Tips for negotiating the best deal
Negotiating in business is a fact of life, whether it be to close a contract or resolve a dispute. As a result, good negotiating skills can be a valuable asset.
1. Do your homework – preparation and knowledge can be critical
What are the other side's drivers and weaknesses?
Before negotiations start, gather as much information as you can about the other side. What pressures are they likely to feel, and where are they weak? What are their needs and motivations? Where does your bargaining power lie?
Turn your mind to these matters before negotiations start and keep them front of mind as the negotiations unfold. Focus on the other side's pressure points. Trying to accommodate the other side's needs, and remembering their weaknesses, can be critical when framing offers and making strategic decisions about how to handle the negotiations.
Know your position before negotiations start
Before negotiations start, it is important to have a reasonably clear idea of what you are willing to offer. Sometimes this will change as negotiations unfold – but not having a reasonably clear idea of what you are prepared to offer before negotiations start can lead to poor decisions being made under pressure which you later regret.
If you are negotiating the settlement of a legal dispute, it is important to know the strength of your case before you start negotiating as well as what will likely happen if you don't reach a settlement. Without a clear picture of these matters, it is difficult to make an informed assessment of what constitutes a good settlement.
A good solicitor will provide advice on these matters before negotiations start, as sometimes what might initially look like a rather ordinary settlement, can take on a different complexion when weighed against the risks, costs and stresses of continuing with the legal fight.
2. Maintain your credibility
Avoid exaggerations and untruths
Being believed and maintaining your credibility is important in negotiations. If statements you make are exposed as exaggerations or untruths, your credibility in the eyes of the other party will be undermined. For example, if facts and figures you provide are perceived as being unreliable, it can be much more difficult to negotiate a deal.
Conversely, if statements you make and information you provide is viewed as being reliable, that can be very helpful in closing a favourable deal. Being caught out fibbing or overstating matters can also annoy the other party, and in turn make them more determined and less willing to make concessions.
Follow through on what you say
In a similar vein, if you say you are going to do something during negotiations, follow through on doing so, otherwise you can lose bargaining power if the other side sees your statements as hollow bluffs.
This principle applies throughout most legal fights. For example, if you threaten to take a particular step or commence court action if the other side doesn't comply with a request, and don't follow through on doing so, your threats will lose force. Conversely, if you follow through on doing what you say, the other side will take future threats seriously, which can be invaluable in gaining the ascendency.
In my experience, bluffing often backfires. For example, I frequently see people use the words "best offer", but afterwards go on to continue making further offers. Then when they do come to their final offer and describe it as their "best offer", they are not believed.
In my opinion, the best approach is to only use the words "best offer" when that is truly the case. Then, if the offer is rejected, re-make the same offer with words to the effect "I said this was my best offer and I meant it".
3. Language, tone and demeanour are important
Negotiations often fail due to emotions. Successful negotiators focus on finding terms everyone can accept.
Be conscious of your words and tone
Words and tone matter. Acting tough can alienate others, making them resistant. It's harder to agree with someone angry or unlikeable. Instead, be decent and fair-minded.
Avoid hostile or confrontational language. Be firm and polite. I avoid "you" as it can be seen as accusatory.
Tailor your approach to the other side
Don't default to a hard-nosed approach. Assess the other party and adapt your style. A hammer isn't always the best tool.
Aim for Assertive Confidence
Combine firm politeness with assertive confidence. Use language and tone that is civil yet confident.
Control your emotions
Don't respond emotionally to rudeness or aggression. Focus on closing the deal. Responding emotionally can jeopardise agreements.
Stay calm, determined, and confident. Silently maintain eye contact while others vent. When they finish, summarise your position assertively and refocus on negotiations.
Body language, eye contact, and word choice matter. Be aware of your body language. Show confidence and willingness to talk.
Don't appear arrogant, dismissive, or rude. Read the other side's body language for insight.
4. Read the other party and understand what is important to them
Constantly read the other party during negotiations.
Assess your opponent
Understand their desires and motivations. If unsure, ask.
Listen more than you speak
We often forget to listen. Good negotiators watch, listen, and gather information.
Only talk as much as you need to
Explain your position, but don't talk too much. Limiting speech can prompt the other side to make concessions.
Silence can be powerful
Silence can disconcert others and affect decision-making. Let silence lead to concessions.
Ask open-ended questions
Ask open-ended questions and listen carefully. They can reveal crucial information.
5. The strategy of making offers
Your first offer is important
The first offer sets a benchmark. Start high (or low) and concede slowly. Don't be afraid to ask for what you want.
Don't start so high (or low) that you offend the other side. Aim for the outer edge of reasonableness.
Think laterally when framing offers – look for a win-win
Identify the other side's motivations and priorities. Money is often the main factor, but other matters can be important too.
Frame offers for mutual benefit
Understand the other person's needs and concerns. Frame offers that give both sides something they want, overcoming impasses.
Always challenge the other side's offers
Challenge their offer, even when it's better than expected. They may feel too generous and become less inclined to make future concessions.
Use facts when challenging offers
Use facts or justifiable explanations when challenging offers. Back up your arguments with evidence.
Link concessions to things you want
Link a concession to receiving something in return. Every price change should involve a trade-off.
Don't make too many offers
Making numerous offers can appear overly keen or desperate. Limit yourself to three or four offers.
Work backwards from your desired outcome
Base your offers on figures that allow concessions towards your desired result.
Don't automatically start with the hardest issues
Start with easier issues and save harder ones for later. This creates momentum and goodwill.
6. Patience – don't rush the process
Patience is important in negotiations. Rushing can pressure the other side and make them resistant.
Allow time for acceptance and change
Give the other side time to accept difficult outcomes or change their firmly held positions. Rushing can be counterproductive.
Avoid short deadlines without reason
Don't impose short deadlines unless necessary. Pressuring others can lead to negative reactions and abandoned negotiations.
The longer the process, the more invested people are
The more time spent negotiating, the more likely people are to make concessions to close the deal.