Life Skills
The Fine Art of Negotiation
by Marco
den Ouden
Have I got a
deal for you! How many times have you heard that line? It's
standard pitchman fare and it appeals to people on a couple of
levels. One is just plain greed. A good deal. Save money. Another
is the desire to be an insider - a deal for me? Yeah!
Great!
In life we
often run into situations where a deal is negotiated. Buying a
car. Buying a house. Perhaps even getting married. Whatever the
situation, it is useful to know how to negotiate a good or even a
great deal.
Recently I
had the pleasure of attending a seminar on the art of
negotiation. The session was conducted by Randy Shuttleworth, an
Edmonton-based professional guru who operates something called
The Training Company. (His business card actually calls him a
training guru.) He conducts seminars and programs on a variety of
topics, one of which is negotiation.
Negotiation,
according to Shuttleworth is an art, not a science. And
understanding what negotiation is and some of the strategies that
go with it will help you come out ahead. Why? Because most
people, unskilled in the art of negotiation, don't always get the
best deal possible.
Top
negotiators exhibit certain common characteristics. First of all,
they know what they want out of the deal before going into
negotiations. They are shrewd - they look for a win-win
situation. They are good listeners - they're open to hearing what
the other side is looking for and trying accommodate that. They
identify key issues quickly. They are creative, patient and seek
common ground. They have an empathy for people.
Some people
go into negotiations with the idea that there is a limited pie.
And, of course, they want the biggest slice. But are these
assumptions true? Shuttleworth maintains that they are not. Not
everyone wants the same thing out of a deal. And because of these
differences, a win-win situation is the desirable outcome.
Take buying a
car, for example. The dealer wants a sale and to make a profit.
If business is slow, the dealer may have a cash flow problem and
be willing to settle for less, or even no profit, in order to
generate cash. The customer, on the other hand, wants a vehicle.
Factors that affect him, besides the cost, are style, ease of
maintenance, warranty, gas mileage and other factors that the
dealer doesn't really care about.
The art of
negotiation is to find the common ground on which a deal can be
made.
The
Forces of Negotiation
Shuttleworth
says there are four distinct forces acting on negotiations. These
are
- Time
- Information
- Options
- Approach
Time
The person
who has the most time wins. If you have a tight deadline, the
other side can wait you out to get the better deal. You feel
pressure. The other side is calm, collected and patient.
For example,
if you're buying a car and your current car is quite serviceable
and you are in no hurry, you will likely get a better deal. But
if you just had your car checked out and the garage says you will
need a major, expensive repair in a month, and you decide to buy
a new car rather than have the service done, you are under a time
constraint. The closer you get to the end of that month, the more
urgent it becomes to get a new car.
This is why
sales presentations for timeshares, buyer's clubs and even pricey
investment courses, will often tell you that you can get their
special deal if you act NOW. But if you decide against the deal
and change your mind later, you're hooped. It is a sales tactic
contrived to put you in a time constraint. Don't fall for it.
Another
interesting note: according to Shuttleworth, 80% of concessions
are made in the last 20% of the time.
Information
They call
this the information age. And certainly, information is money.
The more knowledgeable you are, the better a deal you will get.
Consider renewing your mortgage. The bank will offer to renew it
at a certain rate. If you are aware of the competition's rates,
you are in a better position to negotiate a better deal for
yourself.
Hmm. 7% Mr.
Bank Manager? The bank down the street is offering the same
mortgage at 6 1/2% and they are willing to give me a $500 cash
rebate to boot. You're going to have to come up with a better
offer.
And if a
better offer comes, you can probably still get a better deal,
particularly if you are a very good customer.
It also helps
to have a good understanding of what the other side really wants
and what their priorities are.
Options
Always keep
your options open. Have a fallback position. At the same time,
don't give the other side too many options. It helps to negotiate
one issue at a time.
Approach
This is
really a common sense approach to people skills. As Shuttleworth
put it, "People like to help nice people. They like to hurt
jerks." So be nice! Be friendly!
They, on the
other hand, may not be nice. But don't let their style distract
you. Keep focused on your goals and priorities.
Shuttleworth
also notes that the Pygmalion Syndrome comes into play here. Have
high expectations and you will achieve high outcomes.
Shuttleworth
went on to a number of negotiating tactics and counter-tactics.
These are quite fascinating in themselves and may form the basis
for another article. Meanwhile let's conclude with a few key
tips.
- Prepare,
prepare, prepare!
- Never
let your ego negotiate.
- Always
let the other person save face.
- Don't
name a price first.
- Never
accept the first offer.
And always
know when to fold. A deal may just not be in the cards. Know your
bottom line and be prepared to stick to it. At the same time,
never walk away from a deal with a "Take it or leave
it" ultimatum. Always leave room for a re-opening of talks.
Walk away with "Looks like we can't agree today. Let's sleep
on it and talk again later."
And remember,
it's all a game. Approach it as a game, and negotiating a deal
can be both fun and profitable.
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