Five Principles of Creative Negotiation

Dealing with conflict and differences is rarely an easy task. Barriers to creative negotiation can be numerous and are often the saboteurs of a potential sale. Remember: your goal is to reach win-win-win-win settlements with qualified customers. To that end, I offer these five principles of creative sales negotiation:

Principle #1: Attitude First

Are you a good negotiator? Your answer reflects your level of confidence in your negotiation skills. Creating a positive mindset involves basic attitudinal characteristics, which become the building blocks for successful negotiation. As discussed in Chapter 2, attitudes and skills must work in harmony. Attitudinal characteristics of negotiation include self-awareness, self-belief, and an openness to other viewpoints. Salespeople frequently overlook the importance of preparing themselves mentally. Attitude- how we deal with others when negotiating-drives the relationship. Develop a win-win-win-win attitude toward negotiation, and dont be satisfied until all parties are pleased with the solution.

Principle #2: Planning and Preparation

You may be thinking, Deja vu-didnt we already discuss this? Yes, we did, in Chapter 3. We need to talk about it again. For many of us, planning is boring and tedious, easily put off in favor of leaping into action quickly. However, devoting insufficient time to planning frequently results in failure to negotiate a mutually beneficial agreement, and raises feelings of hostility and frustration.

The cornerstone to effective, creative negotiation is a carefully designed blueprint outlining specifically desired results for both you and your customer. The first step is to clearly articulate your position-know what your objectives are. Know the issues that are not negotiable and the issues that are negotiable. I refer to them as your must-have and nice-to-have issues. Must-have issues are predetermined prior to negotiation and are essential to a satisfactory agreement. They are simply not negotiable. Your nice-to-have issues are negotiable. Although they would be nice to have, they are not essential to the agreement. They are issues you are prepared to concede or use as trade-offs in the interest of concluding the agreement or maintaining the relationship.

Your window of flexibility is guided by your predetermined min-max points-min being your lowest acceptable point and max being your best, most ideal position. So, in the interests of creative negotiation, each of your must-have issues should be accompanied by a window of flexibility-your min-max points. Lets look at the example below.

As a sales entrepreneur, your must-have issue is making a profit. To do this, you are guided by the flexibility of your predetermined min-max points. As in Figure 10.1, the ideal situation is a max-point of $150 whereas your min-point is $100. Any price lower than your min-point is unacceptable-you may have to entertain other avenues, such as concessions or tradeoffs, to secure the deal. The wider the spread between your min-max points, the more flexibility you have to negotiate. Otherwise, you may become too rigid and inflexible, deadlocking the negotiation. In terms of your nice-to-have issues, I suggest there are no min-max points. These issues are subject to negotiation and may be used as concessions to advance the deal. The key to creative negotiation is knowing your parameters prior to negotiation. Whenever possible, plan your strategy beforehand. Its tough to negotiate creatively if you dont know the parameters of your destination. In creative negotiation, those who ask for more typically get more ... and those with low targets typically underachieve.

Also, consider whether negotiation is appropriate at all. It may be a C account or a C opportunity. In some sales situations negotiation can take place spontaneously, so be aware of the status of the opportunity: A, B, or C. You may have to respond on the fly so be sure to have the complete account file with you at the call for quick reference to previous discussions.

The second step in negotiation planning is to define the issues worthy of negotiation. Refer to all your notes and assemble all the issues, yours and your customers, into a comprehensive list. Some issues

may have been resolved prior to the negotiation, which is fine, but be sure to identify any outstanding issues. It can be frustrating and costly-in terms of time and success-if the customer calls you just prior to inking the deal with an unresolved issue. After the issues are assembled, the next step is to prioritize them. By sharing the list with your customer, you continue to build trust and confidence as you work through it together. Extract relevant information from your notes to enhance your position. A comment in your notes from six months ago may be a valuable piece of information. Salespeople often compensate for inadequate planning by conceding more than necessary. This shortcut can be very costly.

