How SMEs can negotiate well and win business
Preparation is the key to winning. Having adequate information, ability to influence, and the resources can work as the power to turn the negotiation in one's favor.
We negotiate frequently while managing our business, however, not all the negotiations go well. Typically, negotiating parties take their positions, argue, and may agree. However, negotiations, when managed well help in building long-term and trusting business relationships, can influence at the highest level in the organization and enable relationship-based growth.
Preparation is the key to winning. Understanding the business issues being addressed, the motivation for the task and the financial impact of terms is critical, and understanding the importance to develop a relationship. Taking advantage of another party's weakness and protecting one's are vital. Negotiation only makes sense if the negotiated agreement is likely to give a better result than the best alternative.
Negotiations are about dealing with people and influencing them, especially with who makes or influences decisions. The unique value creation and solution that solves a client's problems accelerate the process of reaching an agreement. The seller must have certain concessions for the buyer to feel good.
The following levers can be used to take advantage:
RFP: Request for proposal
BATNA: Best alternative to a negotiated agreement
Having adequate information, ability to influence, the resources one may control can work as the power to turn the negotiation in one's favor. Even taking outside help from someone who can influence these powers can help. Control in negotiations is a delicate issue. The action starts from taking the lead in planning and executing and controlling macro as well as micro agenda.
Experienced negotiators typically use various tactics to maneuver the deals. The best response is to recognize the tactics to turn them in one's favour or neutralise the impact. One can continue to focus on bringing up a wise agreement efficiently and amicably.
The following are a few commonly used tactics:
- In order to create a congenial atmosphere use of the following phrases-Could I ask a few questions? It has been a pleasure dealing with you, Correct me if I am wrong, one appropriate solution might be … Our concern is fairness, What do you advise? Rephrase any distracting statement - 'Let me see if I understand what you are saying is ……….'
- The shared and agreed interest are discussed first, and then the disagreements are brought in.
- People tend to become irrational and emotional. Deal rationally and do not respond to emotions unless emotions can be directed to produce a beneficial outcome. To break the cycle of personal attacks, do not respond. Do not respond to an unreasonable request, use silence as a vital weapon. Keep people different than the problem.
- At times, the relationship may be worth an investment. However, some future golden offers may be misleading.
- Insist on objective criteria, appropriate standards, when there is help.
- One person from the team can act like a good boy by positioning as being flexible and as helping other parties to conclude, and another can be firm and not open to any concession. This will help to know the flexibility in the other team.
- A great case for negotiation can be built by using information. When presented at the beginning, it can get one off to a compelling start. The case can also be built during negotiation, preferably, one block at a time.
- Communicating bad news with a mix of something good reduces the impact of the bad news. Start with the information which is not liked and also dovetail the information which will be liked.
- Threats are the most abused tactics and often accomplish opposite to what it is intended. The right response to a threat is again legitimate. "Will negotiate on merit, and do not respond to threats."
- At times, both parties use pressure tactics and show extreme lock-in. Neither of the party changes their stance or position till the time the situation is grave, and action is a must. These tactics are a gamble but may pay, especially if a surprise is pulled out at an appropriate time.
- At times other party uses this tactic by confirming that they understand that you are very reasonable, but the boss is not willing to agree." - Speak directly with the boss.
- If one party is firm, others can be show greater resolve. It is easier to defend principle than illegal tactics.
- Ensure the teams are balanced, the opposite party can bring in a very senior executive to pressurize. Bring in people with similar status in your team.
- If the situation is in your favor and you find another party is likely to give up, you may confront, take it or leave it. If the other party puts you in the same situation, ignore it at the beginning and keep talking as you did not hear that. Buy time and delay the final agreement if that helps and wait for the right time.
Negotiators require specific skills, and no single person possesses them all. The personality traits of a negotiator have a direct effect on negotiating results. A good negotiator will usually demonstrate the above mentioned skills.