Navigating negotiations is a crucial part of business. Negotiation is a conversation whose goal is to reach an agreement that satisfies both parties even if it’s with someone whose interests are not perfectly aligned with yours. Read on for six tips to help you improve your negotiation skills and negotiation results.
Set the right tone
Often, people are hesitant to show their cards in negotiations. This is a smart approach, but it can have a negative impact on the outcome. This does not mean putting all the cards on the table at the outset. Simply sharing something to set a positive tone. If you want to be trusted, you must first offer some information, even if that information is unrelated to the negotiation. This can be sports, personal concerns, or hopes. A positive tone is conducive to gaining an agreement.
Know the key issues
You know your priorities when you are negotiating. List out those out to isolate them in order of importance. If your top priority is not met, there’s no use to continuing. You are more likely to get a better outcome by ranking and covering all the issues on the table.
Go in knowing your range
You should have a clear target range, reservation price, and walkaway price. The target range is what you’re hoping for, but you still have the option of settling for your reservation price. Knowing your own range will help you to be clear about your limits. You should come in knowing at what point you will walk away.
Make the first offer
Making the first offer allows you to set the anchor. The Anchoring Effect is a psychological principle and once the first number is on the table, both parties will work around it. Reluctance to open can be due to concerns that you may be way off, and disengage the other party. Often, people make a first offer that aren’t aggressive enough. The opening offer should ideally be just outside the other’s reservation price.
Don’t counter too low
If you are unable to make the first offer, then you need to protect yourself against the Anchoring Effect. Most people go too low, too quickly. Your counter should be based on the same target range you would have used if you’d made the first offer. If there offer is way off your target range, and go back in with a new reset.
Don’t hesitate to counter an offer
In experiment after experiment, social scientists have proven that people are not particularly happy when they get what they think they want. They’re happier when their bargaining partner says “no” a couple of times before he or she says “yes.” Every party wants to feel that they got a good deal, and/or to feel as if they drove a hard bargain. Parties are most satisfied on both fronts if there is some back and forth. This may come as a surprise if you’re someone who abhors negotiation. You shouldn’t take the first offer, even if it meets your needs. By going back and asking for concessions you can ensure that you got the best deal
Working out the terms of a new deal requires skill. Everyone wants to stay in control of negotiations and be satisfied in the end result. The more satisfied both parties are, the more likely you both will work harder and be more committed to the deal, which is the ideal outcome from the start.