If you think successful salespeople “wing it” when it comes to negotiation, think again. In truth, they prepare for each negotiation with the same rigor as a student preparing for an upcoming exam. Smart salespeople realize that effective negotiation depends on preparation. They take the time to think about their own position and that of their counterpart so that they can ultimately handle anything that may come up during the negotiation process.
To become an effective negotiator and a more successful salesperson, you must understand the power of preparation. The first step is to consolidate your position. Begin by answering the following question: “Where am I standing?” In other words, what is your position in the negotiation process?
Knowing where you stand means more than telling yourself, “I want this” or “I want that.” In most cases, his position will encompass more components than just the issue that brings him to the negotiating table. Before going into the crossfire, use the following three inventory items to establish your position:
1. Know what you want
Instead of going into a negotiation situation with a vague idea of your position, take some time beforehand to formulate a detailed picture in your mind of what you want. Start by making a list of your demands. Let’s say, for example, that you are applying for a new job. In this case, your list may include a desired salary, benefits, and vacation time.
Be very specific in your item listing, because specific demands carry more bargaining power. When you know exactly what you want, you’ll feel more confident and your counterpart will respond more favorably to your requests. Sometimes simply acting as if you expect a positive response will sway the other party in your favor. And while you can’t always rely solely on your confidence, the force with which you present your demands will at least give you an advantage.
2. Know where you can afford to compromise
So what if you don’t get exactly what you want out of the deal? Well, that’s just reality. no one gets all they ask for in life, and bargaining is no different. The process requires give and take from both parties, so you should always be prepared for compromise.
To avoid giving up too much or giving up on the wrong issues, know ahead of time what concessions and compromises you are willing to make. Consider your wish list and decide which items you absolutely must have, which items you would like to have, and which items would be great to have. Plan ahead how far you can reduce your demands so you are not forced to make snap decisions or a decision you may regret.
3. Plan alternatives for your end goal
Think of the alternatives as your safety net. If you can’t negotiate an agreement that both parties agree to, you should always be prepared to walk away. For every plan A, you should have a plan B, and remember to never want too much of anything. Desperation will cause you to make bad decisions, and in reality, situations are usually not as hopeless as they seem.
Many times, when negotiators are not prepared with an alternative perspective, they feel they have no choice but to accept what is offered. When you take the time to consider your alternatives before the negotiation process, you won’t be afraid to walk away when things don’t go as planned.
What is the position of your counterpart?
Once you’ve determined your position, the second part of negotiation preparation requires you to look at the situation from the other side. You need to examine your counterpart’s position and find out their strengths and weaknesses. Ask yourself the following five questions to find out what’s on the other side’s agenda:
1. What do they want?
Finding out what the other party wants is crucial to developing mutually beneficial agreements. They obviously want something from you, or you wouldn’t be negotiating in the first place. Do they want the product you are selling? Or do you want a cheaper alternative to a service you already get elsewhere? In many cases, your wishes will be self-evident. But if you don’t know what they want, then don’t be afraid to go out and ask them.
2. What is important to the other side?
Let’s say, for example, that you are a real estate agent negotiating the price of a listing with an interested couple. Naturally, they want the house you’re selling, but what’s really important to them? Is it the location? Are they comfortable with the mortgage? Once you discover your counterpart’s needs, you can use those points to negotiate things that are important to you.
3. Why are they willing to negotiate?
The willingness to participate in the negotiation automatically indicates a degree of flexibility or necessity. Roger Dawson described a historical example of this concept in his book, you can get what you want. During the Vietnam War, the Lyndon Johnson administration came under tremendous voter pressure to reach an agreement before the general election, and the Vietnamese took advantage of this. They cornered the United States and forced it to give up almost everything to end the fighting. In this case, the impending elections added a time constraint to the United States to the point of desperation. When you know why your opponent is willing to trade, he can use it to his advantage.
4. What does the other party bring to the situation?
Before you enter into negotiations, you need to find out what they have to offer you. Do they have what you want? Can they pay their demands? If they don’t have what you want, the negotiation process is pointless.
5. What resources do they have?
Just as you have other options, chances are your counterparts also have alternatives. Find out how much they need this deal. They are desperate? Or do you have a catalog of other options? A customer, for example, often has many options when negotiating the sale of a product or service. They may just shop elsewhere if you don’t provide them with what they want on their terms. But sometimes, you will find that you are the only source for the item your counterparts want.
Preparing for the future
You wouldn’t take a test without studying, so why should the negotiation process be any different? Taking a personal inventory of your position before beginning the trading process will give you confidence and prevent you from making bad decisions. Plus, a little research into your counterpart’s needs and wants will give you an added edge when you start the process.
Knowledge and preparation are the keys to effective negotiation, and as a salesperson, you can only benefit from the extra effort. When you take the time to understand your position and your counterpart’s position at the negotiating table, you’ll be ready for anything, and you’ll get more sales as a result.
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