How to Prepare for Negotiation

Types of Negotiations

The two basic types of negotiations require different approaches.
Integrative negotiations are based on cooperation. Both parties believe they can walk away with something they want without giving up something important. The dominant approach in integrative negotiations is problem solving. Integrative negotiations involve:
• Multiple issues. This allows each party to make concessions on less important issues in return for concessions from the other party on more important issues.
• Information sharing. This is an essential part of problem solving.
• Bridge building. The success of integrative negotiations depends on a spirit of trust and cooperation.

Distributive negotiations involve a fixed pie. There is only so much to go around and each party wants as big a slice as possible. An example of a distributive negotiation is haggling over the price of a car with a car salesman. In this type of negotiation, the parties are less interested in forming a relationship or creating a positive impression. Distributive relationships involve:
• Keeping information confidential. For example, you don’t want a car salesman to know how badly you need a new car or how much you are willing to pay.
• Trying to extract information from the other party. In a negotiation, knowledge truly is power. The more you know about the other party’s situation, the stronger your bargaining position is.
• Letting the other party make the first offer. It might be just what you were planning to offer yourself!

The Three Phases

The three phases of a negotiation are:
1. Exchanging Information
2. Bargaining
3. Closing
These phases describe the negotiation process itself. Before the process begins, both parties need to prepare for the negotiation. This involves establishing their bargaining position by defining their BATNA, WATNA, and WAP (see Module Three). It also involves gathering information about the issues to be addressed in the negotiation.

After the negotiation, both parties should work to restore relationships that may have been frayed by the negotiation process.
It is essential to pay attention to all the phases of negotiation. Without the first phase, the exchange of information, and the establishment of bargaining positions, the second phase cannot happen in any meaningful sense because no one knows where they stand. It sets a scene for demands to be manageable and reasonable. Negotiations are, after all, about the art of the possible. Without the third phase, anything that has been decided during phase two cannot be formalized and will not take hold – leading to the necessity for further negotiation or an absolute breakdown in a relationship.

Skills for Successful Negotiating

Key skills include:
• Effective speaking
• Effective listening
• A sense of humor
• A positive attitude
• Respect

 

 

Without the above factors, negotiations will be difficult if not impossible. The necessity for negotiation arises because neither party will be able to get everything they want. Knowing that there must be concessions, each party in the negotiation is required to adopt an attitude of understanding that they must get the best deal possible in a way which is acceptable to the other party. The importance of effective speaking and listening is clear; it is necessary to establish what you are looking for and what you are prepared to accept, while understanding what the other parties will be happy with.

A sense of humor and a positive attitude are essential because they allow for a sense of give and take. Negotiations can become fraught, and having the ability to see the other side’s point of view while being sanguine with regard to what you can achieve will be essential. Of course you will want as much as you can get – but the other side needs to achieve what they can, too. Seriously uneven negotiations will simply lead to further problems along the line. An atmosphere of respect is essential. If you do not make concessions while demanding them from your counterpart, it makes for a negotiation which will end in dissatisfaction.

However important a sense of understanding for your “opponent” may be, it is also necessary to have the confidence to not settle for less than you feel is fair. Good negotiators understand the importance of balance. Yes, you will have to make concessions, but the point of making concessions is to secure what you can get – so you need to pay attention to your bottom line and ensure you are not beaten down to a minimum. Knowing what is realistic, and ensuring that you can get the best deal, relies on being ready to insist upon something that the other side may not be willing to give initially. Emotional intelligence, persistence, patience, and creativity can all play a part here.

Preparing for Negotiation

Like any challenging task, negotiation requires preparation. Before you begin a negotiation, you need to define what you hope to get out of it, what you will settle for, and what you consider unacceptable. You also need to prepare yourself personally. The key to personal preparation is to approach the negotiation with self-confidence and a positive attitude.

Without this preparation, you will end up giving more than you get from negotiations. It may be unavoidable that you will have to give up more than you would ordinarily be willing to, but finding the balance between acceptable concessions and getting the best deal for yourself relies on you being ready to go into negotiations with the strongest bargaining position you can.

 

Establishing Your WATNA and BATNA

In most negotiations, the parties are influenced by their assumptions about what they think are the alternatives to a negotiated agreement. Often the parties have an unrealistic idea of what these alternatives are, and they are unwilling to make concessions because they think they can do just as well without negotiating. If you do not have a clear idea of your WATNA (Worst Alternative to a Negotiated Agreement) and BATNA (Best Alternative to a Negotiated Agreement), you will negotiate poorly based on false notions about what you can expect without an agreement.
Often the parties in a negotiation need to decide how likely a particular outcome will be. If your WATNA is something that would be difficult for you to accept, but the likelihood of it happening is small, you might not feel compelled to give up much in negotiations. Realism is essential in this situation. If you could have the ideal situation, the “blue sky” scenario, negotiations would not be necessary. In order to focus on the negotiations with a sense of purpose, your WATNA is important. What is often referred to as the “worst case scenario” is something that any sensible person will think about before embarking on any initiative. What if it goes wrong? How will we deal with that? How you feel about the WATNA will dictate how flexible you need to be (and therefore will be) in negotiations.

