The Science & Process of Negotiating: Preparing for Negotiations

This is the second in a three part series on the science and process of negotiating. In our last blog post, we talked about the possible results in any negotiation and the three stages in negotiation within a sales cycle.Today, we will break this phase down into ten manageable and relevant elements to consider when planning for negotiations.

1) Research All Pertinent Information

Learn everything you can about the company and the people with whom you will be negotiating. Similarly, ensure that all departments involved in the upcoming negotiation are in alignment with your own expectations and obligations.

2) Contract Negotiation Preparation

Before entering the negotiation, you must clearly define your goals and objectives and their relative importance to each other. What could you offer, by way of concessions or trade-offs, in exchange for the same from the other party? This is the most crucial phase.

3) Define Your Position

Your position will form the backbone of the proposal or offer you make to your negotiating counterpart. A backup position should be formulated prior to making your proposal, in the event that your counterpart does not deem the initial offer acceptable. Leave yourself room to maneuver, to allow yourself and your counterpart flexibility in the contractual negotiation process. Also, ask yourself what your backup position would be, should the negotiation fall apart. What options are available and what is the best possible alternative for you should you be unable to reach an agreement?

4) Evaluate the Other Side

Think about what your prospective partner’s position will be in relation to their expectations, as well as your own (take notice, we didn’t say opponent’s position). You must also consider what would be of relative importance to them and gain clarity around their goals and objectives. Consider what objections or issues they might raise and how you might counter them in a mutually productive manner.

5) Introductory Meeting

Before you make an offer or proposal, be sure that you are both in agreement about the objectives and goals of the contractual agreement you are about to negotiate.

6) Listen

Buyers believe that sellers have two operational modes: 1) talking or  2) waiting to talk. Prove this assumption about you is wrong; become a listener. A successfully negotiated contract is not a one-sided viewpoint. It’s important that you take the time to listen to what your negotiation counterpart has to say. This is not the time to talk, but to listen, and by doing so you will learn what is important to your counterpart. Reaching an agreement will become easier if you pitch your position in a manner that gives your counterpart more opportunity to say “Yes.” Active listening is crucial.

7) Concessions

Don’t rush to accept or make concessions. Take your time, and if necessary, put the request for a concession on the back burner. Most importantly, avoid making a concession without ensuring you will receive something of equal or greater value in return. Preparation is important for maneuverability in a negotiation, as it enables you to cover various scenarios that may occur.

8) Don’t Be Afraid to Say No

A bad agreement can be worse than no agreement at all. If what your prospective partner proposes does not satisfy your own goals and objectives, you must be prepared to say “No.”

9) Confirm Your Prospective Agreement

Once you have made a tentative agreement on the contractual obligations of both parties, you should verify the terms of the pending negotiated contract both verbally and in writing.

10) Expect the Unexpected

Unfortunately, a common negotiation ploy many negotiators face in contract negotiations, is a final demand or additional concession request by the other party. This usually happens just when you thought the deal was sealed. Again, don’t be afraid to say no, as this is not what you had initially agreed upon. Conversely, this could also be an opportunity to convince them to offer you an additional valuable concession – but only if it is warranted.

This is all good in a normal economic climate, but 2013 is anything but normal. So what is different in today’s tough and challenging times? The third stage in negotiation is when it becomes a necessity to renegotiate an agreement. Many reasons can lead to such a necessity: bad economy, change in material pricing, change in project scope, and more.

In our next blog post, we will talk about renegotiating in a tough economic climate.

Copyright © KeyRoad Enterprises, LLC 2011 – co-authored by Philippe Lavie and Rob Gullett

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