The Science of Win-Win Negotiating

    • 193 posts
    May 30, 2013 1:30 PM PDT

    Last week, we covered much of the background of Win-Win Agreements, their myths, lessons and some of the sins of improper negotiating.  Here are the actual definitions of constructing such agreements and how to go about it…

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    EASY TO UNDERSTAND

    We all basically understand that you can't go into a negotiation with your bottom line offer from the start.  That's despite what your negotiating partner tells you.  You need room to maneuver and be able to assess what's important to both parties to bring about a decent deal for everyone.

     

    3 POSITIONS

    Here are the 3 vital positions in the Science of Negotiating

     

    1.  Target Position

    This is your first offer.  It's the deal you would love, yet don't expect the other party to agree to.  If they do, bless them and take care of them and over deliver as much as you can.  However, we know that both parties will probably not accept each other's first offers.  Yet, you know you have to start there to be able to develop a starting position called The Anchor.

     

    2.  Fall Back Position

    Just like it sounds.  This is your second offer.  It's the deal you would like and be OK with.  It shows that you are bargaining in good faith.  Remember, ultimatums are delivered by poor negotiators, not good ones.  Your Fall Back position acknowledges that you've moved off your Target position.

     

    3.  Line in the Sand Position

    This is the deal you'll live with, but nothing less.  Anything beyond the Line in the Sand is worth walking away from as the pain of the deal is more than the reward regardless of terms.  We've all done deals like this before.  We accept them for lots of reasons like client history, payment terms, leveraged relationship, multi-platform purchase, breaking a business category, etc.

     

    PLEASE UNDERSTAND...

    • When your client tells you to come in with the sharpest pencil because there may not be a second round of negotiating, you NEED to start at the Target Position and lay the Anchor, which acts as reference point for comparison.  You will hear things like "I'm not paying that price, I don't care what other clients pay, didn't you hear what I said last time". You can move off of your Target Position, just make sure you get something back in return like long term commitment, increased purchase, etc.
    • These positions refer to more than just PRICE or RATE or INVESTMENT.  They center on what they get for what they pay for defined as Value.  Last time I checked, I couldn't buy top quality steak for the price of bulk wieners.  Everything can be negotiated, even though the client will tell you different.
    • Set up your Target, Fall Back, and Bottom Line positions BEFORE you start the negotiating process.  Don't allow emotions to cloud your judgement during the exchange.  You will not think clearly about setting or adjusting these positions after you start.
    • Don't combine these positions to drive a quick resolution.  That's what your negotiating partner wants - a quick end.  One of my clients once told me, "Don't screw this up kid, this is the easiest renewal you've ever had."  This client taught me more about negotiating than any book ever could.  Slow the process down, ask questions, don't panic, smile and enjoy the opportunity to negotiate.  The better you get at it, the more fun you will have with it.
    • Don't ever lower your price before the negotiation even starts.  When someone does that to me, I smile and think "I haven't even started to negotiate and already they've dropped their price.  This should fun."
    • Don't ever reveal your Line in the Sand Position.  Your negotiating partner will go there for quick closure - if they believe you.

     

    THE ULTIMATE CLIENT COMEBACK

    We've all heard it before...

    "Your competition is willing to sell me exactly the same product/service, possibly even better for less than your price."

    Here's the best thing you could say back…

    "I understand.  You know, I can't control what my competition does.  Our business, your business and even our competitor's business sets its prices on supply and demand.  They have a great product and good service, don't you think?  I even know some people over there.  They're great people and work hard at what they do.  I don't know why they sell it for less.  Think about this for a second…if they thought they could charge more for their product based on supply and demand, don't you think they'd at least TRY?  (look the client in the eye and wait for a second to see this sink in)

     

    I know we can - and do.  That's why I think we're worth the extra money.  The market sets our price, we don't."

     

    Every time I say this with passion and conviction, I get a smile from the other party.  Some have said to me  "I wish I had more salespeople like you."  My reply always is "I wish I had more clients like you."  I love my job.  People actually pay me to do this?  How lucky am I.

    I love training Salespeople even more.  If you really want to learn more about Win-Win Negotiating, personalized training might be the answer.  Click the link that pertains to you.  Talking or emailing me costs you nothing.

     

     

    If you found this article useful, I'd love your feedback in the comment section.  The more we share, the more we all learn.  Thanks!

    Dave Warawa - PROSALESGUY

    Pro Sales Guy Logo

     

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