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Guiding principles show you which direction to go in during a negotiation

Negotiations can go on for a long time. When you start a negotiation, you probably have a pretty good idea of where you want to get to. The big question is does the other side of the table share this goal with you? Will they be able to remember this goal throughout the entire negotiation? Hmm, sounds rather iffy to me. Perhaps what you need are a set of guiding principles…

What Are Guiding Principles In Negotiating?

So just exactly what are guiding principles when we are talking about the world of negotiating? Guiding principles are different from negotiation styles and negotiating techniques – they are high level agreements that you are able to reach with the other side that frame the rest of your discussions. These are an important part of any principled negotiation.

A negotiation definition requires that your negotiations focus on the details of the deal that is to be done: who gets how much, when things get shipped, where they get delivered to, terms of credit, etc. At a much higher level, these details assume that both you and the other side of the table have come to an agreement on the big issues.

These issues center on things like how much profit is it fair for the other side to make on the deal? How soon after the deal is signed should the other party expect to see its money? What should be done if the product or service does not live up to expectations? These are big issues that both sides need to come to an agreement on at the start of the negotiations.

How Do You Use Guiding Principles In Negotiating?

Having taken the time to discuss a set of guiding principles at the start of your next negotiation, what does all of this buy you? What it does is to buy you some insurance that the time that you invest in the negotiations won’t be wasted.

By taking the time to establish some guiding principles with the other side, you’ve established a beachhead from which both sides can make progress. There’s another advantage of doing this.

Negotiations can be long, drawn-out affairs and it can be easy to lose your way in the middle of one. For that matter, the other side can get lost also. When you have both agreed on a set of guiding principles, this provides you with a place to come back to when you get lost or the negotiations get bogged down. The guiding principles provide you with a milestone – a point where you and the other side actually did agree on something.

By having this kind of “basecamp” to come back to, the negotiations need never get off track. Sure, they may get bogged down in disagreements over details, but both sides will always have a place that they can come back to in order to get the negotiating process restarted.

What All Of This Means For You

Getting from the beginning to the end of a negotiating session is a lot harder than it may seem. All too often we can lose our way during the negotiation process and the other side of the table can get lost with us. This makes reaching a negotiated deal that much harder to do.

Establishing a set of guiding principles at the start of the negotiations is a great way to clearly communicate to the other side what it’s going to take to reach a deal. The guiding principles will provide both sides with a base that you can come back to later on in the negotiations if either side gets lost.

It will take some time to establish a set of guiding principles at the start of the negotiation. This investment of time will yield significant results by helping to keep both sides of the table on track. Do it right and you’ll be able to reach a deal that works for everyone involved.

- Dr. Jim Anderson
Blue Elephant Consulting –
Your Source For Real World Negotiating Skills™

Question For You: Do you think that you should write down the guiding principles so that both sides can remember them?

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What We’ll Be Talking About Next Time

When you sit down at the negotiating table with the other side, what’s running through your mind? Are you wondering what they are thinking? Are you wondering what negotiating techniques they will use? If you have studied your history lesson, then you’ll already know the answers to these questions.

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3. Why It’s Ok For A Sales Negotiator To Be Wrong When you become the best sales negotiator in the world...

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What the other side wants is what is going to motivate them

In order to be successful in a sales negotiation, you need to play two roles: your side of the negotiating table as well as the other. When you are trying to determine how the other side of the table views the world (and therefore how they will negotiate with you), one of the most important discoveries that you need to make is to find out just what motivates them…

More Than Meets The Eye

One of the most important things that you’ve got to realize about the motivations that are driving the other side of the table, is that they may be unknown. The analogy is much like an iceberg: it’s not what is above the surface, but rather the part that is below the surface that you’ve got to watch out for.

When you are stepping into the other side’s shoes in order to better understand what their motivations are, you’ve got to think beyond the obvious. Once you’ve identified the obvious things that may be driving their positions, take the time to go farther – what might be making these issues important to them?

Can We Talk About Value?

A key component to better understanding how motivated the other side is going to be is to understand what they think that what we are offering to them is worth. The more value that it has, the more motivated they will be to reach a deal with us.

An important point to realize is that there are two types of value that you need to take into consideration: short term and long term. The longer term the value is of the issues that are being negotiated, then the greater value they have and the more likely a deal can be reached.

The Third Man

Reaching a deal is a wonderful feeling for everyone at the table. We shake hands and congratulate each other after it’s done. However, the deal that we’ve reached may not be for the people at the table.

