The Foundation of Strategic Negotiation
Greetings, this is Dave once more from TeleMediator, and one of the inquiries we receive frequently is how to conduct a negotiation. Now I personally have negotiated over one thousand different types of transactions, business deals, real estate deals, civil litigation mediations, many of them in the millions of dollars of transactions, and there’s a few very common traits that goes into being successful in a negotiation. It’s not always about the numbers or the figures or being more powerful or more of a bully. It has to do with getting to what is the hot button of the other side, and many times people go to a negotiation trying to force the other side to do something or thinking it’s a confrontation. Negotiation and confrontations are two different things.
Three Universal Techniques for Any Negotiation
So in this presentation we’re going to discuss three different very successful techniques you can use in a negotiation whether it’s a small negotiation maybe with one of your children to get them to clean their room or a big negotiation on a business deal or somewhere in between that many consumers do every single day like buying a car or maybe an appliance.
The Power of Drawing Out What’s Already There
The important thing to do in a negotiation is not to think you have to talk more or convince somebody. A person is already convinced to do what you want to do, you just have to draw that out of them. So in many cases the technique you want to start with is by asking questions. If you notice, if you deal with any person or company that’s professional at negotiation, for example a car dealership, they’re going to start out not by starting to show you the car and what’s good about the car and the price. They’re going to ask you questions: how you going to use the car, how many people in your family, how many miles a year do you drive, what kind of car do you have now. They’re going to ask you lots and lots of questions. That’s part of the negotiation. You may not think the negotiation has started yet but in reality that is the negotiation.
Strategic Questioning to Discover Priorities
And you can do the same thing if you have certain goals you’re trying to achieve in a negotiation. For example, price: you want to get to a certain price point. Maybe it’s delivery: how fast can you get it. Maybe it’s a certain type of product, you want a certain color of a product or a certain package of equipment. You first want to find out what is important to the other side before you start talking about what’s important to you, because if you can find out what’s important to the other side, you can offer that in exchange. There’s your negotiation, and some of the things that you can exchange aren’t something that really cost you money.
The Problem with Traditional Splitting Methods
In a negotiation a lot of times people will think “I’ll split the difference.” You’re giving something up. If somebody says it costs 10,000 and you want to pay eight, you say “I’ll pay nine,” you split the difference, you just gave away $1,000 that you might not wanted to have to give away. And the other side might not be happy either because they might not want to go down to $9,000 without something that’s in it for them really.
Practical Application: How to Ask Strategic Questions
So specifically how do you go about doing that? Well the first thing you do is start asking questions of the person you’re dealing with. Even if you’re looking to buy a car at a dealership, you can start asking that salesperson, that manager: how soon do you want to sell a car, when do you have your best deals, what is the car you want to sell the most, what do you benefit from this? Ask them questions about their scenario just like they’re asking you about yours. And that way when it comes down to pricing you can say “well you mentioned before that you wanted to sell a car by the end of the month, if I bought it today what would be the price?” Always ask questions, and if you can ask more questions than the other side, you’ll be in way better shape because you will be controlling the narrative.
Benefits of Question-Based Negotiation
And you don’t have to be confrontational, right? You don’t have to say “no I don’t want to do that” or you have to reject it or you don’t have to be defensive about what they’re offering. You can just ask questions and let them tell you how to get the best deal. Also it will help you know what to offer the other side. If you just start randomly throwing out things that you’re offering, you’re every time you offer something you’re giving something away that you could keep for yourself. And you may have to give away five things to get to the one that really is important to that person. The other four things they might not really need, you’re just giving it away for free. And the one thing they need, if you knew what that was and only gave them that one, you would still have more things that you’re retaining: money, offerings, trades, timing, everything else, and only give them one thing that’s important to them.
Finding What Matters: Different Scenarios and Approaches
So you want to find out what those important things are. If it’s a salesperson you’re dealing with: how many widgets do you sell a month, are you the top salesperson in your business, how many do you have sold for this month? “Oh so I can help you get to your goal, what can I do to make that better for you?” Right, so ask those questions depending on your environment. What if it’s a lower level negotiation with maybe a family member or a friend or a colleague? “You know, can you bring me to the airport?” “Well I’m really not sure, it’s a busy day.” “Well what things are important to you that you want to get done? Maybe I can help you rake the lawn or I can do something else.” Again, you don’t want to necessarily have to give away something, you want to find out what’s important to the other person or make it easy for the other person. Even if it’s a ride to the airport, maybe they could bring you two hours earlier than you really need to go if it fits their schedule more than having to go at a certain time, and that might make it better for you.
**Family Negotiation Example: Working with Children
Negotiating with your kids: clean your room. Obviously you could just tell the kid “hey you got to clean your room or you’re grounded,” but you don’t want to create confrontation. You’d rather have it be more facilitated. How do you do that? You ask them: “Well what is the thing you’re looking forward to most this week?” “Well I really want to go to the park and go skateboarding on Friday.” “Great, I think we can definitely make that happen, but how about in the meantime that you pick up these four things?” So you’re not necessarily making it a quid pro quo even though it is, you’re just doing it in a way that is more consultative where you’re working with them.
