Quick Negotiating Tip

In any negotiation parties will almost certainly enter a bargaining phase at some point. This is when either parties ask for something that is in their own interest.

For example can you give me 10% off and we have a deal. This can put a lot of external pressure on you to agree to the discount in order to secure the business.

But what do you do if you cannot drop your price by 10%? Do you simply say no and risk losing the business or be seen as confrontational?

When responding to a request like this, there are a number of things one can do. Here is one negotiation technique that is worthy of consideration.

Offer Vague and Ask Specific

In the event that you have been asked the question:

Drop your price by 10% and we have a deal.

Respond with the formula “Ask Vague, Offer Specific”. Say something like this:

We may be able to consider discounts (vague) but we would need to increase the order by at least 30% in order to do that (specific). Would that be possible?

Alternatively

OK we may be able to look at our discount structure (vague) however we would need to agree a two year term in return (specific). Would that be possible?

You can play around with this “formula” by changing what it is that would be of interest to you. Hope you have found this negotiating tip useful.

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Quick negotiating tip – Challenging an opening bid

One of the golden rules in negotiation is – always challenge an opening bid – even if it seems attractive at first glance.

Many negotiators fail to challenge an opening bid as they fear aggravating the other party. On the other hand some hard ball negotiators relish diving in headlong and challenging the bid.

That is expensive. You will have to do much better than that!

If you do not challenge the bid, you are simply storing up problems for later in the negotiation, as the other party believes you have psychologically accepted the proposal/price. However challenging an opening bid aggressively head on might set the tone for the rest of the negotiation making life more difficult than it needs to be.

The key here is to challenge the bid without being overly aggressive. One possible way to do this is to ask the other party to justify their offer.

Tell me………How did you come to that valuation – assessment – price etc?

Do this with a mildly curious sounding voice and you can subtly challenge the bid without causing offence. The other party now has to justify their initial pitch. Done well the negotiation should enter into a phase of dialogue based around value propositions rather than positional statements.

The reason why we think our offer represents good value is…………………………

This justification of their opening offer is likely to release previously unknown information into the open.  This information can often be used to glean where the real value lies in any negotiation and can set a positive tone for subsequent discussion.

Remember, a good negotiator will challenge opening bids. Be prepared to justify your offer. Having a well prepared response to a challenge  will not only make you look professional but increase your chances of securing a good deal for both parties based on shared value.

Identifying Needs: Asking the right questions

school-kids-0167Identifying client requirements is an essential component of being a good sales person/negotiator. There is only one way to find out what a client wants and that is to get them talking. Good salespeople and negotiators spend more time listening than talking and are adept at using questioning skills to uncover client needs. The best way to get a client to talk is by asking relevant questions to the situation. Using the right type of questions can make your job easier than you might think.

There are two types of questions (open and closed) and both have their advantages and disadvantages. Getting the balance right between open and closed questions can make dialogue much easier and consequently the flow of information is more readily exchanged.

Closed Questions

These questions require a client to answer yes or no. Closed questions can be used to control a dialogue. They can even be used to pre-condition a person into saying yes. Ask three closed questions one after the other where the answer is yes and the likelihood of the fourth answer to a question being yes is significantly increased since a habit of responding yes has been formed. The same applies if the response is no. Three closed questions with a no response means that subsequent closed questions are likely to be met with a no.

Whilst closed questions can be used to ascertain positive and negative responses and even hone in on specifics, closed questions do not encourage a client to open up and conversation can often be short, sweet and awkward. Closed questions begin with phrases such as;

• Are you?

• Do you?

• Could you?

• Would you?

• Will you?

• Can you?

Open Questions

Open questions simply encourage the client to open up and provide information relevant to the discussion. They can also help develop a feeling of mutual interest and trust. Open questions should be designed to help you gather information that will enable you to offer a solution to a customer need. Open questions should enable you to find out what products or services the customer currently uses and how he or she feels about them.

Open questions begin with;

• Who?

• What?

•Where?

•Why?

• When?

•Which?

• How?

Open questions can be preceded with the TELL ME phrase. Tell me who? Tell me when? Tell me how? Tell me why? etc. This is a personal choice and should only be used when you feel the other person would be comfortable with such a lead. It can be deemed as an instruction and used inappropriately can lead to the other party clamming up and providing little or no information

Tactical and Strategic Open Questions

There are two distinct types of open questions:

Tactical Open Questions give you data

• What is your customer ref number?

• How many employees are there?

• What is your telephone number and address?

• What type of process do you use?

• How often do you tender?

Tactical open questions are excellent in gaining information that you might need at a later stage to prepare a clear and specific proposal.

For example;

Which airport do you want to fly from?

What dates for travel do you have in mind?

How many people will be travelling?

What level of budget are you looking to spend?

Strategic Open Questions tell you how the other party feels and reveals their buying motives.

• What is the reason?

• Why did you buy?

• What do you think?

• What would it mean to you if?

