Embarking on negotiations is akin to stepping onto the dance floor. It requires finesse, intuition, and a deep understanding of the steps that lead to a dancing-with-the-stars quality performance. Welcome to Part II of my contract negotiation tactics and strategies series. If you missed Part I, Contract Negotiation Strategies: The Science Of Getting What You Deserve, you can go read it before you dive into this piece. In this article, I will walk you through the essential elements of preparing for, engaging in, and closing a negotiation with unwavering confidence and success. By the end, I hope you'll feel I've unraveled the intricacies of the negotiation process and equipped you with a comprehensive toolbox of negotiation tactics to help you achieve better negotiation results.
Negotiation Tactics: Making the First Offer
Setting the Stage
As you prepare for a negotiation, it's important to gather your bearings. Who are you dealing with? What are their needs, their fears, and their desires? I want you to know that understanding your counterpart's perspective not only provides valuable insights but can also help us position our offer effectively.
Remember, it's not about you versus them, it's about crafting a journey that satisfies both parties. It's about fostering mutual understanding and bridging the gap between different perspectives. You're not just making a transaction, you're shaping a relationship.
Anchoring Your Position
I spent most of my career trying to avoid being the one to make the first offer. I was always worried that I might be leaving money on the table by not asking for as much as the client was willing to pay or what other agencies charge for the same deliverables. Making the first offer can often create a ton of anxiety. Your negotiation partner is waiting to see what you'll offer, oftentimes with little or no boundaries provided by them. It's a moment that can set the tone for the rest of the negotiation.
But then I learned about what negotiation experts refer to as 'anchoring'. Your first offer is the anchor point for all subsequent talks, actually. It establishes the starting point from which you and your counterpart will negotiate. When you see your first offer as truly a starting point, and a starting point from which ALL negotiation variables can either increase or decrease in value, you figure out that making a well-designed first offer is ultimately in your best interest.
Pros and Cons of Making the First Offer
On one hand, making the first offer can be an excellent negotiation tactic, allowing you to set the anchor point and control the starting narrative of the negotiation. On the other hand, if you haven't done your homework or properly structured your first offer, it can reveal your hand too early, and expose key weaknesses in your bargaining position.
It's important to evaluate your circumstances carefully before deciding to make the first move. Factors like the balance of power, the level of preparation, and the amount of information available can influence this decision. But never fear making the first offer simply because you have to "go first." Just make sure you've done your homework, know your BATNA, and be willing to walk away from the negotiation if you can't achieve your BATNA or better.
Negotiation Tactics: Dancing the Bargaining Dance
Unraveling the Dance
Once the first offer is on the table, the bargaining dance begins. This stage of negotiation is where the give-and-take happens, where compromises are made, and where the actual shape of the agreement starts to form. If you haven't read my previous post, Contract Negotiation Strategies: The Science of Getting What You Deserve, take a second and check it out, specifically the section on applying negotiation frameworks.
The process can be a delicate balancing act, akin to a carefully choreographed dance. It's a constant interplay of push and pull, advance and retreat, concession and counteroffer. Use the negotiation frameworks to help you plan your steps and determine when to lead and when to follow.
Making Concessions
In the dance of bargaining, concessions are your dance steps. Each concession is a move that brings you and your counterpart closer to a common point of agreement. Remember, don't view concessions as winning and losing points. Instead, they are simply a means to an end — crafting a mutually agreeable and mutually beneficial deal between you and your negotiating partner. However, just like dance steps, concessions need to be carefully timed and reciprocated to maintain balance. You can always offer more, but it's dang near impossible to take a concession, once offered, back off the table.
So avoid making big concessions early on, as they may give away your bargaining power. Instead, start with small concessions, and progressively make larger ones as the negotiation advances. Time is your friend. Patience equals profit in negotiating.
