“A bus is a vehicle that runs twice as fast when you are after it
as when you are in it.”
When consulting on the toughest negotiations, we often see our client has missed the bus. Have you missed the bus: do you know the other parties’ problems and business priorities?
Clients have planned for negotiation well: they know the substantive issues and have planned for a range of different packages; they know the relationships and have planned for the negotiating styles of the other party. They are better prepared than most negotiators.
A prospective client once said, “I knew we had a problem negotiating when we were walking down stairs to negotiate a multi-million dollar deal and my colleague said, what should we ask for?” For less challenging negotiations, planning for your issues and planning for the relationship will probably get you a deal. Not the best deal, but you will get a deal.
For better deals or with tougher or more challenging negotiations, you must ensure you catch the bus which is heading to the other parties interests. Specifically, you must know what are the other parties’ problems and business priorities.
Now at least one person reading this will say, “Can I just ask them during the negotiation?” Yes, you can. But, put yourself in the other parties’ shoes. During the negotiation, if you ask a question and we could listen to their thoughts it might look like this:
“Away from this negotiation, what are your biggest business challenges”, you ask
“Why is she asking that question…should I answer it…or will it weaken my negotiating position…I could tell her we have cashflow problems, but then she will probably ask for a deposit with order…I could tell her about the big potential order with Westfield that will triple volumes and if that happens I want to negotiate a much lower price…I am not sure why she asking this question…”
“Everything is fine”, says the other party.
Once we formally start negotiations, every question is examined like a forensic scientist meticulously scouring a crime scene. Just what do they mean by that question, how will answering help or hinder their negotiating position. Even with the best relationships, during negotiations it is unlikely the other negotiator will be as open as they would be away from the negotiating table.
So what this means is you are unlikely to discover the other parties’ real business priorities and real business problems during the negotiation. Consequently, you will be less able to connect your proposed package to the other parties’ problems or business priorities. You will be less persuasive. You will have missed the bus heading to self-interest.
Is there an alternative? Yes. Do some preliminary planning for the negotiation. Then, simply arrange another meeting before you have agreed a date to negotiate. Then ask questions about the other parties’ business priorities and business challenges.
Armed with this information, see how you can link your proposal to their business priorities. For example, let’s imagine you were negotiating a package including a price, training days for their staff, technical support at the other parties marketing events. If the client had highlighted that sales growth was a business priority and also controlling costs were a business priority. We might present this as:
Last time we met, you said sales growth was a business priority and also controlling costs were a business priority. Is that still the case, yes?
Ok so we have prepared a package to meet your business priorities. To focus on growing your sales, we have included extra days to train your staff and we have included extra days to support your marketing events. Both of these elements also help you control costs because you do not use your own staff to do the work. Also, the training increases your staff’s sales productivity so you get the most out of your sale costs. So, in summary if you buy 100 units at $1500, we will provide 4 training days and attend 8 marketing events to provide specialist advice. This package supports your top business priorities of growing sales and controlling costs.
Typically, we would see some pressure on price. We suggest responding to this using the information you have gained on their business priorities. If we reduce the training days and reduce the support on marketing events, then maybe we could do something on price. But that would not support your business priority of growing sales because we are taking away training and marketing support.
This will probably not eliminate all price pressure. However, you can frame any attempt to reduce price as not supporting what the other party has stated as their business priorities. Research on persuasion shows that it is very difficult for someone to retreat from their publically stated business priorities. In our terms, once they start driving their bus to self-interest, they will usually find a way to get there, even if there are a few detours on the way.
So, meet with the other party before your agreed negotiation. Discover their problems and business priorities. Plan your negotiation to show how your packages support their business priorities. Then, during the negotiation, connect your arguments to their business priorities.
When you miss the bus, you will get a poor deal or no deal. Make sure you catch the bus heading to self-interest. In the toughest and most challenging deals, you will be surprised at the deals you can negotiate.