Negotiation Tips

Over the last several years, I have had the opportunity to coach and train sellers on the art and science of negotiation. New or less experienced sellers often express anxiety about this learning goal. When questioned as to why; they usually say it’s because they lack experience in negotiating.

I express my view to them that I doubt that they are inexperienced. I explain to them that they have been negotiating their whole lives. It's something they have a wealth of experience with. Like me, they negotiated with their parents for many things. 

In my case, it was negotiating for TV time. Incredibly important in the days before on-demand and when we had only one screen in the house. (That always draws a look of utter amazement on their faces). And that is before I told them we only had 5 channels assuming the antenna was working and none of the vacuum tubes blew out. In return, I would offer to clean my room and negotiation would begin. 

As children, neither I nor my coachees gave much thought to; how to think about negotiating; and neither did the people we were negotiating with. The difference is in the business world you will be negotiating with clients who have thought about it and some are very adept at it. So, sellers need to think clearly about negotiation and have the correct mindset to approach it. 

So, let me share a few of the tips I try to have my coachees think about, and hopefully, adopt as their own.

Tip 1. Make the experience for your customer/client a positive one.

 How? by supplying value during the negotiation. 

 A seller must approach a negotiation like every other interaction they have with a client. As an opportunity to enhance the value of that relationship. 

Everybody wants to win the negotiation, but it depends on your definition of winning. As the saying goes you can win the battle but lose the war. You can win the transaction for next quarter's deal but lose the client for life. 

So, you need to redefine winning to mean that the negotiation outcome adds value to both parties. That you both leave the negotiation feeling that the relationship was strengthened and not strained. Depending on the situation it may be a difficult goal to achieve. But that is still the outcome you want. That means that you need to plan to achieve it and execute accordingly.   

Tip 2. Do not assume the Value of anything, 

Value is dependent on the client's view of it, and that perception can be changed. It is relative. 

What is key, is to understand how a client determines what is valuable. What criteria do they use to arrive at an assessment? The value they place on something you are offering can either be quantified in precise monetary terms or not. Just because something cannot be qualified in monetary terms, does not mean it has no value. It maybe actually be invaluable.

For example, if you can reduce the clients' risk; that cannot always be translated into dollars and cents. But to one party in a negotiation, an offer of something that reduces risk; that “Peace of Mind” that they get from it , could be unbelievably valuable. Even though it's value is either unquantified or imprecise. So as a seller in a negotiation, it is important to understand from the client perspective how important is that risk reduction. And if possible, see if It can be translated into monetary terms, even if it is just a range. 

Tip 3. The cost of something is different from the value.

Often time I coach sellers who when are offering the client, let us say a complementary study. It is an incentive that is part of a larger transaction. Let us assume the cost to the seller is  5,000 dollars to conduct it. The sellers' view is often that the value of this offering is therefore at least 5,000 dollars. The reality is it may be. It may be more. It may be worth nothing.  It truly depends.

For example, if a financial advisor someone offered me complimentary golf clubs (cost $1000) for letting them manage my 401k, it would have no value to me. Why? I manage my own and I do not golf.  But to someone interested in having someone manage their 401K and need a new set of clubs, it would have some value. 

Same offer, the same cost, different value assessed.

Its essential that you develop insight on how a client values a particular element of an offer, and to what extent. Only then can you effectively trade and ensure both parties receive value.

 I hope you found this information of value. Needless to say there are many other ways to enhance the value of negotiations. Love to hear what yours maybe.