Last Updated on May 12, 2015
Negotiation is an art.
Whether you’re doing it over the phone on a cold call, or in a face-to-face interaction, there are a few important rules you should always keep at the top of your mind.
Failure to do so often means getting the short end of the deal and settling for less you than deserve – sometimes not even realizing that it’s happening. Conversely, pushing to hard or trying to “win” can derail a deal where there was more than enough common ground to reach an agreement.
With that, here are 5 negotiation rules to help you succeed, and come away with the best deal possible.
1. Reality Will Rule Them All
Picture this: You’re trying to sell your used car, and you want to get the best deal. Your used car happens to be a ’97 Ford truck, with 150,000 miles on it. You love this truck, you’ve had it for ages, you’ve kept up with the maintenance, and it’s in decent condition.
Blue book states the truck’s worth at $5000.
That’s the reality of the situation. The year, make, model, and quality of the truck are the most important things. Your emotional connections can only get in the way of a good deal.
You can have the best sales pitch in the world, and you can amplify the benefit of every little feature…
But if you’re operating in an unrealistic range of what “fair” is, you’re going to end up limiting your options, which hurts your negotiation power.
What happens when you place a Craigslist ad trying to sell the vehicle? Price it reasonably and you’ll likely get more interested parties, and have more room and power to negotiate. Choose an unrealistic price point and chances are you’ll get fewer, lower offers. That’s how you end up at a dealership getting bottom dollar.
Here’s another example…
Have you ever watched the show Shark Tank? If you’re not familiar with it, entrepreneurs have an opportunity to pitch high profile investors from whom they’re seeking a partnership. The pitch always begins with the entrepreneur seeking a certain amount of cash (say $100,000) for a certain percent stake in the business (say 10%). These two numbers put a value on the company (in this case, $1 million).
What inevitably happens is the investors want to know where there valuation comes from. Some entrepreneurs are so unrealistic in their valuation that they practically get laughed off the stage. Each of these unrealistic entrepreneurs seems to attach emotion to value.
Emotion means nothing. Reality means everything.
2. Cool Heads Prevail
Herb Cohen says, “You have to care…but not that much.”
It’s important to not get emotionally committed to the success of the negotiation. You want the deal to happen, but never let your counterpart know that you’re desperate for it, or you’ll have to make unnecessary compromises, and certainly get the short end of the deal.
For example, let’s say you REALLY want a deal to happen with a client. So much so, that you’ll feel like a failure if it doesn’t get done. There’s no way around it: your desperation is going to get in the way of your ability to negotiate effectively.
Instead of coming from a scarcity mindset, come from the abundance mindset. Know what makes for a good deal, and have the confidence that you’re either going to get it, or you’ll walk away.
When desperate meets confident, confident wins. So keep a cool head.
3. Find a Way to Get to “Yes”
Too many people spend too much time talking and not enough time listening. So if you’re not getting the deal you want, start asking questions and start listening. When you do that, you begin to hear what’s important and of value.
Therein lies your way to get a “Yes.”
When you know what they want, you can figure out a way that you can accommodate them… that also works for you.
The reverse holds as well. When it’s your turn to talk, don’t posture. Be honest about what you need and want. That makes it easier for the other person to see if they can accommodate your needs… helping you both arrive at a good deal.
4. Tackle Tough Issues Early. Isolate Objection.
Talk about all of the hard issues as early as possible. Wait until the end, and you find you’ve wasted all of your time getting to what’s really important. Facing the difficult part of a negotiation up front, means doing it with a clearer mind and paving the way for a smoother process.
When objections do arise within a negotiation, isolate them.
Here’s what that means…
If you write up a proposal, and the other party gets back to you and says, “I have a problem with “so-and-so”, can we make this adjustment?”
Respond with: “We can definitely discuss “so-and-so”. But, before we do, are you okay with everything else in the proposal?”
This is crucial, because it negates the other party’s ability to continuously nitpick the details of the negotiation, waste your time with intricacies, and introduce frustration into the process.
They’ll either say they’re okay with everything else, or name a few more objections. Then, you can tackle all of them.
Additionally, don’t let the lawyers screw things up by trying to prove their value, or add surprises, after a negotiation has been made. Business people are there to agree on fair terms. Attorneys are there document the deal.
5. The Kind of Person You’re Negotiating With Matters
Don’t haggle with genuine people and valuable contacts.
The relationship is more important than the money, and it’ll give you far more value down the road than the value you’ll get by penny pinching.
Besides, good people are usually willing to give you a fair deal.
When faced with an especially difficult or irrational person, don’t join them in posturing or manipulation. Look to win, “not by defeating the other side, but by winning them over.” Focus on solutions, rather than problems. Focus on facts, rather than emotion. Focus on brainstorming, rather than predetermined positions.
What are your best tips for effective negotiation? Tweet us or let us know in the comments below.