You may have heard that the goal of a negotiator should be to find a solution that is a Win-Win for everyone involved. I would like to contest that, while this sounds nice, finding a solution that is truly Win-Win is simply not realistic.
Take the classic example that is used when teaching this technique, the orange conundrum. Each party wants the same orange. The first response is to cut the orange down the middle so each person gets an equal share. When you investigate the needs of each party, you discover that one party wants the orange for juice, while the other wants the rind to make cake. Both sides get exactly what they need and everyone walks away a winner. In the real world, text-book situations like this simply do not happen.
More often times you have a buyer and a seller and each one wants to ultimately save or gain the most in a transaction. In these cases, someone is always left to walk away with the short end of the stick, even if they are unaware of this fact. The trick to becoming a powerful negotiator is to lead the other side to think they have won.
Promulgating the Win-Win Myth is an art for expert negotiators. Use the following techniques to master this skill and you will walk-away the real winner:
Open the negotiation by setting the anchor point with a first offer. Make this offer in the range of reality, but ask for much more than your true target point. If you don’t know the other side well, make your first offer even more extreme—they may surprise you and agree right off the bat. Never underestimate the power you have in asking for what you want.
Never Accept the First Offer
If the other side does surprise you by accepting right away, don’t be too quick to close the deal. If you are, they will walk-away thinking that they should have done better and will fell like anything but a winner.
Be Reluctant to Settle
Instead, feign shock, if they were the one to make the first offer, or be reluctant to settle if you were the one who threw out the initial number.
Use the Hidden Table
Let them know that, while you would like to accept this offer, you do not have the authority and must first check with the one higher up. This technique is often used in sales situations where the primary negotiator wants you to believe they only have so much power. In all reality, the decision is probably up to them. They will just end up gets a smaller slice of the pie, so they don’t want to take less. By positioning yourself as the “good guy”, you are pawning off the responsibility of saying no on the authority figure they will never meet.
Set it Aside
If your competition gets stuck on a certain aspect of the negotiation, that is relatively unimportant to your ultimate goal, ask them to set aside the issue so you can come back to it later. Doing this can have two positive effects. You are able to get the negotiation back on track and the other side may be willing to accept an alternative offer you propose that they haven’t yet considered.
Time is on Your Side
Ever heard of the Pareto Rule that 80% of wealth is in the hands of 20% of the population? The 80/20 split concept appears repeatedly in various unrelated fields, including negotiation. The majority of concessions, roughly 80%, happen in last 20% of the time available. How can this knowledge help you? Wait to present the majority of your demands until the latter part of the negotiation. Once the other side has already conceded on minor issues, they are more likely to be flexible about accepting major proposals.
Don’t Indulge the Nibbler
Now that you are about to close to an acceptable agreement in which you have played your part well, don’t give in to those negotiator’s who ask for “just a little more” toward the end. You may be inclined to agree to their wishes, but before you do you need to ask yourself that if you give-in easily on this issue, will the progress you’ve made so far be compromised? Instead, let the party know that you don’t have the authority to make further concessions at this point in the negotiation. Don’t let the other side nibble away your profit. Then, finalize the offer and close the deal.
Walk-Away Power
If they are stuck on a particular point, just walk-away from the negotiation. Never underestimate the power of a well timed walk-away. If you get up to leave at the end of a negotiation, over a minor point, since the other side is already well invested in the deal, they will be inclined to stop you and let you know they are ready to settle. If they don’t do it right then, when you leave with your offer, they may reconsider their strategy and back-down.
Use the strategies described above to become a powerful negotiator by leaving the other party satisfied with the outcome, instead of with a bad taste in their mouth. Doing this will make you the true winner and set-up a relationship of trust with the other party for further negotiations down the road.
Liked the article, didnt know the Pareto fact, good stuff
Dave
Thanks for the link Dave! Glad you found the bit about the Pareto Rule helpful.