The BATNA is almost more important than the WATNA. If you look at your situation in the absence of a negotiated agreement, and find it almost unthinkable, you will be pressed to enter negotiations in the hope of getting a satisfactory agreement. The word “satisfactory” is important here. Is the WATNA better than satisfactory? Is the BATNA worse? Generally, people only enter into negotiations because they feel they have to. They arrive at this conclusion based on analysis of their WATNA and BATNA.

 

Identifying Your WAP

In any negotiation, it is important that you keep your WAP (Walk Away Price) to yourself, especially if it is significantly less than your initial offer. If the other party knows that you will be willing to take a lot less than you are offering, then you will be negotiating from a position of weakness. If the other party knows, or has an idea of your WAP then it stops being your WAP and simply becomes your price.

Establishing a WAP in your mind, and ensuring that those negotiators on your side of the bargain (and only they) know it, allows you to take your strongest possible bargaining position. The other party will try to argue you down from your proposed price, so you will need to remain firm. If they want to pay less, then you may be prepared to agree on a lower price in return for concessions.

The opposing party will then have to consider what is acceptable to them. Rather than push too hard and lose out on a deal which would be beneficial to themselves, they will have their own areas where they are willing to make concessions. However, if they know that you have set a WAP that would save them money, they will simply hold firm at that price. They have no incentive to make concessions to you. In many ways, negotiation is about keeping as much to yourself as you possibly can until you can no longer maintain that position.

Once you have set your WAP, it is essential to keep to it. A walk away price becomes absolutely meaningless if you are not prepared to walk away should it not be met. You should give the impression to opponents in negotiation that you could walk away at any time. They will, after all, not be prepared to stop once they get a price which is satisfactory to them – they will look to wring a bit more value out of the deal for themselves, testing you to see what you will give up. A warning against setting your WAP unrealistically low is that the other party will not take you seriously if you are a pushover in negotiations. They will seek to test you at every turn.

Identifying Your ZOPA

In the negotiation for the used car, both parties should feel good about the outcome. Even though the parties might have hoped for a better deal, both got a better price than their WAP.
This negotiation demonstrates the importance of keeping your WAP to yourself if you want to negotiate the best deal. Your range in this situation falls between the price that you would ideally, realistically get and the WAP you have set. In an ideal world you could demand a million dollars and expect to get it. In a realistic world, you need to be realistic in negotiations.

You should arrive at your ideal realistic price by seeing what the accepted market value for what you are offering is. By adjusting for your specific negotiating position (whether you are approaching it from a position of need, etc.), you can find your best realistic price. Then think about a price at which it would no longer be worthwhile to strike a deal.

Your co-negotiator will have done the same. What he hopes to pay and what you hope to get are just that – hopeful. The ZOPA (Zone Of Possible Agreement) is the area in which the final price will sit, and within that ZOPA you will ideally end up with a price closer to their WAP than yours. If you hint at where your WAP is, the other party will be less likely to come to an agreement that is substantially better than that.

 

Personal Preparation

One way to relieve some of the tension you may be feeling before a negotiation is to remind yourself that there is nothing to be afraid of. As long as you understand your position, there is no danger that you will “lose” the negotiation. During and before negotiation you should always be:
• Polite – It never reduces your argument
• Firm – Removes Perceptions of Weakness
• Calm – Facilitates Persuasion and Compromise
• Do not take things personally

Knowing your position before entering negotiations means that you are sure of your “red lines”. Things that you are not prepared to consider that would make your position worse than it is now. Many people get pushed into a deal which is unsatisfactory to them because they have failed to prepare for the negotiation in this way. If you go into negotiations with vague ideas, that vagueness will become a weakness in your negotiating position.

How to Increase Productivity by Using Call Center Training

Every Call Center sales associate wants to increase productivity. Constant changes and innovations in the marketplace are sometimes hard to keep up with. The reason people elect to buy is often not a result of logic and planning but rather emotion or felt need. Effective sales associates try to identify the Dominant Buying Motive (DBM) of the buyer on the other end of the phone. Discovering this takes careful listening skills and the suspension of the idea that people always do things for logical reasons.

Defining Buying Motives
Dominant Buying Motive (DBM) is the main reason the customer or buyer will select your product over the competition. It is driven by the felt need that your product provides to the customer. This motive is not always something the buyer is fully aware of. With some questioning and dialogue, skilled sales associates can unearth the DBM and help the buyer do what will ultimately make them happy; buy your product.

