Negotiation is more of an art than a skill.
By its nature, negotiating is uncomfortable, and it often requires you to act as an armchair psychologist, actuary, or field general—sometimes simultaneously.
For these reasons many people avoid negotiating, but as the COO of a growing company, I see negotiation as one of the most direct ways to protect the best interests of my company.
Here are a few strategies for better negotiations you need to grasp before you even sit down at the bargaining table:
One of the simplest ways to gain an advantage in a negotiation is to bid first. It seems counterintuitive—you would think that seeing the other party’s hand gives you insight into his motivations and strategies. But bidding first actually puts the onus on the opposite party to match.
This is why employing an extreme bid can be effective. By bidding first and bidding very low or very high, you force the opposing party to move toward your bid. For example, bidding $1 when the other party wants $10 forces that person to move from $10 to $5. Less extreme bids will provoke equally mild moves from opponents.
One caveat: extreme bids need to have a basis in reality. A bid that is wildly outside the norm can be misconstrued as insulting and could jeopardize the entire negotiation.
Research shows that negotiations almost always end up around the midline. So why even bother with the process? Negotiations aren’t limited to price. When executed correctly, a negotiation can deliver side benefits that would not otherwise have come into play. Skilled negotiators consider these factors before sitting down at the table.
Giving into a concession isn’t necessarily a sign of weakness. In many cases, a concession is more important to one side than another.
For example, in a real estate deal, a closing date could be more important to a seller than a buyer. So a skilled buyer might concede the date in order to gain leverage elsewhere. If you’re forearmed with the knowledge that the price will fall in the middle, conceding strategically can help you walk away with a better deal.
It’s misguided to view negotiations as contests that need to be won. This is called a fixed pie fallacy—your gain must be my loss—and it puts potentially beneficial deals at risk.
In practice, most negotiations are actually integrative, which means that the size of the pie can grow through concessions by each party. Seasoned negotiators plan to make strategic concessions, and they plan to move from their original positions. A win in this view is a fair deal that provides value to both parties.
Don’t misunderstand me; negotiations don’t need to be exercises in mutual admiration. There are points when it’s necessary to be forceful or to hold firm on a point.
It is possible, however, to be tough without being disrespectful. Scuttling a negotiation through insulting behavior can cost more than just a single deal. Most of us travel in small circles, and poor behavior has a way of returning to its source. The human factor is unavoidable, but negotiations work best when emotion is kept in check—and when the other party is respected.
Some deals are not meant to be. It is, therefore, important to prepare other courses of action in advance in case the negotiation falls through. Are there other deals on the table or other parties that can enter into the negotiation? Plotting this out beforehand can bolster your position.
One word of caution: if you’re going to bluff, do it honestly. For example, if you say you have other deals in consideration, make sure you can back up your statement—even if the other options aren’t appealing. Those deals may be your best course of action if the negotiation falls through.
The best artisans prepare in advance, and they’re skilled with the tools of the trade. The tools and techniques I’ve outlined will make you more effective, and they'll increase the likelihood of desirable outcomes.
Corey Weiner is COO of Jun Group, a NYC-based company that gets millions of people to see branded content and CEO of HyprMX, a multi-screen ad monetization platform wholly-owned by Jun Group. He is currently an MBA Fellows candidate at the Wharton School. Corey can be reached via email at email@example.com or on Twitter @asdfcoreyasdf.
[Image: Flickr user Peat Bakke]