In order to fully understand the motivation that is driving the other side of the table, we need to make sure that we know who is pulling the strings. If a deal is reached, who within the other side’s organization stands to benefit the most?

Get Out Your Wallet

One of the keys to understanding motivation is to know who’s going to pay? Every agreement that we reach has a cost associated with it. This means that in the end, someone is going to have to get their wallet out.

Don’t let yourself get fooled into thinking that it’s the other side of the table that’s going to be paying. It can often be a 3rd party such as their customer, etc.

Problems With Risk

In order to understand what motivates someone, you need to understand both what they want – and what they don’t want. This means that you’re going to have to develop an understanding of how they view risk.

The key is to understand just how risk adverse they are. The more risk adverse they are, the stronger lever you have that can be pulled during the negotiations

What All Of This Means For You

Motivation is what drives you during a sales negotiation. It’s the same thing that is driving the other side of the table during the negotiation also. You need to take the time to understand the other side’s motivations.

To do this you’re going to need to find out what their motivations are, understand who is driving their motivations, and realize who’s going to benefit the most from the negotiations.

Once you’ve got this all covered, you’ll be in a good place. You’ll be able to understand why the other side makes the decisions that they do. Once you have this level of understanding, reaching a deal with the other side will have become that much easier…

- Dr. Jim Anderson
Blue Elephant Consulting –
Your Source For Real World Negotiating Skills™

Question For You: What’s the best way to discover what motivates the other side in a negotiaton?

Click here to get automatic updates when The Accidental Negotiator Blog is updated.

What We’ll Be Talking About Next Time

Let’s go hunting, shall we? If you are getting ready to enter into a sales negotiation, then you need to make sure that you have collected all of the information about the deal and the other side of the table that you can. In order to do this, you’re going to have to get good at hunting for information. Let me act as your hunting guide…

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Post tags: final price, hidden objectives, motivation, motivation strategy, risk, risk adverse, what is offer worth, who benefits

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You've Got To Be Able To See Your Target If You Want To Be Able To Hit It

What is the #1 thing that you need to do before you sit down at your next sales negotiation? Polish your shoes? No. Work on your icy “that deal’s not good enough for me so don’t even offer it” stare? No. How about something much simpler that all too often gets forgotten by even the best sales negotiators: picking your target.

Why Are We Doing This?

I’d like to be able to tell you that things like this never happen, but the sad reality is that all too often they actually do. The reasons vary, but generally they start when someone taps us on the shoulder and asks us “to attend” a meeting with a partner or vendor. What started out with us in the role of an observer can suddenly transform itself into a full-fledged negotiation session if we’re not careful.

One way to make sure that this doesn’t happen to you is to make sure that you know the purpose of any meeting that you are being asked to attend. You can’t keep yourself from getting sucked into heading up a spur of the moment negotiation session, but you can make sure that you know why you are doing it.

It’s All About The Issues

If you want to know what the target of any sales negotiation is, then you’re going to have to have a handle on the issues that will lead you to where you want to go. The key thing here is to remember that not all issues are created the same.

Generally, the issues that will be negotiated can be placed into one of three categories: critical, negotiable, and don’t care. The critical issues are the ones that matter the most to your firm. The negotiable ones are where you have some latitude and can be used to make sure that you get what you need on the critical issues. Finally, the don’t care issues are on the table simply to give you more things to talk about with the other side as you work to put a deal together.

Back To That Target Thing

If you want to reach the target of a sales negotiation, knowing what the issues are and just how important they are to your company is an important first step. However, it’s not enough. You’ve got to do a “coin analysis” on each issue.

This means that you need to pick it up and look at both sides – both the pros and the cons (every issue has both). You can be well assured that the other side will be pointing out these issue characteristics to you during the negotiation and so you had better be aware of them going in to the discussion…

Getting Off To A Great Start

I believe that how a negotiation starts often determines how it is going to end. What this means is that you’d better have your act together right off the bat if you want to walk away from the table with a good deal.

One key thing that you’ve got to bring to the table are opening offers for each of the issues that are going to be discussed. You really don’t want to be making these up on the fly! Carefully planning out how you want to start the discussion will put you in the drivers seat and will make it that much easier to get to where you want to go.

What All Of This Means For You

If you want to be successful in your next sales negotiation, then you’ve got to have a clear target that you are aiming for. Taking the time to get this taken care of before the negotiation starts is critical.

In order to get to your target, you are going to have to make sure that you have a firm grasp on just exactly what issues are being negotiated. This means that you’re going to have be aware of the pros and cons of each issue and you are going to have to have a well-formed opening offer for each.

