HOW TO STRATEGICALLY PREPARE FOR ANY NEGOTIATION

Is there a secret to success in negotiations?

Having made my living for over 2 decades as a negotiations trainer and consultant, I am often asked if there is a secret or “key” to successful negotiations.  While our negotiating seminars detail a number of keys to success, one of the most significant would have to be:

At Benedict Negotiating Seminars, we teach a systematic, 3-phased approach to preparation and planning that our clients tell us has dramatically raised the level of their negotiating effectiveness.  Those three phases are:

1. The Negotiations Planning Grid
2. The Complete Preparation Worksheet
3. The Rehearsal

In this article, I’d like to share the first of those three phases.

PHASE 1 – DEVELOPING THE NEGOTIATION
PLANNING GRID

In professionally preparing for a negotiation, everything begins with the development of the Negotiations Planning Grid.  The Planning Grid is your definition of success for the negotiation. 

You establish the Grid with 5 simple, but profoundly important steps:

 In step 1, you list ALL the items you’re going to be negotiating.  Examples might include such areas as delivery, service, price, terms, warranty, length of contract, freight, and volume.  However, whatever you are negotiating, it is essential that every item is included on the Planning Grid.

 
STEP 2:  ESTABLISHING THE PRIORITIES

In step 2, you rank the negotiable items in order of importance.  Clearly, not every negotiable item has the same value.  

As a part of building your Grid (which is really your business case), you need to specifically define your priorities.  If you are negotiating as an individual, that might be relatively simple.  However, if you are negotiating as part of a multi-functional team, agreeing upon the priorities of the negotiation can generate “white hot” disagreements.

If you’re conducting a major negotiation, as a team or as an individual, these priorities need to reflect the objectives of your company’s management.

Once management (or your stakeholder) signs off on the Planning Grid, there are shared expectations of what the priorities are and what a successful negotiation actually looks like.
 

PRICE IS ALWAYS VITAL – BUT NOT NECESSARILY ALWAYS #1

When I teach my Negotiations Seminars, at times I have a participant who will say:  “price is always most important.”  While it’s true that price is always vitally important, there are times when you need delivery of an essential component or sub-assembly unit.  At that time, schedule is #1 – just getting it in. 

If your company is experiencing a cash flow problem, terms of payment may be #1 as you work with the seller to extend the payment out as far as you can. 

The priorities of each negotiation are different based on the needs of your company at a given time and based on the amount of leverage your company has in a particular negotiation. 

So, again, in step 2, you need to establish what is most important, second most important, third most important, etc
           

Whether it’s a business negotiation or a personal negotiation, the first two steps are:

1. List all the negotiable items
2. Rank them in order of importance

Whether it’s a team negotiation or doing the negotiation by yourself, you need to list the negotiable items and rank them in priority order.
           

STEP 3 – AIM HIGH OBJECTIVES (COUNTER OFFER)

In step 3, you establish your aim high position.  What that means is that for every item on the Grid, you need to establish an aim high position.  When you have completed that process for every negotiable item, you have established your counter offer. 

Let me say this about your counter offer.  It needs to be a stretch objective, but still defensible.

STRETCH OBJECTIVE, BUT STILL DEFENSIBLE

One more time:  Your counter offer needs to be a stretch objective, but still defensible. 

Let me talk about stretch objective for a moment.  I’ve had new buyers come up to me at breaks during my seminars and say:  “Why can’t we tell the supplier at the beginning what we really need?  I mean, why do we have to aim high?  It seems like such a game.  Why not just level with them and tell them our bottom line?”

As I explain to them, the problem with doing that is that most professional sales people are not going to see your first offer as your ending point.  They’re going to see it as your beginning point.

 Later in the negotiation when you won’t move off that opening position, they see you as someone who is unwilling to negotiate or work with them.  Because you’ve gone immediately to your bottom line, you have no room to move.  By definition, you’re telling them, “take it or leave it.”  They see you as a win/lose negotiator. 

Your counter offer needs to be a stretch objective that gives you room to move – room to allow a win/win negotiation to unfold.

I used the phrase: “The counter offer needs to be a stretch objective but still defensible.”  Let me focus on the phrase:  “still defensible.”  If your counter offer is too aggressive at the beginning, the supplier may just say, “hey, if you can buy it for that, more power to you.”  They fold up their books and begin to leave.  If you want that supplier, and now have to try to persuade them to stay, saying, “wait, wait, let’s try to work this thing out!” - you’ve lost credibility and you’ve lost leverage.

 So, how do you develop a legitimate counter offer that is a stretch objective but still defensible?  While there are a number of ways to do it, I’d like to address three foundational ones that my clients many times use:

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