Sales entrepreneurs cannot afford to be quick and clever during the give and take of negotiation. Planning increases your negotiation success substantially and helps you achieve solutions that you never thought possible. Invest the time and energy (during janitorial hours) to prepare a strategy in line with your customers behavioral style. Your strategy will help you relax, face fewer unknowns, and reduce stress.

Principle #3: Know the Lingo

The negotiation arena has a language of its own. I have seen many negotiation sessions fail simply due to not understanding the language of negotiation. My objective here is not to provide you with an in-depth study of all the nuances of negotiation but to create a mindset, an awareness, and an overview of the logistics of creative sales negotiation. I suggest you augment your negotiation skills and confidence by considering other publications on the subject. Consider this chapter as your springboard to further study.

Language of Negotiation

The following terms should become part of every sales entrepreneurs vocabulary.

1. Concessions. Giving in to a customers request without asking for anything in return. Concessions are central to creative negotiation. They are the backbone to a mutually accepted outcome as they acknowledge the other party and communicate sensitivity to his or her issues and demands. Initial concessions can be effective-they communicate that you are willing and that your intentions are honorable. Many authors suggest that negotiation involves a progression of concessions.

Once again, your min-max points must be clearly defined prior to giving concessions. Know your parameters and dont give away the farm. Begin the negotiation by offering small concessions. Concede the items or issues to which you attach little importance. The sooner you demonstrate your willingness to negotiate, the sooner the customer will respond in kind. Dont give away big concessions too early. Use them to respond to a customers concession or to secure the deal: Can we confirm the deal, if I give you XX? However, you need to draw the line when your min-point is being compromised.

2. Trade-Offs. Give customers what they want in return for something of comparable value. Value is perception. The item may not be equal in monetary terms, but it may be equal in perceived value. As youve heard before, One mans garbage is another mans treasure. Once again, know your must-have issues and your min-max points before determining what you are willing to trade.

The power of trade-offs is enormous and can have a tremendous impact on your productivity. By asking for a trade-off you elevate the value of your concession. It also stops the grinding process. Marry your concession to a trade-off, otherwise your customer will continue to make demands. You might as well say, Sure, here you go, its yours for the asking. A confident negotiator exercises give (concessions) and take (trade-offs) throughout the negotiation process, moving the dialogue toward a win-win-win-win solution. However, the rule of thumb is to stay flexible-there is always a way.

3. Walk-Point. The point where you walk away from the deal because your minimum must-have issues are not being met. If through trade-offs and concessions you are unable to reach an agreement that satisfies your predetermined parameters, your only option may be to walk. However, walking may only be a temporary solution. Both parties may be receptive to a recess, a cooling-off period. In the interest of an agreement, you may both agree to revisit your parameters and get together again tomorrow, next week, or next month. Although both parties may privately wish there were some way to get back together, they usually dont know how to arrange a reconciliation. Open and honest communication, coupled with an attitude of win-win-win-win, is your key to avoiding an impass.

4. Impass/Deadlock. Where communication no longer moves the agreement forward and conversation seems to go in circles. There is nothing wrong with deadlock-either party has the right to prefer no deal to one that falls short of their min-point. How do we break an impass? Change the negotiators, change the parameters, call a third party to mediate, change the shape of money (larger deposit, different terms, cash versus credit), or consider changing venues. These tactics can help create a climate in which new alternatives can be developed. There is always a way.

5. Agree to Disagree. Both parties may agree to disagree rather than reaching an agreement that compromises both parties, leaving each resentful and disappointed. If your agreement is undermined you may lack the commitment necessary to carry it out. Once again, this could be a temporary situation. Negotiation might be better served two or three months down the road. This tactic can be effective in personal relationships as well. It can even work with your spouse!

6. Confessions. Not only are confessions good for the soul, but they can be a good tactic for negotiators. Confessing- telling all you know, revealing your motives and needs- can be a good way to gain empathy. People tend to be more charitable to someone who tells all. You also demonstrate honesty and a sincere desire to do business. However, no need to share your personal net worth or your most recent sexual fantasy.

Principle #4: Negotiate Price, Dont Sell It