1. Establish your goals. What are you really negotiating about?
2. Gather information about the person that you're dealing with and the topic of the negotiation. Try to figure out what the other side really wants.
3. Use whatever devices that you feel comfortable with to reach an agreement.
4. Don't hesitate to use a firm handshake, with women also, as this act has psychological benefits and is expected.
Try not to be the one that makes the first offer. If you have to do so try to be flexible or non committal with a line like "I have heard that in matters like this people have charged $_______. I'm not saying that's my bottom line, but what's your reaction to that amount as an offer relative to the money part of our deal." To really function as a business man it is important not to immediately accept first offers. Only the most unseasoned opponent will give you their best offer first. Traditionally, the first offer is something that they don't expect to be accepted, but would love it if it was. In the U.S. we have developed a tradition of asking more than we expect to get and offering less than we expect to pay. Deviating from this tradition is viewed very negatively. A car is offered for a thousand dollars. You, playing Donald Trump, offer three hundred dollars. "Sold," he says, and your immediate reaction is to think, "what's wrong with it?" On the other hand, had he acted insulted
Reluctance and Reactions
Essentially this deals with someone's responses to first offers. If you are not reluctant, a salesman type with immediately start thinking: "Boy, I've got a live one here." Things that might have been thrown in become extras. "And, it's only fifteen dollars extra for shipping". Reluctance has the opposite effect. "Tell you what I'll do. We don't often do this, but I'll include the shipping at no additional fee." The worst response is enthusiasm. This can really cost you if they feel you've been hooked. The best reaction if you have a little actor in you is a flinch. This is a reaction of incongruity usually coupled with a physical response like jerking back. With some people this response results in an immediate bettering of the other party's offer.
Turning People Around
Don't be confrontational or argue. It's practically impossible to resolve a negotiation if the parties are involved in emotional arguments. Try to understand the other person's motivation. Try to agree with them whenever it won't damage your position. "I understand how you might feel that way." Try to get them to relate to you. "In a similar situation I have felt that way myself." Now turn them around. "However I have found that if you do this, you will have solved the problem and you can do this by accepting my offer." The fact that you claim to know where the other person is coming from tends to make most people feel more comfortable with you and can help in resolving the negotiation in your favor.
You'll Have to Do Better Than That & Good Guy/Bad Guy
This is a ploy that is often responded to by getting the unsophisticated negotiator to end up bidding against himself. When you hear it used, your immediate response should be to respond, "How much better?"
This is a ploy that we are all familiar with, as we see this technique continuously utilized on television police shows. The secret of dealing with this approach is to insist on dealing directly with the bad guy and the realization that the good guy is not really on your side. If you are the one using the technique, you can create a bad guy, like a hard to deal with board of directors, who isn't even physically present. This is using the bad guy like the person referred to in the next technique.
The Higher Authority
This is a ploy that gives you additional time. It's use can delay the negotiation and give you time to regroup, do research, or get out of a high pressure situation. Essentially, the technique is to set up your business so that before you can agree to a particular arrangement in the negotiation, you must get approval from a higher authority or make a claim to that effect. In personal negotiations that person can be your spouse, someone you rely on who has expertise in the matter that you're negotiating, older folks sometimes want to check with their kids, etc. In a business situation it could be your partner, your board of directors, the corporate officers or in a smaller business your boss. One approach to eliminate the higher authority ploy is a technique wherein they inquire at the beginning of the negotiations that if they can show you the exact item that you are looking for today, is there any reason that you wouldn't be able to do the deal today?
Don't Offer to Split the Difference
Another use of higher authority can be involved in a situation wherein the other party offers to split the difference. You can sometimes get them to do this by emphasizing the closeness of the offer and counter-offer. When the other party offers to split the difference you take the resulting amount as an offer and state that you'll check with your higher authority and get back to them. The result usually is that the split the difference amount is rejected and that based on the admonitions of the higher authority only a small amount is taken away from your original offer. The difference splitter may offer to spit the difference again and again. To not fall into this trap yourself, never offer to split the difference.
The Naive or Unknowledgeable approach
This is an approach often used by amateurs when they deal with professionals or by young people when they deal with older persons. In bygone days it was often used by women dealing with men. Acting not knowledgeable can reduce the competitive nature of the most experienced or older person. Here one party is fawning over the other. The other may feel badly for the fawner and may be tempted to help them out in the negotiations (which is against them).
Don't Give Anything Away
Through out the entire negotiation until the very end even if the concession means nothing to you, don't give anything away. "If I do that for you, what will you do for me?" This ploy can be important in personal relationships as well as in business situations. You will sometimes be very surprised as to the concessions the side you're questioning might suggest. Asking this question will usually stop the asking party from asking for more free concessions. Additionally by asking the question as to what the other party will give for your concession, it elevates the value of your concession and by asking them instead of making a demand, leaves them owing you something.
