Many people hate negotiating, and many founders take the “take it or leave it” approach.
However, ignoring your negotiation skills can lead to lost opportunities and reduced revenue.
Negotiation should not be seen as an opportunity to win at the expense of someone else but should be seen as a way to satisfy both sides’ needs with an outcome that benefits everyone.
In this article, we look at some tips to help you achieve just that.
Here goes…
1. Preparation
You cannot negotiate effectively without first understanding your counterpart.
Ensure you fully understand their position, their goals and their pain points. Aim to find out what their motivations are and what limits they have within the business.
Always approach negotiations with collaboration in mind. Avoid over competitiveness that can lead to resentment in the negotiation process. Don’t approach negotiations with a “take it or leave it” attitude.
Don’t make the mistake of thinking that being a good negotiator is playing “hardball”, so that you get what you want at the expense of others.
This is not good negotiation; even if your deal does go through, it will more likely implode once the client wakes up and understands there is little or no value in the deal for themselves.
A partnership mentality breeds trust and long-term value for your client.
2. Personality Types
In order to negotiate effectively, you need to understand people and the different personality types.
You will need to adjust your communication style depending on the personality traits of your counterpart to be fully effective in negotiating.
a) The Analytical Negotiator
This personality type is often data-driven, and they love the small details.
Don’t make the mistake of thinking that their requests for more information or detailed breakdowns are a waste of your time.
Their approach may come across as a pain and inconvenient, since they often require difficult to get hold of facts, figures and data.
If you can provide all the necessary information without being vague with your answers or emotional in your responses, this personality type will be quick to pull the trigger and make a deal once all their boxes have been ticked.
If you pressure them into making quick decisions before giving them all the necessary time and details they require, be prepared for negotiations to break down as they walk away swiftly.
b) The Competitive Type
This personality type is goal-driven. They expect efficiency and do not like unnecessary detail.
You will need to get straight to the point when dealing with this personality type. Avoid all fluff, jargon, and sales speak.
You will need to demonstrate competence, but you should avoid coming across as arrogant at all costs.
Trying to “sell” them will make them walk away from negotiations quicker than you can blink your eyelids.
Aim to remain calm and match their energy to gain their trust.
Read this article on how to sell:
c) The Amiable Negotiator
This personality type values relationships above everything else.
When negotiating with this type of person, you will need to focus on building trust and rapport.
Before diving into business, you may need to do some small talk to get to know a bit more about each other.
Just because these types are friendly, do not make the mistake that they are pushovers.
Avoid the temptation of trying to steer them in a direction that suits you just because they are approachable.
Negotiations will come to a quick close if you are overly pushy or aggressive in your approach.
Focus on long-term partnership benefits and use collaborative language such as “we” and “our goals”, to get your point across.
d) The Expressive Type
Expressive negotiators are often creative types and, much like the amiable negotiator, are people-orientated.
They respond well to stories, vision and a cause.
With these, you will need to keep negotiations stimulating with enough emotional appeal to keep their interest.
The expressive types will sometimes overlook the details of the negotiation, so you may need to steer them back to the practicalities of the deal and ensure you clarify everything in writing to nail down the fine details.
3. Negotiation Tactics (and How to Respond)
Negotiation tactics can be effective, but you should understand that using them comes at a risk since they have all been done to death.
Executing a negotiation tactic poorly will lead to a lack of trust and a breakdown of negotiations. The client will simply walk away.
You should avoid using these tactics, but it’s important to recognise when these tactics are being used on you during negotiations, so you can act appropriately.
- The “Highball/Lowball” Offer: Your counterpart will make you a ridiculous offer. The aim is to get an emotional response from you and anchor the position of negotiation from the baseline of their offer. Deal with this by remaining calm, restating your value and redirecting the discussion to realistic numbers.
- The “Good Cop/Bad Cop” Routine: One counterpart will be accommodating, and the other will be tough. The aim is to draw you in and pressure you into making unnecessary concessions. Deal with this by not favouring either side. Acknowledge the tactic by stating, “I can see we have two different opinions here…”, consider seeing each party one at a time.
- The “Deadline” Pressure: Your counterpart may try to put you under pressure by insisting on artificial time constraints to force you into quick decisions. If you feel the deadline is artificial, deal with this by simply insisting on more time. If someone is pushing for an unfavourable deal urgently, today, it usually is a warning sign that the deadline may be artificial.
- The “Silence” Technique: With this negotiation tactic, you make an offer and then nothing, no response. They remain silent. The aim here is to make you fill the silence by making concessions, lowering your price or reaching out unnecessarily in the interim. If you cave in, your counterpart will understand that they have the upper hand. Deal with this by simply remaining silent yourself. If some time has passed, reach out only to give additional information about the existing deal. Do not panic and alter the deal. Let the silence work for you instead.
- Emotional Appeals: Some negotiators are great at using emotions to steer the negotiation process. This could involve using frustration, enthusiasm or even disappointment to shift negotiations. Deal with this by keeping your emotions in check and staying focused on the facts rather than the feelings that are being artificially created.
Being aware of these tactics will keep you calm and rational during challenging negotiations. Your goal is not to manipulate but to be professional.
4. Rapport and Trust
Negotiation is a human skill that is also necessary in business.
People are more likely to deal with someone they trust, so your goal should be to build rapport and trust above everything else.
Aim to find common ground and be prepared to listen during negotiations rather than dominating the conversation.
When your counterpart feels heard, they will be more open to compromises.
Of course, being open and honest during negotiations is essential. Do not conceal important information just to get the deal. Doing this will damage your credibility in the long term.
5. Zone of Possible Agreement (ZOPA)
A negotiation can only succeed if both parties “win”. These overlapping interests are called the “zone of possible agreement”.
In order to find this zone, you must not only understand your priorities but also those of your counterpart.
Asking questions, such as “How can we make this work for both of us?”, is a good place to start if negotiations come to a roadblock.
Be prepared to be flexible, but at the same time, it’s important to understand when you are prepared to “walk away” from the deal.
Having this approach means negotiations can conclude amicably without sacrificing your core goals.
6. The Follow-Up
You should always fully document any agreements reached to avoid misunderstandings further along the line.
Ensure you deliver on your promises to maintain your credibility and reputation.
A reputation for reliability is one of the strongest negotiation assets you can build.
Final thoughts
Negotiation is more art than science. Success with negotiation requires preparation, emotional intelligence and flexibility.
Understanding human personality traits and recognising potential tactics that are sometimes used during negotiations can help you build negotiation outcomes that favour both parties.
Achieving the goal where both sides leave the negotiating table having gained something worthwhile is the ideal position to be in.
This will always lead to long-lasting, sustainable business relationships.
Good luck!
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