Good negotiating skills are key to have in today’s environment. Whether we are negotiating with our kids, our bosses or customers, continuing to hone your negotiating tactics are an important endeavor. Many times, negotiating turns into a game of compromise where the outcome is so diluted that no one is satisfied. That is an unskilled negotiation. Not to get political here but Obamacare seems to be a prime example of this. To get the initiative pushed through, a ton of “pork” had to be included and too many compromises caused many unintended results and the thrust of the initiative to be ineffectual.
There is also what’s called a “win-win” negotiation. But many times that evolves into I win and you think you win but only realize later that you actually lost. I believe many go into negotiations with this strategy to try and “game” the negotiation and use tricks to mask the initial agreement as one that is positive for the other party. What happens when that other party realizes they have been bamboozled (rarely get to break out that .25 cent word outside of deploying my impression of Stephen A. Smith)? It causes hurt feelings, is a detriment to long-term relationships and may cause them to want to retaliate down the road.
When I negotiate, I like to think about long term results and how both sides can truly achieve what they want. This process will take longer but will result in both sides skipping away from the negotiating table (figuratively of course; seeing a 300-pound man skipping somewhere can be scary and the authorities might be called) and create a healthy long term relationship. To accomplish this, before I go into a negotiation what I do is break out a flip chart and draw three columns; the first it titled with my name, the second is the customer’s name and the third is titled “Options”. In the first column, I list what I want to achieve as a result of the negotiation and in the second, what I suspect the customer might want to achieve as a result.
Below is an example of this process:
I want to realize my margin
Wants boss to be happy with the deal I made.
I want referrals from this customer.
Wants good value from purchase.
I want my customer to be happy long term.
Solution to address business challenges.
The solution should be appropriate, long term.
Wants to pay under budget.
I want 30-day payment terms.
Want implemented in short timeline.
I want the deal to close today.
Ability to back out if not working.
Now, what we need to determine is, how can each side get EVERYTHING they have on the list? Not 50% of each item, not half of my items and half of theirs but each of us get a check mark next to every item listed. This is obviously easier said than done and that’s why it’s good to work on it ahead of time so you can come to the table with some good ideas. Now, here are some options to address both party’s needs:
- I want referrals but not just referrals; referrals that turn into business. What if I implement a rebate that takes effect after six months that will allow the customer to pay under budget if they provide enough customer referrals that can translate into X amount of revenue? Or, what if they allow me to take up to three prospective customers into their location to see how effectively my solution is working for them?
- Normally, my company would provide a 15-day money back guarantee if the customer was not satisfied. What if I extend that to 30 days if the customer is willing to close today?
- The customer would normally pay with 60-day terms but what if I could escalate the install or implementation in an extremely short timeline with minimal operational disruption if I could get them to pay within 30 days?
- What if we did a lease with a bank to pay the cost of the solution? This would allow me to realize my margin and provide them with more flexible payment terms.
These are just some examples of some shared options we could deploy that would allow both sides to get everything they wanted as a result of the negotiation. Now, what would happen if I did this on a flip chart in concert with the customer? We did it collaboratively with the customer listing some “out of the box” ways to allow them to look good to their organization (and hopefully strengthen their job security which is becoming more vital in today’s world). Even better, what if I put myself out there and listed everything I wanted first to be completely transparent about my wants and desires? Do you think the customer would appreciate this type of candor? Jack Welch said that candor is a greatly undervalued asset in our society and I believe a customer would find it very refreshing.
Now, would this work with every type of customer? Obviously not (I have a difficult time trying this with my kids as my son seems to be destined for a career as a lawyer and my daughter has me wrapped around her little finger) but I tend to believe that most customers are reasonable people and this exercise would allow you to be better off financially, as a result, create better relationships and help differentiate yourself from your competitors. What else could you ask for? So try out a version of this technique during your next negotiation and would love to hear some stories about how they turned out!
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