The Set Aside Technique
If you reach an impasse or a deadlock, the correct approach is the set aside technique. As long as there are several issues still to be resolved you can suggest that the controversial issue be set aside until later and that we deal with some of the other issues now. The fact that the controversial issue has been set aside doesn't mean that both sides are going to stop thinking about it. Normally, as part of the continuing negotiation of other issues one party will go back to the set aside issue and bring it back as part of a package of issues. The only problem with this technique is when you're down to one issue. Then there has to be a winner and a loser. No compromise is possible. This reminds me of the negotiation between the Palestinians and the Israelis. They were down to essentially one issue which was whether Israel would give up part of Jerusalem for the Palestinian State capital. This was something that the whole world knew the Israeli's had sworn to never do.
The Hot Potato
The hot potato situation occurs when someone tries to make their problem your problem. Delivery dates, certain styles, quantities, qualities can all be hot potatoes. The secret is to not let someone else's problem become your problem. The defense to the hot potato ploy is to toss it back to them as soon as they toss it to you. "Well, you'll have to deal with that on your end." Don't let your opponent make his problems, your problems.
Having the Power to Walk Away
As long as the item you want is not unique and you could conceivably get it elsewhere, then you must be prepared to walk away. A good auctioneer will try to get up an atmosphere of such excitement that the participants will get carried away and offer far more than they had allocated to bid on an item. Back in the good old days of Maxwell Street in Chicago, when you really negotiated for every item that you bought there, you really didn't start hearing bargain prices until you had walked out of the store. Then the salesperson would run after you and drag you back in with the "special deal" language. I remember being at an Arab vegetable stand in Bethlehem and seeing a potential customer walk away in a negotiation over a bunch of carrots. She was called back and eventually the purchase price was resolved.Once the other side knows how much you love and desire what he is offering, to a great measure, you've lost the negotiation. Try to have the ability to walk away.
Withdrawing an Offer
Some would call it unethical. Most would agree that it's very dangerous as to the negotiations, but certainly it is a technique that you should recognize. You're in the midst of negotiations and you're asking for more concessions when the other side comes back: "Not only can't I grant you the additional concessions that you've asked for, but my higher authority has reviewed the state of our current negotiations and even though I offered you xx previously, I'm afraid that now I can only offer you x." The normal response on the part of the other party is to forget about his other newer demands and to angrily insist that you honor your prior commitment. The seasoned negotiator's response is to calmly insist that the withdrawing offer party work it out with his higher authority and then come back to the negotiating table so we can get back to the real issues. You may suggest your walk away capacity.
No doubt viewed as unethical by many, but in common use are the false issue situations. These false issues are commonly referred to as Red Herrings or Decoys. They are demands that are put into contract offers that are there only to be knocked out by the other party or his attorney. Their purpose is to give the other side the feeling that they have been successful in winning some concessions that will benefit them. The purpose of putting them in the contract on the part of the user of the false demands is to be able to tell the other party of their willingness to negotiate in good faith and make concessions while really not acting in good faith or making any meaningful concessions. When dealing with false issues, concentrate on the real issues. I sometimes have gone so far as to call them as I saw them and usually the party recedes.
Divide and Conquer
Another ploy that is often used in negotiating, for example, would be to get a contractor to break down his offer from one overall price to the prices for each thing that the contractor was going to do and then the prospective purchaser would pick and choose from such a list of items those that are the best deals. When you are negotiating over several points the person making the presentation can usually offer a better deal with the purchase of larger quantities. The recipient might respond that he'll take that price but for a smaller quantity. I am reminded of an old Jack Benny skit wherein a store was offering something with the added bonus of buy one, get one free. Benny, always playing the cheapskate, would say: "In that case just give me the free one."
That Little Something Extra at the End
This is a ploy that is used after the negotiations have ended, often referred to as "nibbling." You're about to sign the deal for the car and you ask, "does this deal will include new floor mats for the front and back seats?" The salesperson had felt that the deal was done. In his mind he's feeling psychologically wonderful. He's mentally already spent his commission. Now you dash his warm glow with your request. Usually, if the request is small enough, the salesperson will give in. If you're the salesperson your response should be a compliment. Smiling you say that the questioner has done such a good job negotiating that you know that he must be joking. Just brush the request aside while complimenting the questioner of his negotiating skill.
Additional Considerations and Areas of Study
1. Learn about yourself and your opponents.
2. Learn about personality types: Are you the aggressive Alpha male type that's out to win at any cost and usually makes quick decisions? Or, are you the slower decision maker who wants huge amounts of input before they make a decision?
3. Learn about body language. This is so important that trial lawyers actually hire body language experts to observe the trials and give them leads as to what direction they should go based on body language.
4. Try to meet your fears. They say that, more than death itself, most people's number one fear is public speaking. So learn to speak publicly.
5. Don't forget that doing your due diligence or gathering information never stops. It should go on throughout the negotiation.
6. Don't hold post mortums. By this I mean don't gloat as to how well you did.
7. Don't assume that you know the other parties strategy or needs.
8. Use of certain words.
9. The trial balloon.
10. Dealing with foreigners.
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