• How important is it to you that?

Asking strategic questions can be very powerful. This is where the real value is to be found. However strategic open questions can be felt intrusive and therefore requires an element of trust and empathy to be exhibited by the questioner. However, if one can master the skills of asking strategic open questions, one should be able to build trust and rapport with client’s enabling good value judgements to be made.

Building good rapport with the other party can only serve to strengthen your position when you make a proposal at a later stage. Be sincere and professional when asking any questions, but especially those that are strategic in nature. You are venturing into how people feel and that can be considered unwelcome in the business environment.

Build a database of open and closed questions (Tactical and Strategic) and regularly review them prior to any meeting with a client. This will serve to remind you ahead of the meeting a number of appropriate questions to ask. That way you can then build a proposal based on the things that are important to the client.

Here are a few example questions to get you started;

How have you been since we last met?

What do you do when you are not working?

How have things changed since your new marketing campaign?

What do you see as your competitors strengths?

What do you need to be better than your competitiors?

What would happen if………?

Why is that important to you?

What is your reasoning behind your statement?

How do you decide on which supplier to choose?

What is your decision making process?

What time scales are you working to?

What is your level of interest in our proposal?

In which areas are our competitors stronger than us?

Where do we need to improve to get your approval?

What deadlines do we need to be aware of?

I look at my database of questions frequently. This prompts me to think of the type and relevancy of questions I need to ask before I go into a meeting.  Choose the right questions and increase your chances of making a proposal that will win the business.

Negotiating Tactics – Recognise and diffuse them

istock_000000409040_l1You are in the clients office looking to negotiate a valuable contract. You have been told by your Sales Director not to bother coming back without a deal and your client is using negotiating tactics to put you under pressure to concede at every turn. One by one you give in to all their demands There you are doing your very best in the middle of a heated negotiation and out comes the vice and the broken record technique.

Buyers have been using negotiating tactics since time began, to win concession after concession in business. One thing is clear; they do work or people would not use them in the first place. After all, should a buyer successfully use a negotiating tactic against you, then it follows that they will use another and yet another until you finally learn how to counter these tactics. Good negotiators are able to recognise a tactic and diffuse them.

So what tactics are out there. Well there are too many to cover in this article so I have highlighted a few that I have experienced.

The Vice

vice

This does exactly what iy says on the tin. It is designed to squeeze you into conceding on one or several points at once.

You will have to do better than that.

followed by deadly silence prompting you for an answer. Now the pressure is on you to come up with something better. This is often combined with the broken record technique. This is where the vice is simply repeated as if stuck in the groove of an old broken record

You will have to do better than that

I have seen many a salesperson simply collapse and  improve their offer when faced with this tactic. Do not offer any improvement or you will hear;

You will have to do better than that

once more

What do I do now? I gave them a better offer and they are still asking for more. You can only spiral downwards from here.

The simple answer is to break this cycle by asking,

Could you be more specific? Where in particular do we need to be better?

You have now got them talking about specifics and can now re-enter negotiations. At the same time the other party will recognise that you are capable of diffusing a basic technique and this alone may get them to change negotiating behaviour.

The Monkey on your back

monkey

Some negotiators refer to this tactic as the ‘shuttlecock’ or ‘the ball is in your court’. I prefer to visualise it as a monkey on someone’s back. Some negotiators have the irritating habit of handing their problems to you so that they become your problem. They attempt to put the monkey on your back leaving you to resolve the problem

In this situation I would recommend that you politely and skilfully pass the monkey back to the person or persons with whom you are negotiating. A typical example would be where a client says;

I can only afford £15,000. The budget will not stretch any further.

At this point you have the monkey on your back. In other words , if you cannot find a suitable solution below £15,000 there is no deal. Or so it seems!

The challenge here is whether or not the budget (monkey) is real or not. It may be that the other party has a higher budget and is wanting to peg your offer at a lower level than they would be prepared to pay for the right solution. You can either agree to meet their budget or try to pass the monkey back.

How do we find out if this budget statement is real without losing face? Hand the monkey back but let the other party feel that they are still in control. Look concerned and say something along these lines;

Oh that could be a problem. We have a number of options in our range of products/services. I really want to ensure that you get the best cost effective solution/s for your particular situation. Does that mean that if I have a product/service that satisfies all your needs costing more than £15,000 you would rather that I did not bring it to your attention?

The monkey is now on the other persons back. If the budget is fixed he will say so. However, if it was an attempt to put down a marker, they will suggest that you show/explain all options within a range and they will make the final decision on whether they can stretch the budget or not.

It is important that as a negotiator you are able to deal with many types of negotiating tactics. There are many other tactics that I cover fully in my negotiation workshops.

  • Time Out
  • Use of silence
  • Under the spotlight
  • Salami
  • Trojan Horse
  • Good Cop Bad Cop
  • Power of legitimacy
  • Use of a higher authority
  • Preconditioning

etc.

Happy negotiating.