“Negotiation is the resolution of conflict by mutual compromise”
Negotiation is cooperation not competition!
It’s not selling and it’s not buying – because buying and selling are highly competitive and negotiation is not.
If you find yourself using the techniques in this course in a competitive way you are not negotiating – you might feel like you are, but actually you are not.
We are now going to give an overview of the ’10 Rules’ of Negotiation. These are the 10 golden rules which will help to make you an expert negotiator.
Like all things these rules can be used defensively or aggressively, however if you find that you are using them defensively or aggressively you are probably not negotiating.
If you can live by all of these 10 rules then you will be unstoppable as a negotiator. You will win every time but not only will you win every time but so will the other party – it will be a true win-win.
That is how we build relationships and maintain negotiation integrity.
The 10 Rules of Negotiation are:
- Don’t (unless you need to)
- Never negotiate with yourself
- Never accept their first offer
- Never make the first offer (if you can avoid it)
- Listen more and talk less
- Never give free gifts
- Always watch for the salami
- Don’t fall for the rookies regret
- Always avoid the quick deal
- Never reveal what your bottom line is (or was)
Negotiation and discussion are the greatest weapons we have for promoting peace and development.– Nelson Mandela
Rule 1 – Don’t (unless you need to)
This is our definition of negotiation: “Negotiation is the resolution of conflict by mutual compromise”
Out of the nine words in our definition there are actually only four that are important:
1. Conflict - if there is no conflict don’t negotiate. If you’re a salesman sell high. If you’re a buyer then buy on price. If you do not need an ongoing relationship with the other party then buy hard or sell hard.
2. Resolution - If you do not need a resolution or an immediate resolution to the conflict then don’t negotiate. When looking for a resolution most people will think price. Good negotiators will think about value and value will give you a broader spectrum of activity than the narrow one of price. If you just stick with price then you will just get into a haggle.
3. Compromise - The important point for the compromise is that it does not have to be the price. In good planned negotiation you can get the price you want and compromise on the things that you can give away whilst still maintaining the right price.
4. Mutual - The only caveat to the above is that the other party has to be mutually engaged in their own need to resolve the conflict today.
Rule 2 – Never negotiate with yourself
If you decide that you are going to break Rule 1 and enter into negotiation, then Rule 2 is never negotiate with yourself.
Always make the other party do it first. Negotiation with yourself means that you will never get what you are trying to achieve.
Rule 3 – Never accept their first offer
This one is short and simple – Never ever, ever, ever, ever, ever accept the first offer.
Why? Because there is always a better offer behind it!
Not necessarily a lower price but a better offer.
Rule 4 – Never make the first offer (if you can avoid it)
Salespeople often think that making the first offer is unavoidable (sometimes it is!). However there may be a time when you can gain an advantage in a win-win negotiation without making the first offer.
Rule number four may feel counter intuitive and like a standoff as if you are not making the first offer or accepting the first offer then how do you move forward?
If you are selling always ask the important questions early and quickly, and you can find out what the possible deal is without making an offer.
If you understand the client position, budget, where they feel pain and why they want to buy your product or service then effectively they are making you the offer without knowing it. You will know what they want to buy and how much they are willing to pay for it. So always ask the important questions such as:
what the budget is?
what they have set aside?
what they are currently paying?
what is the competitor’s position?
Remember the who, what, where, when and most importantly Why.
Rule 5 – Listen more and talk less
You have two ears two eyes and one mouth – use them in that proportion in negotiation.
This is what we refer to as the 80/20 rule – 80% listening 20% talking.
Whilst you client is talking they will be divulging their bottom line they will be giving you signals and information that you can use.
While you are talking all you can do is firm up what they already knew or leak new information that you don’t want them to have and which could potentially be damaging to you.
Rule 6- Never give free gifts
Free gifts can seriously weaken your position in negotiation as a free gift today becomes tomorrow’s starting point. You will always be starting further behind after giving a free gift.
If you give something for free then you have nothing back in return and so not only have you set your starting point for the next negotiation back but you have also lost the opportunity to strengthen your position and ask for something in return.
If you give in easily and the client knows that you will give a free gift just by being asked, not only is there now a drop in the price as part of the deal is free, but then you set a precedent that They ask and You give, which makes it very difficult to negotiate effectively.
Rule 7 – Always watch for the salami
This Rule relates to the ‘repentant rookie’ – we have all felt like this regardless of how long we have been buying or selling. What happens is that we walk away after closing a deal thinking two things:
- Did I really get a good deal?
- 2. What could I have done better/is there a better deal?
This is where the 3TQ come in, the Three Trading Questions, and they are:
Cost – What is this exchange going to cost me?
Price – What price do I want for it?
Value – What is it worth to them?
These questions help us to see the value of something to the other party and the cost of the item to us.
This is essential information in negotiation as it helps us to work out if we have a good deal and if there is an exchange then there should be something equal in value for us as the concession we have given. This does not mean equal to the cost to us but equal to the value for the other party.
Rule 8 – Don’t fall for the rookies regret
The ‘Salami’ is almost like Rule 2 (Don’t negotiate with yourself) but it is a little but more detailed. The client will look at your proposal and if you have ‘salamied’ yourself they can see how it is broken down (or sliced up) this is where our analogy comes from as it is like slicing salami.
They are then free to pick the slices of your proposal that they like, they can choose the slices they like but want a better price on and they can disregard some slices all together. This can greatly reduce your deal and make the process much longer.
When looking at the Salami it is important to try not to salami the other party as ‘behaviour breeds behaviour ‘. If you salami them then this makes the behaviour OK and they are then free to return this behaviour.
Rule 9 – Always avoid the quick deal
Experience has taught us that every time you make a quick deal by allowing the other party to control the speed of the deal you will come away regretting it.
The reason the other negotiator will speed things up and go for the quick deal is usually that they have seen a mistake you have made and they want you to make sure that you sign your name to this mistake. This could give them an advantage in many ways such as a better price, delivery terms etc.
They may not even want you to honour the terms you have agreed to as they understand it is a mistake, however in this case they may use your agreement to push for further concessions and you may have to give something up in order to back track from this mistake.
There is rarely a time in negotiation when you cannot take some time to consider things more fully and look for your mistakes without spoiling the deal, so never go for the quick deal.
Rule 10 -Never reveal your bottom line
This Rule may sound obvious and even a bit of a rookie mistake but at some point you may get caught doing this. So when you are negotiating remember:
•Don’t tell anyone what your bottom line is before you start.
•Don’t tell anyone what your bottom line is during discussion. (Unless you are at the end of your concession then it will change from a negotiation to an ultimatum).
•Finally never tell someone after the negation is over, even if it is a close friend or relative.
If you reveal your bottom line after negotiation has finished you will cause one of two things to happen:
1.If you tell them they may open the negotiation again or they may think that you have deliberately done something to hurt them and they will remember this in the next negotiation.
2.This goes from a win-win to a win-lose and could destroy your relationship going forward meaning that all future negotiations could result in a lose-lose.