SESSION ONNegotiation Skills

Negotiation An OverviewNegotiation is vital for organizations overall effectiveness

Negotiation techniques are primarily used for sales but also apply to other negotiations such as buying, contracts, debt, salary & employment etc. If you want to trade you have to negotiate

Many people assume that nothing is negotiable unless the other party indicates otherwise

Purpose of NegotiationTo reach a fair and reasonable compromise and not to do the impossible

Negotiation as a part of Sales Process especially B2B

Identify your target customers

Create prospect list and plan mailingsUnderstand the market needsWrite your sector-specific mailer Initial mailing/contactConvert the replies into meetingsPresentation or proposalNegotiate the dealFollowing up and confirming

Benefits of NegotiationGood Negotiation can easily add upto 10% to sales revenue as incremental profits

Good purchasing negotiation can easily save upto 10% of the cost of product & service brought

Good negotiation by managers dealing with staff can reduce staff turnover by 5 to 10% which reduces recruitment & training cost

Good negotiation with regulatory & planning authorities can open up new markets

4 Phases of NegotiationPreparation

Opening

Bargaining

Closing

4 Phases of Negotiation - PreparationInformation gathering like

Knowing the state of the market

Being aware of demand supply status

Being aware of current discounts & special offers etc..

4 Phases of Negotiation - OpeningBoth parties present their position to one another. It represent the most important opportunity to influence the other side

4 Phases of Negotiation - BargainingNarrow the gap between two initial positions

Persuade that your case is so strong that they must accept less than they had planned for which you should use clearly thought out, planned & logical debate

4 Phases of Negotiation - ClosingOpportunity to capitalize on all the work done in the earlier phases

3 Characteristics of NegotiationConflict of interest between two or more parties

Parties prefer to search for an agreement rather than have one side capitulate

The principals of negotiation can be applied universally and is independent of the identities of the parties, culture or amount at stake

Critical Factors in NegotiationGoals and interest of the parties

Perceived interdependence of the parties

History that exists between the parties

Personalities of the people involved

Persuasive abilities of the parties

Negotiation Skills 2 types of approachIntegrative or Win-Win (Partnership Agreements)

Distributive or Win-Lose (Unstable Agreement)

In Real life both these approaches work together and any negotiation tends to involve a tension between the above two types

10 Rules of NegotiationRule 1 (Very Important) Have alternatives. Negotiate with Freedom of choice

If selling be unique and if buying, be able to walk away

10 Rules of NegotiationRule 2 (Very Important) Negotiate when sale is conditionally agreed not before. (If buying opposite applies)

Dont negotiate unless you have got an agreement or commitment to do business

10 Rules of NegotiationRule 3 Aim High. (If buying aim low and also tend not to go in first either)

Aim for the best outcome

10 Rules of NegotiationRule 4 Let the other side go first. (If buying also adopt the same tactics)

This allows you to use another tactics to refuse to even accept the invitation to start negotiating

10 Rules of NegotiationRule 5 List all the requirement of the other side before negotiating (Buyers do the opposite, they pick up concessions one by one indefinitely)

It is vital to know what your buyer want before you negotiate.

10 Rules of NegotiationRule 6 Trade concessions, dont give them away

Never give anything away without getting something in return

10 Rules of NegotiationRule 7 Keep the whole picture in your mind (buyer tend to divide and erode your position bit by bit)

When you give a concession evaluate the impact of this on the overall deal

10 Rules of NegotiationRule 8 Prepare & keep looking for variables (buyer tend to look for concession but will avoid offering the same)

The more you look for variable the less you will have to give on price and also add value to the deal.

10 Rules of NegotiationRule 9 Keep accurate notes (buyer stands to benefit from lack of records & tend to conveniently forget things even concession that you have won from them)

To avoid the other person distorting, forgetting & misunderstand what was discussed & agreed

10 Rules of NegotiationRule 10 Summarize & clarify negotiations as you go.

It is important to get the other persons trust and commitment at every stage of the deal

Pitfalls in NegotiationRemember that you work for your company not for the customer

Especially in relationship building selling, this dilemma exist.

Pitfalls in NegotiationAvoid offering preferential deal to new customers just to get the deal.

This undermines our existing relationship with our old customers.

Pitfalls in NegotiationGiving too much away or referring a negotiation to a higher authority can have a demoralizing effect and customers dont respect it.

Be firm in negotiating the business.

Pitfalls in NegotiationWe should be able to say No when needed

If the other person demands are not reasonable, commercially unacceptable then negotiation is not the answer.

Benefits from using a firm NO in NegotiationPrevents you from conceding substantial grounds unnecessarily

Avoids raising false hopes which you may find difficult to satisfy later

Stamps you personal authority & professionalism on the situation

Preparation before any NegotiationGoalsTradesAlternativesRelationshipExpected OutcomesThe ConsequencesPowerPossible Solutions

Styles in Negotiation Play Hardball (Win-Lose situation)

One time deals

Styles in Negotiation Subtle Gamesmanship & detailed preparation to gain advantage

Great deal at stake

Styles in Negotiation Honesty & Openness

Long term relationship

Some tips for NegotiationUse an AgendaPay Attention to detailsMake a tough but good & credible openingListen, Anticipate & CompromiseAvoid ConfrontationUse concession judiciously, trade concessionAvoid losing trendsRemove Deadlock

QUESTION & ANSWER