The Ultimate Negotiation Strategy Checklist
Written by Strategic Pricing Associates | @SPASIGMAWednesday, March 15, 2017
Ready to up your game? Get started with our ultimate negotiation strategy checklist.
❒ BRAINSTORM “THE GOLDEN QUESTION”.
With a name like “the Golden Question,” you know it’s juicy. So I won’t keep you waiting – here it is: If there are pressures on me, what are the pressures on the other side?
We tend to dwell on our own pressures, and that puts us at a disadvantage. It’s easy to forget that the other party has pressures too. Brainstorming the Golden Question isn’t just a great strategic exercise that can put you on equal, if not firmer footing than the other party. It also promotes a productive mindset that allows you to approach each deal with confidence.
❒ EMPLOY A DISCOVERY PROCESS.
Now that you’ve brainstormed a list of pressures the other party may be facing, it’s time to uncover which ones the other party is actually experiencing. Here are a few tactics you can use:
- The Detective – Strategically probe the other party for beneficial information. Think through the “5 W’s” and ask open-ended questions. Write your questions down and review them before the meeting because it helps you ask each question at the most opportune time.
- The Schmoozer – Use casual conversation to uncover the other party’s pressures. You’d be surprised what you can learn by simply showing a genuine interest in the other party’s business.
- The Snooper – This is about using the internet to gather beneficial information about the other party. Dig beyond their website to unearth third-party data and marketing or sales presentations that reveal concerns, motivations and values.
❒ SET APPROPRIATE TARGETS.
If you enter a negotiation expecting very little, very little is probably what you’ll end up getting. By setting appropriate targets, you give yourself benchmarks for success and improvement.
Three tips on target setting:
- Aim high – Those who aim higher do better. Prioritize your must have issues and ask for all of them so long as they are within reason. Establish a firm walking away point and honor it.
- Leave room to negotiate – by aiming high, you are automatically leaving room to negotiate. Your prioritized list of must-have issues will help you make concessions strategically, starting with the bottom of your list.
- Use the “Expectation Index” – The Expectation Index is your best-case scenario (your opening offer) plus your worst-case scenario (your walk-away point) divided by two. The Expectation Index can prevent you from making concessions too quickly, and is an excellent way to gamify the negotiation and improve your results over time.
❒ ASK THE VALUE QUESTION.
The value question is this: What is preventing the other party from using my competition?
Most negotiators pretend to only be concerned about price, which is why it’s important to strategically steer the conversation away from price and toward the other factors they value. Discovering these factors can strengthen your value proposition while simultaneously weakening a competitor’s. Now you’ve increased your leverage by de-commoditizing the negotiation.
❒ DETERMINE HOW YOU WILL TEST ASSUMPTIONS TO GATHER EVIDENCE.
The Golden Question and the value question will help you come up with several assumptions that may significantly boost your leverage. But you shouldn’t trust these assumptions. Not yet.
Your discovery process (checklist item #2) will help you vet out some of your assumptions, but until you’re sure, you should strategically test the other party in order to validate whether your assumptions are true. You can accomplish this with Trial Balloons and “What If” questions. Both tactics involve tactically sending information to the other party in order to observe their reaction, thereby uncovering what they truly desire.
❒ IS YOUR MONEY FUZZY?
By making money “fuzzy,” you are being strategically vague when discussing price. It’s important to plan a strategy for discussing price, and to talk about money on your terms.
It works the other way, too, as a preventative measure. For example, when the other party tells you, “It’s a measly penny,” you should be prepared to respond with, “That ‘measly penny’ per unit means a $20k profit reduction.”
❒ HOW WILL YOU PROVE CREDIBILITY?
Successful negotiation requires persuasion: Causing the other party to do something through reasoning or argument. Aristotle’s three pillars of persuasion – ethos, logos and pathos, loosely translated as credibility, legitimacy and emotion – have stood the test of time. These three pillars are the foundation of not just any successful negotiation strategy, but also any buying or selling methodology. Let’s start with credibility.
Credibility refers to how trustworthy the other party thinks you are. Trustworthiness refers to either your willingness or your ability to follow through on your word. Subject matter expertise can satisfy the ability portion. References and testimonials can speak to your dependability.
To determine whether the other party sees you as credible, ask yourself:
- Does the other party respect me?
- Does the other party believe I am of good character?
- Does the other party believe I am generally trustworthy?
❒ HOW WILL YOU PROVE LEGITIMACY?
No matter how sterling your reputation, your claim still needs to make logical sense for the other party to proceed.