Taking the time to identify the target that you want to hit as a result of each sales negotiation can do wonders for your success rate. Ultimately, taking the time to know where to aim your time and energy is the ticket to long-term sales negotiation success.

- Dr. Jim Anderson
Blue Elephant Consulting –
Your Source For Real World Negotiating Skills™

Question For You: Do you think that you should only have one target for a sales negotiation or is it ok to have multiple targets?

Click here to get automatic updates when The Accidental Negotiator Blog is updated.

What We’ll Be Talking About Next Time

In order to be successful in your next sales negotiation, you need to make the right decisions before you sit down to start negotiating. If you take the time to make the right decisions then you can end up being successful.

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© Dr. Jim Anderson for The Accidental Negotiator, 2010. | Permalink | One comment | Add to del.icio.us
Post tags: critical, don't care, issues, negotiable, opening offer, position on an issue, pros and cons, target

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In Sales Negotiations, You Have To Know Where To Aim In Order To Hit The Target

The Problem With Most Sales Negotiations

So there you are, all ready to start another sales negotiation. Hold on a minute, are you really ready? Sure you’ve researched the other side of the table, you’ve created a negotiation strategy, in fact you’ve done just about everything that you can think of in order to prepare to have a successful negotiation. However, maybe you’ve overlooked the most important point of all – setting your target for the negotiation.

The Right Way To Set Sales Negotiation Targets

Doesn’t everyone know how to do this? I mean really – isn’t the goal of any sales negotiation to get the best deal? Well, yes and no. Getting the best deal is what we all want to accomplish. However, just saying that is not enough – we need to be a bit more specific and that’s where setting targets comes in.

It always helps if we have an example to make things clearer. Let’s say that you were getting ready to go buy a new car. You do your research, check out the dealer’s invoice price (what they paid for the car) and you decide that you don’t want to pay any more than $500 over invoice. However, if push came to shove, your budget would allow you to go as high as $700 over invoice.

Well wait a minute, just what is your negotiating goal here? Is it $500 over invoice or $700 over invoice? I hate to tell you this, but if you go into a negotiation with wishy-washy targets like this, you’re going to end up paying $700 over invoice every time.

In your mind you have already set $700 over invoice as a price that you are willing to pay and when the other side digs in and starts to shove back, you’re going to roll over and accept paying more than you originally wanted to. Sorry – it’s human nature.

So what are you doing wrong here? Simple, you are focusing on the wrong things. As you prepare to start a sales negotiation you should be focusing on two numbers (and only two numbers): the price that you are going to start at, and the final price that you are willing to pay. No fallback positions should cloud your mind!

In our car example, this would boil down to focusing on a starting price that was say, $300 above the invoice price and a final offer price that was $500 above the invoice price. If you were able to strike a deal with the dealer then great – you’d end up paying no more than $500 above the invoice. If not, then you’d walk away.

What To Do If You Don’t Get Your Way

So what should you do if you can’t reach an agreement that meets your target with the other side of the table? I mean come on, you really need that new car. Simple, you still walk away. Once you’ve left, you sit down and give things some thought.

If you changed your target, what would the other side have to do for you? If you decided that yes, you could pay $700 above the invoice for the car, what would you want the dealer to do for you – more options, better financing, etc. Once you’ve picked your new target, you can return to the negotiating table and restart the negotiations.

By not bending on your target price and walking away, you mentally prepared yourself to do a good job of negotiating. You had no other options to fall back on and so you didn’t.

What All Of This Means For You

Having a solid target as a part of your negotiating plan is the key to making a negotiation successful. If you confuse things by having multiple targets you’ll never be sure just exactly what you are trying to accomplish during the negotiation.

If you can’t reach a deal, walk away. You can then rethink what your target should be and what the other side would have to provide in order to support your new target.

How you set your target will determine what kind of deal you’ll eventually reach with the other side of the table. Set good targets and you’ll reach good deals.

Question For You: What could you do to make sure that you don’t set an unfeasible target for your negotiaton?

Click here to get automatic updates when The Accidental Negotiator Blog is updated.

What We’ll Be Talking About Next Time

Inexperienced sales negotiators often enter into a negotiation thinking that the price of something that they are trying to buy or sell is fixed – it’s set in concrete and cannot be changed. It turns out that the price of just about everything is constantly in flux – and we need to understand what can make it go up as well as go down…

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© Dr. Jim Anderson for The Accidental Negotiator, 2010. | Permalink | 2 comments | Add to del.icio.us
Post tags: back up plan, buying a car, goal, initial offer, invoice price, new target, target, walk-away