What are some effective strategies to handle objections and counteroffers during contract negotiation?

The foregoing is solid advice, but reminding yourself or constantly thinking of your BATNA during a negotiation can be stressful, anxiety-inducing, and counterproductive if your BATNA is very unfavorable versus some kind of deal. In such cases, it may make sense to focus on multiple potential deal outcomes/compromises that you will be happy with and let such thinking guide your talks.

Getting a team aligned to the BATNA can be challenging especially in the space I work, technology related sourcing. By the time the team is officially negotiating there has been a lot of engagement with the supplier and the functional team is fully bought into the solution so the idea of walking away would be unfathomable to them. I have used Guiding Principles as a way of driving the team throughout the process to ensure we are aligned on the deal we need to get to move forward.

In contract negotiations, BATNA is like having a trusty sidekick by your side. You and your sidekick have a mission to accomplish - getting the best possible contract terms for your company. But just like any superhero duo, you need a backup plan in case things don't go as planned. Your sidekick, BATNA, stands for Best Alternative to a Negotiated Agreement. It's your Plan B, your contingency plan, your ace in the hole. Imagine you and your sidekick are on a mission to save the day, but the villainous other party is not playing fair. Your BATNA is there to make sure you don't get caught off guard and have a backup plan to achieve your goals.

For example, let's say you're negotiating a contract with a supplier and they're not willing to budge on price or delivery terms. Your BATNA would be to look for alternative suppliers who can offer you better terms or consider changing your strategy to find a different solution. Just like Batman has Robin and Iron Man has Jarvis, having a BATNA in contract negotiations gives you the peace of mind and confidence to negotiate from a position of strength, knowing that you have a backup plan if things don't go as planned. So, grab your trusty sidekick and go save the day!

Active listening essentially involves 3 elements: 1. A higher level of attention (to not just the words being spoken, but to the tone, emotions & body language) 2. Giving conversational space (without interruption to allow for seamless flow of thought), & 3. Feedback (verbal & non-verbal) to demonstrate understanding & encourage further conversation

To Graham's point - silence is golden. It is an incredible tool in negotiations when you can get the team to sit in silence and let the supplier fill in. Most people aren't comfortable with silence, so I always talk to my team about the importance of it and not to jump in to fill the silence.

In contract negotiations, you have to focus on your interests, not just your position. Think of it like a game of chess - your position is like your chess piece, but your interests are the ultimate objective you're striving for. If you focus too much on your position, you might miss opportunities to achieve your interests. So, ask questions, brainstorm solutions, and stay flexible. Just like in chess, the key to winning in negotiations is to think several moves ahead and stay one step ahead of your opponent.

Understanding both parties' interest is a key to developing the approach to negotiations and next steps. I start efforts with an internal kick off meeting with all key stakeholders so that I can gain alignment on guiding principles, timing, expectations, etc. I then hold a meeting with the supplier(s) and the internal sponsors where we discuss our process, their process and their interest. For example if getting a contract signed by end of quarter is important to them I want to know that upfront and be able to set their expectations early on. Same with understanding what the sales team is being compensated on selling. The more we understand about what is important to each party the better we will be able to get to a good deal for both.

In technology related sourcing there are advisory services that can provide insights/benchmarks/etc, I also find that if the team is aligned to the Guiding Principles and the lead negotiator is able to be agnostic to the solution/vendor and call each side out when emotions/opinions are getting in the way the discussions go much better.

I would go so far here to say you should walk into any negotiation with your possible concessions ranked/prioritized. Know precisely what you are willing to give up and in what order in exchange for something you want or need. Last thing you want is to be scanning through an agreement mid-negotiation for a concession or feel surprised by a concession the other party is asking you to make. Being able to say, "I can't offer you this, but I can offer you that in exchange for ________" is very powerful.

I agree with Adam that you should know up front what you are willing to give. Additionally I think it is beneficial to focus on what is important and not argue every point. If it truly dosen't matter, why spend time negotiating it. The goal in most cases is to get to a deal that works for both parties so the company can start getting the benefit of the solution as soon as possible. Negotiating over everything causes fatigue on both sides. If the internal team understand why something is important (such as indemnity) then they will be more likely to participate in the negotiations supporting the discussions on that point rather than complaining that everything is taking too long

Over the past 30 years, I have participated in literally thoughts of negotiations from deals ranging from small software contracts to large outsourcing deals worth over 100 million and impacting multiple suppliers. And in all that time and work I can honestly say that I have only walked away from a handful of deal. All because we could not come to agreement on business terms. That is not to say we shouldn't have walked from other deals however the internal teams were convinced they needed to have the whatever it was they were buying. Walking away requires complete alignment with all parts of your organization. Spend the time upfront ensuring that you and the team know exactly where the walk away line is.

The best training course advice I received over 20 years ago. In negotiation simply ask your counterparty what is their expectation. Many times we try to solve or do items that aren’t important to them. Don’t offer a solution looking for a problem. Listening and silence, encourages the other side to potentially talk more than they intended, either giving more insight into their position or even allowing them to negotiate against themselves. Listening works wonders to truly understand what really matters to the other person, rather than ever making an assumption on what I think they want.

There are usually three basic things a customer wants from any project. They want it done Right, Fast and Cheap. Never forget that you can only pick two and have a happy end result. If you want it Right and Fast, it isn't going to be Cheap. If you want is Cheap and Fast, I can't promise it will be done Right. If you want it Right and Cheap, it takes planning, so it's not going to be Fast.

Over 30 years in real estate I find that fully understanding my client's objectives is the first key. Is this a hill to die on or just another opportunity? I always research my other agent, check their background and experience and always give them a call to chat. Many times they will inadvertently spill good intel. Last, flip the tables; how would you react if offered what you're presenting? Keep it business and civil.