “This would be your price.” However the number is always quickly erased, another number is punched in and you are told, “This is best friend price.” How did we get so close so fast? Anyway, I was offered the “your price” of 1,500 RMB (about $240), followed by the “best friend price” of 980 RMB (about $156).
Tip 3 — Start Low
You’ve got to have a number in mind, and put it on the table no matter how ridiculous it seems. “I don’t think that’s worth more than 450 RMB (about $71). You will almost always be met with, “I’ll lose money on that.”
Tip 4 — Threaten to Walk or Walk
The game is afoot, and you will now start trading numbers. “How about $600 RMB?” I respond, “How about if you add the matching wallet?” “I’ll give you that for $200 RMB.” I respond, I don’t think that’s going to work for me, and I start to walk out of the shop. The next thing you know, someone is (gently) grabbing your arm. The further you get from the shop, the lower the price gets. “OK, both for 750 RMB.” I respond, “How about both for 700?” “OK!” (I’ve just spent $111.)
In negotiating, if you can live with the outcome or you’re thrilled (or anything in-between) you’ve taken part in a successful negotiation. I brought home a bag and a wallet and my wife is thrilled.
That’s a good negotiation.
However, if the authentic looking, feeling and writing Mont Blanc pen I bought for just under $3 is any indication, I probably got hosed!
Be a Better Negotiator: Act Dumb!
Acting dumb might be a smart thing to do. Acting dumb is important whether you are negotiating as a creative problem-solver or as a bargainer. In a Business Week article we explained that acting dumb requires asking a lot of questions, avoiding assumption-making, and confessing ignorance or confusion in order to draw from the other party a more detailed understanding of their situation, their goals, and their restrictions.
Most negotiators fail to fully uncover underlying needs. Only 38% of sales reps and managers we’ve seen succeed in uncovering real needs. We’ve conducted consultations and seminars with dozens of companies that have sophisticated sales forces selling everything from high-tech electronics to water pipe to exotic foreign currency derivatives. After some guidance and practice that success rate can double to 76%.
Not as easy as it looks. We’ve analyzed hundreds of negotiations. Two-thirds of the negotiators produce solutions that are not as good as they could have been (1/3 produce solutions that are not good at all). In our seminars we take pleasure in the challenge to convert those lagging bargainers into accomplished negotiators.
Here’s a brief overview and introduction to the skills necessary for successful negotiations. The ultimate objective of these sessions is to help you negotiate as effectively as possible. ZEHREN♦FRIEDMAN has been helping clients sell, present, negotiate and influence more effectively on a global basis for over 20 years.