10.3 Negotiation Techniques and Tactics
5 min read•august 7, 2024
Negotiation techniques and tactics are crucial skills for successful sales professionals. From and to making strategic , these methods help shape the negotiation process. Understanding how to use psychological and incremental techniques can give you an edge in reaching favorable agreements.
Power dynamics play a significant role in negotiations. Assessing your bargaining power, developing strong alternatives, and leveraging your position can greatly influence outcomes. Mastering these strategies will help you navigate complex negotiations and achieve your goals more effectively.
Negotiation Strategies
Establishing the Framework
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- Anchoring involves making an initial offer or demand that sets the baseline for the negotiation, influencing the other party's perception of what is reasonable (first offer of $50,000 for a car)
- Framing refers to presenting the negotiation in a way that highlights the benefits or advantages for the other party, shaping their understanding of the situation (emphasizing the long-term savings of a more expensive but energy-efficient appliance)
- Positive framing focuses on the gains or benefits of a proposal
- Negative framing emphasizes the potential losses or risks of not accepting a proposal
Making Trade-Offs
- Concessions are compromises or adjustments made by one or both parties to move closer to an agreement, often in response to the other party's demands or concerns (reducing the price by 10% in exchange for a longer contract term)
- Concessions should be made strategically, considering their impact on the overall negotiation
- involve both parties making trade-offs to reach a mutually beneficial agreement
- is a technique where parties trade off less important issues to gain concessions on more important ones, creating a win-win situation (agreeing to a longer delivery time in exchange for a lower price)
- Logrolling requires understanding each party's priorities and being willing to make trade-offs
- combine multiple issues or items into a single proposal, allowing for more creative problem-solving and value creation (offering a discounted price for a bundle of products or services)
- Package deals can help overcome impasses by finding mutually beneficial solutions
- They can also create more value by combining complementary items or services
Negotiation Tactics
Psychological Techniques
- is a tactic where one negotiator takes a friendly, cooperative approach while the other adopts a more aggressive or confrontational stance, creating a sense of contrast and encouraging concessions (a salesperson expressing empathy for the customer's budget constraints while their manager emphasizes the firm's pricing policy)
- The "good cop" builds rapport and trust, making the other party more receptive to their proposals
- The "bad cop" creates pressure and a sense of urgency, pushing the other party to make concessions
- is a powerful tool that can create discomfort and pressure the other party to fill the void, often leading to unintended concessions or revealing valuable information (remaining silent after the other party makes an offer, prompting them to justify or modify their position)
- Strategic pauses can also give the impression of thoughtfulness or gravity, enhancing credibility
- involves creating a sense of urgency or imposing deadlines to encourage the other party to make decisions or concessions more quickly (emphasizing a limited-time offer or the need to finalize the deal before a specific event)
- Time pressure can be effective when the other party has a genuine need or desire to conclude the negotiation promptly
- However, it can also backfire if the other party feels manipulated or rushed into a decision
Incremental Techniques
- is a surprised or shocked reaction to an offer or proposal, designed to make the other party question the reasonableness of their position and consider making concessions (visibly reacting with disbelief when the other party names a price, suggesting it is far beyond expectations)
- The flinch can be verbal (e.g., "Wow, that's much higher than we anticipated") or non-verbal (e.g., raising eyebrows or leaning back in surprise)
- The goal is to create doubt and encourage the other party to justify or modify their stance
- is a tactic where small, incremental concessions are requested after the main agreement has been reached, aiming to gain additional value without renegotiating the entire deal (asking for free delivery or an extended warranty after agreeing on the price of a product)
- Nibbling can be effective when the other party is invested in the agreement and reluctant to reopen negotiations
- However, it can also damage trust if perceived as manipulative or greedy
Power Dynamics
Assessing Bargaining Power
- refers to the ability to leave the negotiation without reaching an agreement, often derived from having attractive alternatives or a lack of pressure to conclude the deal (being willing to end the negotiation if the other party does not meet key demands)
- Having strong walk away power enhances and can encourage the other party to make concessions
- Communicating walk away power, such as mentioning other potential partners or options, can influence the other party's perception and behavior
- is the ability to influence the other party's decisions or actions, often based on controlling resources, information, or relationships that the other party values (having exclusive access to a key supplier or customer)
- Leverage can be positive (offering incentives or benefits) or negative (threatening consequences or withholding resources)
- Identifying and using leverage effectively can shift the power balance in a negotiation
Developing Alternatives
- (Best Alternative to a Negotiated Agreement) is the most advantageous course of action a party can take if the current negotiation fails to reach a satisfactory agreement (having a solid job offer from another company when negotiating a salary increase)
- Knowing one's BATNA provides a benchmark for evaluating offers and determining when to walk away
- A strong BATNA enhances bargaining power and can be used as leverage in the negotiation
- Bargaining position refers to a party's relative strength or weakness in a negotiation, influenced by factors such as walk away power, leverage, and BATNA (having a unique product or service that the other party strongly desires)
- Assessing and improving one's bargaining position is crucial for successful negotiation outcomes
- Strategies to strengthen bargaining position include developing attractive alternatives, gathering relevant information, and building strategic relationships
Key Terms to Review (15)
Anchoring: Anchoring is a cognitive bias where individuals rely heavily on the first piece of information they encounter (the 'anchor') when making decisions. This concept is crucial in understanding how initial price offers or terms can influence later perceptions and judgments, impacting both purchasing decisions and negotiation outcomes. Recognizing the power of anchoring helps individuals adjust their strategies to achieve better results in various scenarios, from sales to complex negotiations.