The Power of Silence
I think this may be the single most important point of this entire post. Silence is an incredibly powerful tool in negotiations. It's like the pause in a dance that builds anticipation for the next move—and forces your partner to take the step without any direction from you. By effectively using silence, you can create space for your counterpart to fill, prompting them to reveal information, make concessions, or even reconsider their position.
Humans HATE silence in conversations. It's uncomfortable and unless you're negotiating with a trained pro, as soon as you go silent, your negotiation partner will wait a few seconds, but they'll eventually fill that uncomfortable lull with something beneficial to you.
Navigating Power Dynamic
Bargaining isn't just about exchanging offers and counteroffers, it's also about navigating power dynamics. Understanding where you stand in relation to your counterpart, and using this knowledge effectively, can help you negotiate more confidently and assertively.
This is where you really have to know your BATNA and have the willingness to walk away from a deal. I find this one especially difficult, especially if it's a contract with a new client that I've really wanted to work with or have been courting for an extended period of time. It also gets more difficult the longer the negotiation continues. But again, remember, as long as you're willing to walk away from the deal, the other party doesn't have the upper hand. Now, this isn't always the case, but whenever possible, try to make it at least seem the case.
Negotiation Tactics: Closing the Deal
Recognizing Closing Time
Just like a well-timed dance move, recognizing the right moment to close the deal can make the difference between a successful negotiation and a missed opportunity. But how do you know when it's the right time to close?
Watch for cues from your negotiating partner. Are they starting to make bigger concessions? Are they asking questions about details and specifics? Listen for "buy language." For instance, my wife is a rockstar realtor here in New Orleans. As she's showing potential buyers a listing, if she hears them begin discussing where they'll put certain pieces of furniture, she knows she has someone ready to make an offer. It doesn't always work that way, but more often than not, it will. When you hear your negotiating partner begin to speak about your mutual future together, it often indicates that they are ready to reach an agreement.
Techniques for Achieving Closure
Closing the deal is like the final flourish in a dance. It seals the agreement and brings the negotiation to a satisfying conclusion. But achieving closure requires tact and finesse. Techniques such as summarizing the agreed points, proposing a win-win outcome, or even using a time constraint can help prompt closure.
But be careful using that last one. Too many folks try and turn up the heat on a deal by falsely declaring time is running out. The problem is, if your negotiating partner really needs the extra time, you either have to walk away from a deal you really could have continued negotiating or you have to admit you were full of crap. And as soon as the other party realizes you've lied, they'll question every single thing you've said and quite often will leverage the lie to extract a concession you really do not want to offer but feel you must if you want to regain their participation in the deal.
There are numerous proactive "closing techniques" that are taught in most sales training programs. These are designed to push your negotiating partner to complete the negotiation now. For instance:
- The Assumptive Close: Assume the close by phrasing your statements in a way that implies the agreement has already been reached. For example, say, "When we move forward with this agreement, we can start implementing the plan immediately." Personally, I HATE this one and NEVER use it. It's so assuming and off-putting in my opinion. It just screams "sleazy used car salesperson" and honestly, I think it positions you as an amateur in the world of negotiations.
- The Alternative Close: Present the other party with two or more choices, all of which lead to a favorable outcome. By giving them a sense of control, you increase their engagement and commitment. For instance, ask, "Would you prefer option A or option B? Both options offer substantial benefits." This one is a great way to move a negotiation that has stalled forward. It also helps you figure out what's most important to your negotiation partner or maybe better stated, help them figure out what is most important to them.
- The Takeaway Close: Temporarily remove a desirable element or concession from the negotiation to create a sense of urgency and prompt the other party to agree. For example, say, "Unfortunately, the special discount we discussed earlier is only available until the end of the week." Use this one sparingly and only when you truly are ready to walk away from a deal. I usually ONLY use this one on negotiations that have dragged on far too long and when I really want to make sure the other party truly wants to make it to the finish line on a deal.