Four Motives for Buying:
1. Logical Reason A) Save Time: The buyer may believe that buying your product will save them time in the long run in contrast with the competition’s product offering. This may be a faster computer, a car, or a service from your company.

2. Logical Reason B) Save Money: The buyer may believe that buying your product will save them money either in the short or long term. The financial savings they seek does not come at the cost of any features or practical application the products provide.

3. Emotional Reason A): The buyer has a strong brand loyalty and trust in the product. This may cause them to be willing to pay more for the security of the known brand loyalty.

4. Emotional Reason B): The buyer trusts the sales person and their judgment in recommending a product. The sales associate has demonstrated expertise and credibility that has won the confidence of the customer so that they are willing to take the suggestion of the sales associate and buy the product.

Establishing a Call Strategy
The advice “stop talking” may seem counter intuitive to making a sale. Many people talk excessively and fail to listen to the customer. The problem with constantly talking is that you are unable to truly understand the underlying needs of the customer. We feel a need to control the conversation or we will lose the sale. For example, an army recruiter can spend all his time trying to convince the recruit to sign up for military service but fail to listen to the young man explain how his grandfather was killed in a military conflict and this gives him both motivation and hesitation in following in his grandfather’s footsteps. The recruiter needs to empathize with the young man’s loss and filter the pain into a motivation for heroism.

Prospecting
Prospecting is a method of evaluating the potential of a buyer or customer. Prospecting takes into consideration the likelihood that the buyer has the means and the motivation to buy your product. Ranking potential buyers in a systematic way allows phone sales associates to close more deals and spend their time with customers who are more prepared to make the decision to buy the product. Those who are further down the motivational scale and do not appear to have the means to make a deal, can be given less time and attention or kept on file for future contact when they are able to make a deal.

Qualifying
When qualifying a prospect you are evaluating that they are in a position to decide to buy your product. If you are talking to someone in an organization, it is important to speak only to the person who has the authority to finalize a purchase. If the person is not authorized to make a deal with you then find out when the person who is able to close the deal is available and call back. Once you have the person on the line with the authority to buy your product then inquire if they have the means to close the deal. This may involve finding out information about available funds on credit cards, lines of credit, and monthly budget. It is important to know how much an individual makes per month and their current economic commitments.

There are different types of conversations that we all use to function in everyday life. The different types of conversation are required in different situations. When attempting to converse, whether person to person or in a group or organization, it is essential to understand the different types of conversations and how each type functions.

Getting Beyond the Gate Keeper
Informational conversation is what most people would define as conversing. It is the type of conversation that “gets beyond the gate keeper” and this is important when it comes to establishing a level of trust or rapport before making a sale. It concentrates on exchanging facts and information. This can be done casually in asking someone about the time or the weather. Inquiring about the date or the score of the last football game is also an exchange of information. The facts are either correct or incorrect but they are free of opinion or feeling from either of the participants. It is a low risk conversation in that it reveals little or nothing about those involved.

Controlling the Call
The next level of communication is the sharing of preferences, likes, and dislikes. A customer may be asked what they like best about their current car or house. They may share the features of the house or car of their dreams. People are usually willing to share their preferences of food, beverage, clothing, music, and movies. A skilled sales person can gain much information about the style and preferences of a client by talking about his or her likes or dislikes in other areas.

Three Stages:
1. Discuss preferences
2. Talk about likes or “turn ons”
3. Express dislikes or “turn offs”
In order to understand preferences, likes and dislikes, a skilled communicator must focus and listen.

Difficult Customers
Emotional sharing is the next level where the conversation turns to feelings the buyer and seller have about the deal they are about to make. They may have fear about changing to an unknown brand. They may be insecure about the willingness of the seller to respond if the product is found to be defective or not working as promised.

The seller can restore confidence in explaining guarantees and customer service return and repair policies. The buyer may express positive emotions about how proud they would be to be an owner of that brand of vehicle, watch, or sports jacket. The skilled sales person asks questions like, “How did it feel to drive that car?” or “How do you feel when you see yourself in the mirror wearing this jacket.” Listening to the customer’s emotion whether good or bad and helping them visualize themselves as an owner of the product can help the sales person tap into a valuable resource in closing the deal.

Reporting
An even deeper level of communication occurs when the buyer and seller communicate about what they value and believe. These core values are the deep seeded principles that are rarely violated.

Honesty, Integrity, Responsibility and Love are a few core values that people hold and act upon. If the buyer and seller sense the other is relating to them in an honest and responsible way then they are more likely to buy the product from that person. If the company has a reputation of treating its employees fairly and being a responsible member of the community, then it will attract repeat business.

Companies like Price Charities and Costco in San Diego, California are legendary for their contribution to the community and have a high regard in the community. On the contrary, companies that treat employees unfairly or are found to be irresponsible in their use of the environment can suffer from the negative public perception.

A wise sales associate can benefit from reaching the level of values and beliefs in identifying the dominant sales motivation of his customer.