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Negotiation Tactics: 4 Crucial Steps to Prepare for Negotiation

January 22, 2013

Buff up your negotiation skills with strategy. Here are four negotiation tactics from How to Become a Better Negotiator, Second Edition by Richard A. Luecke  and James G. Patterson.

You want to go into your negotiation as well prepared as you can be. Don’t even think about “winging” it. If you’re lucky, that’s what the other side will do.

To be prepared, you must:

Identify issues and interests.

  1. Develop a mental picture of an ideal agreement.
  2. Determine your alternatives to a deal and reserve price and try to do the same for the other side.
  3. Improve your negotiating position.

UNDERSTAND ISSUES AND INTERESTS

The starting point of preparation is a thorough understanding of the issues and of the interests of all parties to the deal. Consider the example of a small company that plans to negotiate the purchase of a new office server and PC network. The manager in charge might prepare by drawing up a document based on his knowledge of the situation and whatever he can learn about the equipment vendor (e.g., through discussions with the vendor’s sales reps and so forth). There he identifies the issues that matter to his company, and those most likely to matter to the equipment vendor.

Issues describe what’s important in this particular deal—what’s at stake. Interests are similar but are more general. They are related to the long-term well-being of the negotiating parties. If you understand issues and interests very well—and prioritize them in order of importance—you’ll be in a much better position to horse-trade with the other side.

Common interests indicate a potential win-win deal.

In this case the two parties have a mutual interest in a long-term business relationship. This is a signal that a win-win negotiation is possible. Each party might be willing to trade off something to serve that interest. For example, the buyer might not select the vendor with the lowest price. He might opt for a vendor that offers a reasonable price if the vendor appears to be the better long-term supplier. For its part, the equipment vendor may give up something on the selling price in anticipation of other opportunities of serving the customer in the years ahead: a maintenance contract, the sale of system upgrades, etc.

TIP: LEARN AS MUCH AS POSSIBLE ABOUT THE OTHER SIDE.

As you prepare, learn as much as you can about the organization and the individuals with whom you will be dealing. The more information you have, the better. Know your negotiating partner’s background and personal characteristics (emotional and personal needs, involvement in office politics). Also, find out how much this person wants what he or she is fighting for. The more a person wants one thing, the more likely he or she is to make concessions on others.

Are you currently embroiled in a negotiation, or do you anticipate being so in the near future? Then take a few minutes to jot down the issues and interests that matter most. Prioritize them.

Now, based on what you know, do the same for the other negotiating party or parties. If you don’t know their issues and interests, investigate.

What sources of information do you need to tap on your opponent?

 

DEVELOP A MENTAL PICTURE OF AN IDEAL AGREEMENT

Once you understand the issues at stake and interests of the negotiating parties, develop a mental picture of an ideal agreement. What would be the best takeaway for you? And if you understand the interests of the other side, how would they see the ideal resolution?

In cases where mutual interest can be found, think about things that you could trade off, at little expense to yourself, for things that the other side might find highly valuable. For instance, if you were the vendor in our example and had lots of techies with time on their hands this month, you might say, “If we can negotiate the purchase before the end of the month, I’d be willing to have two of our people spend three to four days training your personnel. They’ll teach them what they need to know to get the most out of your new system—and at no extra cost to you.” Here, you saw a chance to sweeten the deal with something of little value to yourself (excess techie time), but that your customer values highly (technical training). In exchange, you’ll get something you value: a sale this month.

Take a moment to identify something you value little (e.g., excess capacity), but your negotiating partner would dearly like to have. Does your negotiating partner have something she values little, but you’d like to have?

DETERMINE YOUR ALTERNATIVES AND RESERVE PRICE

What is your best alternative if your current negotiations fail? What is the price (reserve price) at which you’d be willing to walk away? Never walk into a negotiation without having these in your head. If you are part of a negotiating team, the team must be in agreement on these. Write them down.

Remember: Anyone who enters a negotiation with no feasible alternative is at the mercy of the other side. He or she is doomed to be a deal taker, not a deal maker.

Now put yourself in the shoes of the person with whom you plan to negotiate and determine that person’s best alternative and reserve price. This may require some investigation, but time spent doing this is worthwhile. Having an informed view of the other side’s best alternative and reserve price is analogous to knowing which cards the other side holds in a game of poker. If you find yourself in a win-lose negotiation, you’ll know when to push, when to back off, and when to bluff.

IMPROVE YOUR NEGOTIATING POSITION

Imagine that your team is scheduled to run a 10-mile road race against a team from another company—and the race date is two months from today. And the stakes are high. Would you just show up and do the best you can, or would you start training tomorrow?

If you were serious about winning, you’d use every day over the next two months to build the speed and endurance of your team. And if you were clever and mischievous, you would do something to weaken your opponents, such as sending them a large daily batch of sugar donuts with a note reading, “With Our Best Wishes.” Those daily donuts would hit them like a ton of bricks somewhere around mile five of the race! Better yet, you could weaken the other team by recruiting its fastest member to your team.

Negotiation preparation is no different. You want to strengthen your position and, if possible, weaken the position of the other side (particularly if you anticipate a win-lose slugfest). How can this be done? Here are a few suggestions:

Strengthen your best alternative to a deal. You already know your best alternative to a negotiated deal with the other side, but that shouldn’t stop you from seeking even better alternatives. As you prepare, try to strengthen your position—or weaken your opponent’s.

Weaken the other side’s position. This is generally more difficult, but still possible. Consider forming coalitions. If you find yourself in a weak position, try to find allies. Your combined strength may put you in a dominant position. If you recruit an ally from the opponent’s camp, the effect will be magnified.

 

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About The Author

Richard A. Luecke (Salem, MA) is a freelance business writer and publishing executive whose articles have been published by Oxford University Press, John Wiley & Sons, and Harvard Business School Press. He has negotiated over one hundred contracts with individuals, businesses, and non-business institutions. He is the author of The Manager’s Toolkit and The Entrepreneur’s Toolkit. James G. Patterson (Tuscon, AZ) is a training consultant who has taught leadership and communication skills for the U.S. Army Military Intelligence School.

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