- The Reciprocity Close: Appeal to the principle of reciprocity by offering a concession or favor in exchange for their agreement. This technique taps into the natural inclination to reciprocate. For instance, say, "If we can come to an agreement today, I can offer you an additional service at no extra cost." I'm not a huge fan of this one either. In my mind, it basically says you've been negotiating in bad faith (asking for more than you really needed) or that you're a bit desperate (willing to discount to get the deal), neither of which positions you well for future negotiations.
- The Urgency Close: Create a sense of urgency by highlighting time-sensitive factors or limited availability. This technique motivates the other party to make a decision promptly. For example, say, "Our current inventory is running low, and if we don't secure this agreement soon, we may not be able to guarantee delivery within the desired timeframe." This is really just an alternative version of #3 and suffers from the same weaknesses.
- The Benefit Reinforcement Close: Recap and emphasize the key benefits and advantages of the proposed agreement. Remind the other party of the value they stand to gain by reaching a positive resolution. For instance, say, "Just imagine the increased efficiency and cost savings your organization will experience through our innovative solution." This is one of my favorites, especially when you're trying to get the other party to stop focusing on winning pricing concessions. It helps you reestablish the total value of the agreement in terms of future impact on the other party or their organization.
- The Question Close: Ask thought-provoking questions that lead the other party to consider the positive outcomes of reaching an agreement. This technique prompts them to reflect on the benefits and aligns their thinking with your desired outcome. For example, ask, "Can you envision the positive impact this partnership will have on your market share?" This one is just a reframing of #6, but in certain situations, phrasing the future impact as a question vs a statement is more effective. It really just depends on your negotiating partner's personality type.
- The Summary Close: Summarize the key points of the negotiation and highlight the areas of agreement. This technique helps solidify understanding and encourages both parties to move towards a final resolution. For instance, say, "Based on our discussion, we have aligned on the price, delivery timeline, and terms. Are you ready to move forward and close the deal?" I favor this closing technique when a negotiation has stalled for reasons that aren't entirely clear to me. It's a great way to whittle down the negotiating points to figure out "what's left" to negotiate.
- The Trial Close: Test the waters by asking a closing-oriented question to gauge the other party's readiness to make a decision. Their response will provide insight into their level of commitment and allow you to adjust your approach accordingly. For example, ask, "If we can address any remaining concerns, would you be ready to proceed with this agreement?" I LOVE this one when I'm dealing with a Nibbler. I'll get to that in a second. But when you sense your partner is nibbling, the Trial Close helps you both Label the action and politely suggest you're not playing along.
- The Emotional Close: Appeal to the emotions of the other party by highlighting the positive feelings associated with reaching an agreement. Paint a vivid picture of the desired outcome and tap into their aspirations. For instance, say, "Imagine the sense of accomplishment and pride you'll feel when this partnership catapults your business to new heights." I've never really tried this one because to me it feels patronizing and again, sort of sleazy used-car salesperson.
Beware the Negotiation Nibbler
"Nibbling" is a negotiation tactic characterized by asking for small, incremental changes or demanding additional concessions or benefits after the main agreement has been reached. Often the concessions were not discussed during the negotiation or included in the original agreement. You see this a lot with estimates for work. The other party will negotiate an agreed price to perform a set scope of work and then at the last minute, as for something extra to be included for the already agreed-upon price. They'll usually say something about not wanting to go back through internal approvals, etc., for such a "small change." Personally, I HATE it when folks try and nibble and more often than not have learned just to say no.
The bottom line is that everything in life is a negotiation. You're negotiating all of the time and if you have kids, you know EXACTLY what I mean. And just like people that tell me they hate selling, you don't really hate negotiating, you just aren't comfortable doing it because you've been taught it's a win/lose kind of thing instead of a beautiful dance between equals. If you'll apply these negotiation tactics, I'm confident you'll succeed far more than you fail and enjoy the dance along the way.
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This post was originally published on Painless Prospecting, the weekly sales and marketing blog created by the fine folks at Converse Digital. If you want to learn how to create, engage in, and convert conversations into new clients and customers, give them a call.
