- Why are negotiation tactics important for business success?
- What are the most effective negotiation strategies?
- Benefits of drawing on the power of silence during negotiations
- Advantages of making the first offer
- Preparing to walk away from the deal table
Strong negotiation skills will contribute significantly to a successful outcome, whether you’re set on haggling with shop owners abroad, seeking to settle common ground in the boardroom or resolve a conflict over a product for your business.
So, what are the common characteristics of negotiation skills, and how can negotiation tactics contribute to the success of your business?
A common misconception about negotiation is that it is used only to discuss products or services with a price, but the term represents possibilities beyond money.
For example, if you’re having trouble negotiating your desired salary, you could make an argument for better job benefits, a reduced workload, or suggest flexible working.
Elsewhere, you might need to negotiate a better deal with your mobile phone provider or haggle a lower price for a souvenir while holidaying abroad. In some instances, effective negotiation can also help improve interpersonal skills by developing our ability to interact effectively with others.
Recent research has shown that effective negotiation tactics can support business growth by helping you build better relationships, create lasting high-value contracts and resolve conflict in the workplace.
The importance of negotiation tactics in business
It’s hard to think of any business initiative that does not require some form of negotiation due to its impact on strategy and bottom line.
Learning how to use negotiation tactics effectively is essential for business growth, as it boosts confidence and makes for win-win situations.
Powerful negotiators can secure competitive compensation packages for employees, manufacturer discounts and pivot with ease from one tactic to another to capture a valuable deal that will help you upscale your business.
Suppose you intend to sell your business; powerful negotiation tactics could mark the difference between achieving a small financial gain and making a significant profit.
Successful negotiation could also help reduce business costs and increase profits by negotiating better deals with suppliers and renegotiating rent costs with landlords.
Negotiation does not always offer positive results for one party either. However, when done effectively, both parties can benefit, which helps foster positive relationships between firms and avoid any possible future conflict.
Highly effective negotiation tactics for business
Businesses should not overestimate the importance of negotiation, given the endless benefits that it brings. This is especially the case for new businesses. However, without effective negotiation tactics, you may struggle to negotiate a deal with another party successfully.
If you’re new to negotiations, fret not; we’ve covered a range of effective tactics that could help you make better decisions for your company, secure deals and generate new business opportunities.
Draw on the power of silence
Some people rush discussions to fill the uncomfortable silence after the other party poses a counterargument. However, there is power in allowing a few moments of quiet to absorb what has been said.
Most successful negotiators listen more than they talk, which allows them to truly understand the other party’s objectives and strike a win-win deal that would leave everyone happy.
Silence can also help you reduce your tendency toward the anchoring bias and be present in the conversation, which will help the other party feel heard and understood.
Active listening can also build good rapport as it is a form of communication that improves mutual understanding, which could help you land a better deal for your business.
The art of negotiation framing
A skilled negotiator is much like an artist or photographer because they possess the means to construct a favourable perception of an idea and share that with the other party.
For example, if you’re trying to sell a product to a retailer, you’re essentially painting an image of your product that resonates with the company on multiple levels.
However, as we interpret information differently, the best way to position your product advantageously is to present it in the most favourable context to that organisation – a concept called “framing”.
Framing involves analysing the negotiation situation, identifying the most potent positioning theme and then framing your argument in a way that shapes the other party’s perspective of your product.
For example, if you’re trying to market a low-fat yoghurt, stating that the product is “80% fat-free” sounds more appealing than “contains 20% fat” despite being the same.
You can also use the framing method to highlight any potential savings your client might make with your product or service and position your discussion around the win-win concept.
Suppose you want £50,000 for your product, but your client has offered £43,000; consider reframing your argument to draw on the benefits of using your product against competitors or the risks of passing on your offer.
Ask yourself: “How can I frame this negotiation to prevent a disadvantageous outcome?”
Recognise that framing does not alter the end result but propose an alternative way for you to frame the conversation, thus increasing the likelihood of a profitable deal.
Compromising can lead to win-win scenarios
Even if you’re confident in your negotiating skills and have an array of tactics in your toolkit, it’s not uncommon to forgo something to reach a mutually beneficial agreement.
However, this isn’t necessarily something to be concerned about, as relationships sometimes require compromise.
Still, negotiators who walk into a room with a plan are often more successful than those who choose to improvise.
If you’re aware that you might have to compromise to reach an agreement, why not be prepared for it? Preparing for a compromise will help you identify what you are and aren’t willing to give up to secure this opportunity.
