By Michael Pearson, Founder of Inside the Procurement Mind
3 minute read
By Rob King, Founder and CEO of The Client Key
Negotiation is an art form in itself and it’s a skill you will eventually need to learn and practise within your business. During the latter stages of a client conversation, you will need to have a basic understanding of negotiation principles in order to get the best possible outcomes for you and your company.
10 KEY NEGOTIATION RULES:
- Understand where on the scale your negotiations are taking place – warm or cold / bartering or haggling. Or trust and high value.
- Prepare as much as possible – understand the other party’s perspective and then use it to your advantage.
- Plan your moves in advance.
- Exercise control and discipline – don’t let emotion get in the way.
- Look out for buying signals – what information is the other party giving away?
- Negotiating is uncomfortable at times – especially in the final moments. When people are trying to influence you. Know this and understand it. Get comfortable with the discomfort and learn to live with it. Recognise it when it’s happening. People say ‘yes’ to make themselves feel better and more comfortable.
- Try saying ‘no’ when you feel like saying ‘yes’ – try it a few times on smaller conversations.
- When you say ‘yes’ it devalues your ‘no’.
- Don’t end up negotiating for the sake of it – or for the sake of principle. Better to see the bigger picture and cede satisfaction to the other party in order to get your outcomes.
- Understand perceived value versus real
There are many forms of negotiation, but your focus should be on commercial negotiation. We are not focussed here on political negotiation or any other kind. Commercial negotiation can be defined as ‘the exchange of value between two parties’. So, where should you start?
You must know whereabouts on a sliding scale you are negotiating. At one end you have cold, hard negotiations. These are purely price-led and it’s all about bartering or haggling for the best possible prices. At the other end of the scale, you have the warmer side of negotiations, which involve more trust and have more elements than just purely price, although it’s still a factor.
Understanding where your negotiation is taking place is the first stage. Is the client (or their procurement team) just trying to beat you down on price? Negotiating with procurement teams is an art you must master. It’s their job to get the best price and terms for their organisation. It’s your job not to give in or accept without negotiating the best outcome for your business.
There are several ways that you can improve your chances of success, for instance, setting a price that has a degree of ‘wiggle room’ built into it. You can do this more aggressively at the cold end of the negotiation scale.
On bigger projects the warmer your negotiations, the more trust there will be involved. Price will still be a factor but there are likely to be a variety of other elements to the negotiation. Things like payment and contractual terms, delivery milestones, quantities and shipping costs. Perhaps you might also be negotiating on marketing budgets or clearance rights for a specific project. Everything must be considered from the outset before you go into the negotiation. The other party is not just looking for a price-led haggle. They are looking for trust and reciprocity, and this can mean the negotiation will be more complex. These are important values for you to consider as you prepare. Try to avoid the competitive ego creeping in because you have to seek a way to help cede satisfaction to the other party. This is essential to understanding where the balance of power lies and working out how you can help the other party achieve their goals whilst simultaneously achieving yours.
The key to doing all of this is preparation. Eighty per cent of any commercial negotiation is in the preparation – even before you meet the other party and get down to business.
Rob King
Rob King is the founder and CEO of The Client Key and author of Selling Creativity: How Creatives and Agencies can Grow their Business through the Art of Sales
