“Negotiation is the art of letting people have your way for their reasons” says Roger Dawson, one of Crestcom Faculty Members in this month’s session on The Road to Negotiating Success.
Here’s a story that illustrates what can happen when someone does not have the ability to negotiate a win-win outcome.
In 1931, a 17-year-old boy named Joe became friends with a boy named Jerry. Both were fans of comic books and science fiction stories. Joe and Jerry worked tirelessly for two years to create their own comic book character, eventually deciding to try and get their story published. When they shopped around their idea they were met with heart-breaking results. No one was prepared to publish their work.
Then one day, an upstart comic-book publishing company that was trying to keep its color printing presses busy needed something to print. They remembered Joe and Jerry’s idea. “Printing that was better than nothing,” they said. For a 13-page story, delivered in three weeks in May 1938 – and the rights to the character they created – Joe and Jerry agreed to a one-time payment of $130 (about $2,180 in today’s value). The cover price of that first comic book was 10 cents at that time. A copy of that same issue was recently sold for $1 million, and the rights to that character today are worth hundreds of millions of dollars. Those rights are still the subject of lawsuits. The comic book superhero that Joe and Jerry created – and sold the rights for $130 – was the action hero Superman.
Imagine the emotions on both sides of this negotiation, back in the 1930’s, as the value of the Superman franchise skyrocketed. Have you ever felt like either of these parties after negotiating something? Like the publisher who negotiated the rights to Superman for $130, or the proud, young artists who sold Superman for this paltry amount?
Here are some negotiation tips that will help you to successfully close bigger, better deals for yourself and your organization.
Negotiation Tactic #1: Ask a lot of questions
Most poor negotiators think they have to talk a lot in order to get their way. Nothing can be further from the truth. Asking a lot of questions helps you to listen more than you talk. This is an important psychological device in negotiations. Typically, the person asking the questions and staying quiet is the person who has more control over the negotiation. They are better able to collect information and intent from the other party. It is said the one who listens more has the advantage in any negotiation.
Asking a lot of questions also helps you to find much more about the other party and what they really want.
Plan to ask questions both before and during the negotiation. Pre-write questions to pose to the other party, so you have a list of relevant, insightful questions to ask during the negotiation, rather than having to think of them when you are in the moment.
During the negotiation, ask open-ended questions like, “Tell me more about that…” or “Why would this feature be so important to you?” This will help you clarify the assumptions you made during your preparation about the other person’s interests and concerns. It will help you better understand where the other party is coming from so you can both craft mutually beneficial outcomes.
Negotiation Tactic #2: Ask for what you want
Poor negotiators underestimate their own power and overestimate the other party’s power. Never underestimate your power or let fear prevent you from asking for your desired outcome. Take the risk.
If you have done your preparation properly, chances are you’ve already thought about your desired outcome in the context of what you think the other party is going to be able to handle. Be ready to make concessions, but don’t make concessions before negotiations get started! And ask for something in return for your concessions.
Negotiation Tactic #3: Use relative value to your advantage
Poor negotiators tend to think of negotiation situations as a “fixed pie” in which each party is trying to get the biggest slice of the pie. A zero-sum game where if one wins the other loses. But great negotiators know how to use relative value to expand the size of the pie and create win-win scenarios for all parties.
Relative value refers to something that may be very valuable to the other party but is relatively easy and/or inexpensive for you to concede.
For example, a hotel may throw in breakfast free if you book a room because for a hotel the breakfast may cost $20 to make, but the guest may see it as a saving of $100. The relative value to the hotel’s guest is five times the cost to the hotel.
Always look for things that costs you very little to give but are of high-value to the client.
By giving the client what is easy for your company to provide, in exchange for what is of greater value to you, it will help the negotiation to moving forward. You’ve basically “expanded the pie” by being able to stick to your price-point while providing the client something that is valuable to them, and creating lasting value by building the relationship.
You can never make more money, or gain greater value, than when you negotiate a successful deal. The ability to negotiate successfully in a way that creates lasting value for the business and builds the relationship with the other party is a key skill that all leaders and managers must build and sharpen, in order to be successful and lead successful organizations. These negotiation tactics will help you improve your negotiation skills. Practice them whenever you get the chance and build the discipline to become a great negotiator!