Unwritten Negotiation Rules
Robert Menard, Certified Purchasing Professional, Certified Professional Purchasing Consultant
The negotiation rulebook is not written because nothing is standard. It also has a rather loose structure, like grammar, with its changing rules and exceptions. How then do we bring some order to negotiation? These tips will help.
Buyer and Seller do not want the same thing
What does the seller want from the buyer? We could say, the sale, the profit, or in one word, the Money. That’s what capitalism is about. So, what does the buyer want from the seller? We could say, the product, the service, or in one word, the Stuff.
Sellers want the money and buyers want the stuff. Additionally, the bargaining process establishes standards acceptable to each side for quality, service, delivery and price. Settling on these standards is what negotiation should be about. Since we do not want the same thing, we need to expand the process beyond just price. This fact forms the basis of Win-Win negotiation.
Negotiation is more like a journey than a destination
The temptation is to see negotiation as an event, a sort of speed bump on the road to business happiness. This is a mistake. Negotiation is a process that evolves over time. The learning and trust inherent to the process advance through time. Since the customer’s stress on quality, delivery, service and price are bound to change, and because our priorities as sellers change too, the process is constant.
Concentrate on the importance, not the sequence of issues
Write down thenegotiation issues. Prioritize them in descending order from most to least important. Discuss issues in the order most comfortable for the customer. If you plot out a magic sequence, your plan may be upset as the customer raises issues out of your rehearsed order. If the customer brings up issues for which you are not prepared, admit that and ask for more information. Refuse the tendency to ‘wing it’, as you will tend to lose both the negotiation and the buyer’s respect.
Find areas of agreement quickly
Sales pros know enough not to ask the closing questions before conditioning the buyer to a series of affirmative decisions. We call this principle ‘the theory of many little yeses’ and it reflects human nature. Early agreement on small matters begets larger agreement on larger matters later. Introduce issues to which both parties concur as you begin, and build on this framework of agreement.
Power
Inevitably, sellers believe that buyers have more power in the buy/sell setting. If they have so much power, why are they negotiating with us? Because we have something that they want! Power, like negotiation itself, has very little definition. Its many manifestations include clothes, titles, money, etc. It is a matter of perception. Remember the all-powerful wizard of Oz? He lost all his power when that little dog pulled open the curtain and altered our perception.
The perception works this way. If you think they have the power, they do. If you think you have the power, you do.
Two other facts about power appear in every negotiation. The ultimate power is the ability to say NO, and live with the deal. So know your walk away position. Also, power flows away form those who want the deal most. If you want it bad, expect to get it bad.
Alter your selling style
You would not consider selling every customer the same suit in the same size. Why then would you sell in the same style to every customer? This is simply a matter of effective communication. Choose the approach with which the customer feels most comfortable, not you. The emotional buyer prefers the relationship style, the matter of fact buyer likes the needs satisfaction style, and the executive type favors the consultative approach.
The lack of firm rules for negotiation seems frustrating, but this flexibility is negotiation’s great beauty. Every player can apply some of his own rules. There is no referee, no audience, and no scorecard. The whole object of the game is to get to the next objective with both parties happy.