Bargaining Position: Bargaining position refers to the relative power and influence one party has in a negotiation process, which can affect the terms and outcomes of that negotiation. It is shaped by various factors such as alternatives available, knowledge of the situation, and the perceived value of what is being negotiated. Understanding one's bargaining position is crucial for negotiating effectively and achieving favorable results.
BATNA: BATNA, or Best Alternative to a Negotiated Agreement, refers to the most favorable course of action a party can take if negotiations fail and an agreement cannot be reached. Understanding one's BATNA empowers negotiators by providing a clear benchmark for evaluating offers and making informed decisions. Knowing the strength of your BATNA can significantly influence negotiation strategies, as it sets the threshold below which a deal is unacceptable.
Concessions: Concessions are compromises or adjustments made during negotiations to facilitate agreement between parties. They often involve giving up certain demands or making changes to terms in response to the other party's requests, aiming to create a win-win situation that satisfies both sides. Understanding the role of concessions is vital for effective negotiation tactics, as they can help build rapport, maintain relationships, and ultimately lead to successful outcomes.
Flinch: In negotiation, a flinch is a physical or verbal reaction to a proposal or statement that indicates surprise, discomfort, or disapproval. It is often used strategically to gauge the other party's response and can serve as a tactic to express dissatisfaction or push for concessions. Understanding how to interpret and employ flinching can significantly impact the dynamics of negotiation.
Framing: Framing is the process of presenting information in a way that influences perception and interpretation. This technique shapes the context in which messages are received, affecting how individuals understand and respond to information, making it essential in persuading others and negotiating outcomes.
Good cop/bad cop: Good cop/bad cop is a negotiation tactic where two parties take on contrasting roles, with one acting as the 'bad cop' who is tough and uncompromising, while the other plays the 'good cop' who is sympathetic and understanding. This dynamic aims to manipulate the counterpart's emotions, leading them to favor the good cop's position or offer. By creating this contrast, negotiators can pressure their opponent into making concessions or agreements they might otherwise resist.
Leverage: Leverage refers to the strategic advantage that a negotiator holds in discussions, which can significantly influence the outcome. It involves utilizing one's resources, information, and position to achieve favorable terms, creating a scenario where one party can apply pressure or gain concessions from the other. Understanding leverage helps negotiators maximize their effectiveness and navigate complex discussions.
Logrolling: Logrolling is a negotiation tactic where parties agree to trade favors or concessions on specific issues to achieve a mutually beneficial outcome. This approach encourages collaboration and builds trust between negotiators, allowing each party to gain something of value while conceding on less important issues. By prioritizing what each party values most, logrolling can lead to creative solutions and more effective negotiations.
Nibble: Nibble is a negotiation tactic where one party makes a small request after the main agreement has been reached, often to secure additional concessions or benefits. This strategy plays on the psychological aspect of negotiations, as it can make the other party feel compelled to agree to minor requests in order to maintain goodwill or finalize the deal.
Package Deals: Package deals are a sales strategy that bundles multiple products or services together at a discounted rate, encouraging customers to purchase more than they originally intended. This approach not only enhances the perceived value for the buyer but also increases the average transaction size for the seller. By offering several items as a cohesive package, sellers can simplify decision-making for customers and promote cross-selling opportunities.
Reciprocal Concessions: Reciprocal concessions refer to a negotiation strategy where one party makes a concession to the other party, expecting a concession in return. This tactic builds rapport and trust between negotiators and can lead to more collaborative problem-solving. It plays a crucial role in creating a balanced negotiation environment and encourages both parties to compromise in order to reach a mutually beneficial agreement.
Silence: Silence in negotiation refers to the deliberate use of pauses and non-verbal communication to create a space for reflection or pressure during discussions. It can serve multiple purposes, such as prompting the other party to fill the void with information, demonstrating confidence, or allowing for a moment of contemplation. This tactic can often lead to more favorable outcomes when employed strategically, as it may unsettle the counterpart or encourage them to rethink their position.
Time Pressure: Time pressure refers to the stress or urgency experienced when there is a limited amount of time to make decisions or reach an agreement. This situation can significantly impact negotiation strategies and tactics, often leading individuals to prioritize speed over thoroughness, which can affect the outcomes of negotiations.
Walk away power: Walk away power refers to the ability of a negotiator to leave a negotiation without reaching an agreement, thereby maintaining leverage and ensuring they do not accept unfavorable terms. This concept emphasizes the importance of having alternatives and the confidence to utilize them, which can significantly impact the negotiation dynamic and outcomes.