Some negotiators even utilise the compromising negotiation style as a quick middle-ground solution, as it results in satisfaction for both parties.
Establish your priorities, create strategies and set goals
Setting priorities and ranking these in order of importance will help you determine what aspects you are prepared to give up if you need to compromise during negotiations.
You will likely find that you’ll have more than one interest and desired outcome, so ensure that these align with the other party as failure to do this could result in an unsuccessful negotiation.
Establishing goals will also help you keep motivated ahead of the negotiation by encouraging you to consider and outline the steps needed to achieve those goals.
Suppose building a good relationship with your client is more important than making the sale; this could create room for compromise. Outlining your priorities and goals is a strategic way to help you achieve what you set out to attain.
Make the First Offer
During dealmaking, the question that often looms over negotiators is: “Should or shouldn’t I make the first offer?”
You’ve probably also heard of the saying: “Keep your cards close to your chest.”
Traditionally, experts have advised negotiators to wait for the other party to make an offer first, noting that it could offer insight into your client’s goals and put you in a solid position to meet them.
However, more recent research has suggested that the party who makes the first offer could gain a significant advantage during negotiations.
Why? According to scientific research on the anchoring effect, the party that makes the first offer could steer talks in their favour as people tend to orient their subsequent evaluations around the information received first.
Whether your price is extremely low or extremely high, the part that makes the offer first has a better chance of steering discussion in their favour.
While the anchoring effect could work against you, the other party tends to fixate on the first offer during negotiations. Even if concessions are made, the organisation that made the first offer will usually find that the result is closer to their goals.
Incorporate a win-win strategy
As aforementioned, framing your negotiation as a win-win situation could help you become an effective dealmaker.
Essentially, a win-win strategy is structured around negotiation that allows both parties to walk away from the table satisfied, having struck an agreement on the most important goals.
Win-win negotiation strategies also build mutual trust, respect and prevent future conflict between both parties by eliminating the winner-loser dynamic.
The win-lose mindset is grounded in the negotiator’s ability to convince the other party to accept defeat, which could hinder the possibility of any future business.
Skilled negotiators would ensure that the client perceives the offer as beneficial by being modest about what they would gain from the deal and praising the other party for being a hard bargain.
Even if you’re in a strong position, acknowledge the other party’s stance on the matter and invite them to respond to your proposal or suggest alternatives to enhance perceptions of fairness.
Be prepared to walk away from talks
If you’ve tried all your negotiation tactics and still failed to achieve a mutually beneficial agreement, you might want to consider walking away from the negotiation table.
Many people are scared to walk away from a negotiation, which increases the likelihood of accepting a bad deal. But, in truth, being willing to walk away from talks could give you an advantage as you can use it as leverage for a better outcome.
Being prepared to walk away from negotiations can also empower negotiators to be assertive about their goals. If the other party recognises that you are prepared to walk away from the deal table, they may refrain from being overly pushy with their demands.
While negotiation tactics may sound intimidating, anyone can utilise them to reach better outcomes in their personal and work lives.
These tactics, which are powerful alone, and together, are also valuable for companies as they can aid a variety of business interactions and establish new relationships.
Negotiation Tactics: Frequently Asked Questions
What shouldn’t you say in a negotiation?
If you’re new to negotiations or find it difficult, avoid using phrases such as “let’s make this quick” or “I think we’re close”, as this can make the person in front of you feel like you care more about the deal than the relationship you share with them.
You should also avoid using the word “between”, especially when referring to an offer, as this is as good as making a concession.
Is there an essential negotiation skill?
Effective verbal communication skills and active listening are probably the two most crucial negotiation skills. These skills allow you to understand the other party’s point of view and respond to them in a way that shows you value their opinion.
Is negotiation manipulation?
Manipulation is where you control another person’s emotions or perceptions of a matter, often through fear or guilt, to get them to act or feel a certain way.
Providing that you respect your client’s needs and commit to fairness, negotiation is not a form of manipulation.
Can I negotiate as a beginner?
Anyone can negotiate, although it requires practice if you want to be successful. Utilising the tactics outlined earlier in this article will provide you with the means of becoming a great negotiator!
How do you negotiate professionally?
Whether you are selling artwork or negotiating a commission with a large firm, the key to successful negotiation is understanding the other party’s needs, desires and motivations.
You can learn how to successfully negotiate by creating hypothetical scenarios, exploring how to provide value and acquire it in return.
Alternatively, seek the help of a professional negotiator who could mentor you and help develop your skills.