The Mediation Mindset: Finding Common Ground
That’s the whole premise of a negotiation or a mediation. A mediation is a form of negotiation, it’s two sides that are this far apart in their head that have to get together on some type of an agreement. Usually, I shouldn’t say usually, almost all the time when we do a negotiation or mediation, the clients are actually already in agreement on 99% of the items. It may be one or two sticking points that seems like it makes a big wide gap between what they need to do, and they may not even realize how close together they are. Sometimes it’s pride, it’s ego, it’s the fact that they’ve been insulted and they have defensiveness. Sometimes a third party in between can help, but if you don’t have that third party because it’s not that big of deal and you have to do it yourself, take away some of the animosity. Maybe they are upset because you insulted them or you did something offensive to them. If you steer away from that, maybe even offer an apology, sometimes you can get back some of the things that you’re trying to negotiate from that counterparty.
The Strategic Walk-Away
Last but not least, what if you’re down to a negotiation and there’s a big sticking point that doesn’t seem like you can get past? Maybe it’s a big difference in price, right? Maybe it’s you’re buying a business for $5 million and they want $6 million and you can only be stuck at five. At any given time, don’t be afraid to do small walk-aways. This is a very effective technique and say “well based on where we’re at right now, I’m not sure if this is going to be the next thing that I’m going to commit to.” You’re not saying no, you’re not saying “I don’t want to do it,” you’re not rejecting them, because sometimes if you reject somebody, even if they would have a little bit of negotiation, if you draw a line in the sand and say “no I’m not doing it,” now sometimes they dig in their heels and they get defensive.
The Psychology Behind Strategic Walk-Aways
But if you leave it open-ended to say “well I understand you want 6 million, makes sense, I get what you’re saying, but I don’t know that right now if it’s at 6 million that this would be the next investment I’m going to make in a business.” So it tells a couple stories. First of all, it says that you’re not saying no because you’re incapable of doing it. Sometimes people will do what’s called sour grapes, which is an old Aesop’s Fable that says if you lose something you say “oh the other person couldn’t have done it anyway.” You kind of make up a story that it wasn’t you, it’s them. So if you just say “I can’t afford it” or “I’m not paying it,” the other side can say “well they couldn’t afford it anyway so I didn’t lose anything.” It saves their own internal pride.
Implementation of the Walk-Away Strategy
But if you say “well you know I’m not sure if at 6 million this will be the next investment I make, let me get back to you, let me think about it, let me talk to you in a few days,” and then you can ghost them for more than the time you said you would. What that does is it tells the person you’re capable of doing it. In fact, when you say “it’s not going to be the next thing I do,” that implies you are going to do things. Maybe you’re going to take another deal, maybe they don’t want to lose your deal because they’re planning on doing something with the money and they’re kind of hung up on that price.
Letting Time Work for You
Once you let them stew on it and mull it over in their head a little bit, if you’re selling a business for $6 million and you have it stuck in your head you’re getting six million, and all of a sudden that is taken away from you, well you know what, five million doesn’t sound that bad anymore. Maybe you had planned on buying a house or going on vacation or retiring or putting money in the bank, and you might say “well you know 5 million I could still do this.” It gives them a few days to reconstruct their future plans for what they were going to get from you, whether it’s 6 million for a business or 10,000 for a car or $10 for a pair of shoes. Whatever it is, if you take it away from them a little bit, what their built-up plans were, you’re letting them reconstruct their expectations in their head rather than you trying to do it.
The Re-engagement Strategy
If you try to chop them down now they’re going to get defensive, they’re going to fight back against you. If you just backpedal from it in a way that says you might lose this deal, right, “I’m willing to work with you but you might lose a deal,” tell them you’ll get back to them in a few days. After three days don’t be in a rush to call them back, let them stew on it. If you do want this deal, whatever it is, and you want to chase it, that’s fine, but wait six days or seven days to say “look I’m still kind of have this in my head, I’m not sure if it’s a thing I want to do, have you had any other thoughts about this transaction?”
The Right Questions to Ask During Re-engagement
You’re not going to ask them “did you come down on price, can you sell it for less, do you do the 5,000 or 5 million?” Ask them “have you had any other thoughts?” because the answer is going to be yes. You never want to ask a question that the answer is no. If you ask them “will you sell it for 5 million” they’re going to say no or they could say no. If you ask them “can you reduce the price” they could say “no I’m stuck at 6 million.” If you ask them “have you had any other thoughts on this transaction,” of course they had thoughts. They’ve been thinking about it for six days, they’ve been imagining what they’re going to spend 6 million on or 5 million or five and a half million. They’ve had many thoughts on it.
Getting Inside Their Decision-Making Process
So if you ask them “have you had any other thoughts,” again you’re asking a question to get them to start spilling their guts and be transparent about their conscious ideas, and that might paint a picture of how you could do the deal. What they might say is “well I was thinking about that I need all the money right away,” and the other thing you can ask is “what are you going to do with the money if you sell it for 6 million?” If they say “I’m going to put it in the bank,” you might say “well why, what if you didn’t get all the money right away, maybe it could pay over time, the money’s in the bank of the business.” There’s a lot of things you can do, but you can’t do that unless you know specifically what it is the other side is thinking.
Universal Application Across All Negotiation Sizes
So asking that question “have you had any thoughts on this, what are your thoughts on this,” that will help get inside their head to know what they’re thinking. It’s almost like reading the playbook of the other team, and you can use that to your advantage of structuring a transaction, whether it’s a $6 million business or a $10 pair of shoes or getting your kid to eat their breakfast before they go play outside. They’re all things you can do by asking questions. Obviously you don’t need to overdo it if it’s a small thing like getting somebody to do their chores, but it’s the same theory, the same process. And if you get in the habit of doing it all the time, when it comes to a larger transaction you can have the skills already built up that make it easier for you to have it be a natural conversation rather than a fight where two people are arguing over the same thing.