To determine whether the other party views your claim as legitimate, ask yourself:
- Does my message make sense?
- Is my message based on facts, statistics or evidence?
- Will my promise lead to the desired results the other party wants?
❒ HOW WILL YOU EVOKE AN EMOTIONAL REACTION?
The other party experiences emotions just like everyone else. They have motivations and an imagination. By using empathy skills to experience the transaction from their side of the table, you can tap into the underlying emotional factors that influence decisions.
To determine whether your claim is appealing on an emotional level, ask yourself:
- Do my words and visuals evoke an emotional reaction?
- Does my tactful characterization of the competition evoke feelings of fear or uncertainty?
❒ WHAT MESSAGES WILL YOU SEND WHEN MAKING A CONCESSION?
Every concession you make sends a message to the other party. Before conceding anything, it’s important to ask yourself: By making this concession, what message am I sending?
While a strong negotiation strategy can help you mitigate major concessions, it’s usually unreasonable to expect that you can avoid them altogether. Concessions should only be made for the following reasons:
- To move your opponent closer to a settlement.
- To protect your margin.
- To increase the satisfaction level of the other party, which brings us to…
❒ HOW WILL YOU INCREASE THE SATISFACTION OF THE OTHER PARTY?
If there’s one “thing” that separates master negotiators, it’s not that they get what they want – it’s how they get what they want: By strategically increasing the other party’s satisfaction level with the final outcome. Assuming you’ve done your due diligence to uncover pressures and motivations, here are a few additional tactics that can help you increase the satisfaction of the other party:
- Anchoring – It’s important to be the first one out of the gate with a price or position. For example, maybe the other party wants $40 per unit. But by “anchoring” your starting offer at $60, you reset expectations. The other party is now more likely to be satisfied with $54 per unit.
- The “If You” Rule – Have you ever heard the phrase, “give with the getting in mind”? This allows you to satisfy the other party by giving them what they want, but you also win because you get something valuable in return.
- No Before Yes – Strategically saying “no” before a settlement as a means to increase the other party’s satisfaction in the eventual agreement.
- The Flinch – The Flinch applies the same rationale as “no before yes.” It’s a tactically delivered negative reaction to the other party’s position in order to increase their satisfaction in an eventual agreement.
- The Calculator – Strategically considering a response before vocalizing it. It increases the other party’s satisfaction because their offer required careful consideration, so it must be reasonable.
❒ WHAT WILL I DO (AND NOT DO) TO STRENGTHEN THE RELATIONSHIP?
Stop me if you’ve heard this before: people buy from people. Okay, you’ve heard it before, but it bears repeating. It’s easy to get so caught up in the win/loss aspect of buying or selling that we turn it into a zero sum game. We continually forget that we all make decisions largely based on emotion, and then rationalize our decisions with logic. Why do you think “emotion” has lasted for centuries as one of the three pillars of persuasion?
Have you ever been dumbfounded when a decision didn’t go your way, muttering to yourself, “What just happened?” or, “That decision just doesn’t make sense”?
Well, then there’s a really good chance that you overlooked the emotional element, overestimated the strength of the relationship, or both. This final checklist item is your eternal reminder to keep relationships at the forefront of your negotiation strategy.
How to strengthen a relationship:
- Climate of agreement – Strategically focusing on common ground areas to prevent conflict or negative emotions from entering the negotiation.
- Avoid “irritators” – Irritators are certain words or phrases that make the other party want to withdraw from the relationship bank. Obvious examples include phrases like, “to be honest,” or “trust me.” The key is to find the non-obvious irritators that hinder you. This is where recording your interactions and getting trusted, third-party feedback can be extremely valuable.
- Breaking bread – The act of eating with the other party during a negotiation. Eating together can increase familiarity and strengthen the relationship, but it also works because people tend to be more agreeable when they know they’ll be together for a while. It’s the same reason why so many deals get done on the golf course.
Do you already feel more prepared for your next negotiation? Learn more about How Experts Navigate 5 Tough Sales Situations and The Difference between a Trained and Untrained Negotiator.
Keep this negotiation strategy checklist handy. Use it as a guide to ensure you ask the right questions (of yourself and the other party) so that you can enter every upcoming interaction with confidence.
Whether you’d like to lead a team that protects profit margins, or you’d like to boost your own professional worth and income, we’ve got a proven system that can make your goals a reality. It starts with a negotiation seminar near you and it continues with 90 days of SPASIGMA’s Online Academy.
To learn more about SPASIGMA’s proven negotiation training system and why it works, check out our on-demand webinar: Introduction to Negotiation Mastery.