Tag archive: negotiation-technique
Make Them an Offer They Must Refuse
The Karrass Effective Negotiating Seminar teaches you how to use a 'Bogey' as a discovery tactic to gain more information. The more you know about what is on the other party's 'sheet,' the better the opportunity for you to find ways to create a Both-Win agreement.
Consider making them an offer they must refuse.
This is an interesting negotiating technique. There are times when you should make an offer the other side just has to refuse. Why should anyone give the other party such an offer?
Here's what this negotiating technique can accomplish.
Proposals like this help set the stage for making offers later that look good by comparison (i.e. it helps establish aspiration levels). Making an offer like this gives you time to explore various alternatives that could be acceptable. Using this technique can stall the negotiation; force talks to break down; or help postpone a decision until a time that is more favorable to you. All of these events provide you more time that can be used to craft a better agreement for both you and the other side.
One of the best reasons for making an offer the other side can't accept is to help you zero in on what is acceptable. The magic of such an offer is that it opens up a flow of conversation. When people believe that no agreement is likely, they talk more candidly with one another. It is then that real motivation and goals are revealed. After gaining this additional information, there is no reason you cannot then follow-up with a more knowledgeable offer that is acceptable.
There is some risk associated with this negotiating technique. But, you may find this technique can open up an avenue to a value enhanced agreement.
Caution is necessary -- particularly if you are on the 'sales side' of the negotiation. Make sure you leave yourself a way to re-enter negotiations. You want to use this negotiating technique to stop the negotiation, to allow you to gain more information, but you do not want to eliminate your proposal from consideration.
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Your Negotiation Challenges
Negotiation is one of the most difficult jobs a person can do. It requires a combination of diverse traits and skills. The process of negotiating demands good business judgment and a keen understanding of human nature. There is no other area in business where the alchemy of power, persuasion, economics, motivation, and organizational pressures come together in so concentrated a fashion and so narrow a time frame. But – nowhere is the return on investment potential so high!
Today economic pressures around the world are causing organizations to put more pressure on their negotiators. In other words—you!
Buyers and supply management professionals are being asked to cut costs and increase efficiencies. Sellers and marketing professionals are being asked to increase volumes and increase margins. Engineering, system analysts, IT professionals, manufacturing managers, and HR managers are being asked to do more with less. There is a lot of negotiating going on!
Graduates of the Karrass Effective Negotiating seminar have a distinct advantage over any untrained negotiator. If, in your negotiations, you happen to encounter another Karrass trained negotiator – great! Both of you are now in an ideal position to create real value using the “Both-Win” negotiating techniques you learned at the seminar.
Here are some of the key attributes good negotiators exhibit:
1. An ability to negotiate effectively with members of their own organization and win their confidence.
2. A willingness and commitment to plan carefully; know the product/project, the rules and the alternatives; and the courage to probe and verify information.
3. Good business judgment; an ability to discern the real bottom-line issues.
4. The ability to tolerate conflict and ambiguity—it comes with the negotiating process.
5. The courage to commit oneself to higher targets and to take the risks that go along with it.
6. The wisdom to be patient—to wait for the story to unfold.
7. A willingness to get involved with the other party and their organization— to understand all the various personal and business issues.
8. A commitment to integrity and mutual satisfaction.
9. An ability to listen with an open-mind.
10. The insight to view the negotiation from a personal standpoint—discover the hidden personal issues that could affect the outcome.
11. Self-confidence based on your knowledge and your planning.
12. A willingness to use experts and an understanding of how a team might be valuable in the negotiation.
13. A stable person; one who has learned to negotiate with oneself and to laugh a little; one who doesn’t have too strong a need to be liked so they can feel free to disagree when the need arises.
Research shows us that skilled negotiators create better agreements. But we are not born with these skills, it takes training, practice and persistence. Use what you learned at the Karrass Effective Negotiating Seminar. Be confident in your ability to negotiate. You have the tools and skills to create good, long-lasting agreements that will satisfy all parties.
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Take It Or Leave It!
"Take it or leave it" is a negotiation. And, there are many bargaining situations in which it is appropriate. This tactic has a legitimate place in your negotiating tool kit.
Much of today's business is conducted on a "take-it-or-leave-it" basis, whether we like to call it that or not. When you go into a retail store you see items clearly marked with a price. Some prices, like your electrical or water bill, are fixed by regulations. Many industrial goods and services are sold at the same price to all customers.
"Take it or leave it" is not as ominous as it sounds. It often represents good pricing policy for the seller, and a better way for the buyer to buy.
"Take it or leave it" makes sense under the following conditions:
* When you don't want to encourage future negotiating.
* When the other party is under a lot of pressure to say "yes" to what you propose.
* When a drop in price to one customer will force a drop to all customers.
* When others have already accepted your proposition.
* When you can't afford to risk a loss because you are selling at the lowest possible price.
* When you want to signal the other party that you have gone as far as you are going to go.
If you are going to use "take-it-or-leave-it" in your negotiation, there are ways to minimize hostility. Never use the expression itself because the words alone are enough to anger the other person.
"Take-it-or-leave-it" positions that are backed by legitimacy are less offensive. When a firm position is backed by regulations, published policies, clearly observed price tickets, or customary trade practices, it tends to be accepted more easily. The same is true when your firm position is accompanied by a good explanation and positive proof statements.
People are more willing to accept a "take-it-or-leave-it" later in a negotiation than earlier. Timing is important in reducing hostility.
"Take-it-or-leave-it" is a legitimate tactic in negotiation. A surprising number of people welcome it because it saves them the trouble of bargaining.
If you are going to use it, there are three things you must do. First, give the other party all the time needed to discuss the matter; and second, be sure to tell your boss, or your team, that you are going to use it. The person who forgets this is could be in real deep trouble. Finally, if you use 'take-it-or-leave-it' as a negotiating tactic, remember it could result in a 'dead lock'. You need to plan for this. If you really want, or need, to come to an agreement with the other party, determine which negotiating techniques you will use to re-open negotiations should a 'dead-lock' occur.
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Negotiating 101: What If? Would You Consider?
"What-If" and "Would-You-Consider" are excellent discovery devices that can help you build better agreements.
Both types of questions provide an avenue for getting more information than you would ordinarily be given.
A buyer who knows more about a seller's cost and price structure is bound to make better decisions. A seller who knows more about a buyer's specific needs and constraints will be in a better position to configure a product offering.
Following are some examples of how you might use this negotiation technique.
Buyers: you need to make sensible business decisions based on the best information you can get. "What if" is a good way to get pricing data as well as other information. The "what ifs" listed below usually open up new alternatives and generate valuable answers. Their logic is self-evident.
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- What if we double the order (or halve it)?
- What if we give you a one-year or two-year contract?
- What if we drop the warranty (or increase it)?
- What if we supply the material?
- What if we own the tooling?
- What if we buy apples and pears instead of just apples?
- What if we let you do the job during the slow season?
- What if we supply technical assistance?
- What if we change the specification in this way?
- What if we give you progress payments?
- Would you consider taking grade-B products, a larger delivery, spare parts?
- Would you consider last year's model?
- "What if" we change the configuration this way?
- Visit with other people in their organization (production, engineering, etc.). You may get a better picture of the buyer's constraints and the potential options you can present.
- Never price a "what if" on the spot.
- If a concession is offered, make it contingent on getting something in return. "Would you consider" this if we reduce the price?