How to effectively conduct business negotiations?
Negotiating is one of the most important skills in the world of business. A good negotiator combines strategic thinking with communication and interpersonal skills, and knows effective techniques that help find the golden mean between cooperation and competition. How to become an effective negotiator?
4 key negotiation techniques in business
There are many negotiation techniques, but let's focus on the key ones that are most often useful in business situations.
- Trial balloon - this technique involves testing the other party's reaction and is used in the early stages of negotiations. Using it, we make an understated or inflated proposal, assessing the opponent's flexibility (e.g., What if we increased the order by 20%, could we expect an additional 10% discount?).
- High low opening - this is called bargaining and starting with a proposal more favorable to yourself. This technique is based on the belief that sellers inflate prices so that they can lower them when bargaining (e.g. We checked market prices and PLN 15,000 for this software is too much. We can offer PLN 9,000).
- Graduation of concessions - involves controlled and deliberate concessions, where each successive concession is smaller than the previous one. In this way, you show that you are reaching the limits of your possibilities (e.g., the initial price is PLN 100, and subsequent levels of concessions are PLN 90, after a long reflection PLN 85, and finally PLN 83 as the limit of your possibilities).
- Dead fish - involves deliberately presenting the other party with an unfavorable and outrageous offer, only to be presented with a more favorable and realistic one after refusing it, and getting exactly what you want (e.g. You have a budget of PLN 150,000 for software, but you offer PLN 50,000. The other party gets indignant and refuses, saying they can't go below PLN 180,000. In the end, you propose PLN 120,000, which seems much more attractive than PLN 50,000).
How to prepare for negotiations?
To negotiations you can prepare in 4 steps:
- Determine the interests of both parties - identify your partner's interests to prepare an offer that will interest him. Also identify your own interests, i.e. what you want to achieve.
- Define your boundaries - clearly define the limits you will not cross during negotiations.
- Prepare arguments - write down all possible actions you can take and techniques you can use. Prepare the arguments you will use during the conversation.
- Prepare proposals - develop answers to possible counter-arguments and think about what you can propose to the other side.
What are the most common mistakes during negotiations?
Unprepared negotiator is an ineffective negotiator. Thus, lack of preparation is a fundamental mistake that can be very costly.
Other mistakes during negotiations:
- Giving concessions too quickly - if you decide to use the technique of gradual concessions, you must clearly show the boundary not to be crossed. If you make concessions too quickly and too easily, your opponent will sense that he can afford to do more.
- Excessive emotionality - keep your emotions in check during negotiations. Also remember to be polite, open and actively listen. If the atmosphere is too tense, you can suggest a break.
- Unclear communication - lack of precision can lead to misunderstandings. This also applies to negotiations in a foreign language: if you don't feel up to conducting them, use the support of a translator.
Remember that the goal of negotiation is to find a solution that satisfies both sides, and tactics should always be tailored to the specific situation.
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