Art of Negotiation
Chapter 05. 6 Negotiating Methods
The salesperson has to optimistically think
that the customer can pay for that product or service. —Zig Ziglar
There are many different ways of negotiating.
It is important that you understand the negotiation method
you are using
and the outcome or goal you are trying to achieve.
Negotiate: gain –> lose
The first method, called “win-lose negotiation”,
is when Party A gets what he wants,
and Party B loses.
As mentioned in chapter 3,
this is the goal of type I negotiation,
often used in one-time transactions,
when you want to sell at the highest price
or buy at the lowest price.
You are not interested in making connections
or establishing long-term relationships.
You simply want to win the best deal possible.
You don’t care if the other party is satisfied
or dissatisfied with the price or the terms of the contract.
Your goal is just to win.
Of course, this isn’t the kind of negotiation
that leads to long-term business relationships or transactions,
except in a few special cases,
such as when you’re pledging property to get a quick cash boost.
In this case, the pawnshop owners are the winners
– they only need to pay a fraction of the item’s value,
and the pawnbrokers are the losers
– receiving a negligible portion of the value.
Negotiate: lose –> gain
The second type is “win-lose negotiation”,
which is the opposite of the first.
Party B gets what he wants,
and Party A loses.
Party B’s needs are satisfied,
while Party A’s needs are not.
This method is used
when both sides see each other as enemies
and must defeat the other at all costs.
Negotiate and lose
The third method is “negotiation and failure”.
In this case,
the two parties sign an agreement that neither is satisfied,
because neither side gets what they expected.
This is a method often accompanied by opposition,
a husband comes home from work
and says to his wife,
“Let’s go to my restaurant tonight!
Where do you want to eat?”
The wife wants to eat seafood.
But the husband complained that he was tired of seafood
until his neck and preferred Italian food.
The wife complains
that she has been eating too much Italian food lately
and is not interested.
To keep the peace,
they eventually agreed to go for Chinese food
– an option neither of them wanted much,
but it seemed to be the only compromise that would solve the problem.
This is a “win-lose” type of negotiation.
The wife doesn’t get what she wants
and neither does the husband.
However, they accept the negotiated outcome,
because at least they get something,
rather than nothing.
The fourth mode of negotiation is called “compromise negotiation”.
When negotiating compromises,
both sides gain something, and partially benefit,
but neither side’s needs are fully met.
At the end of the negotiation,
both left with a feeling of dissatisfaction.
Although they were not so disgruntled
that they refused to sign the agreement,
they were not very enthusiastic about the outcome of the negotiations.
Negotiating no deal
The fifth method is called “no-deal negotiation”.
In this case,
both you and the other party present their views,
In the end the two sides could not come to an agreement.
The two are too different
but still happily agree not to come to an agreement.
The opportunity is
still there for the two sides to negotiate
with each other when the conditions change.
For example, you want to buy a certain product,
but the price offered is too high.
You bid lower but the seller refuses.
You are not willing to pay more,
and the seller is not willing to lower the price,
so no deal takes place.
Finally, the best negotiation method – “win-win negotiation”.
This is your goal.
In a win-win negotiation,
both sides feel like a winner.
Both have signed a great deal.
They are all happy,
eager to make commitments
and conduct further transactions on that
or other similar basis.
In most cases, win-win negotiation requires a third solution
that is better than the two originally proposed.
Each negotiating party has a set of default ideas,
and positions in mind.
They often find it impossible to compromise
between two very different points of view.
But then they found a third option,
which in many cases would be different from what each side had thought
of before entering the negotiation.
Win-win negotiations will occur
when the third solution is superior
to what the two sides brought to the table to discuss
with each other at first.
Looking for a win-win solution
Some time ago I negotiated a contract to build 330 houses
with members of a town council.
My client purchased a plot of land outside the town perimeter
and completed the design for each lot.
However, the mayors of the town offered $10,000 for each plot,
a total of $3.3 million in cash with the condition
that it be paid upfront to improve the periphery.
This is not an unreasonable number
because the town will have to spend a lot terms of money
to free up this new area.
The problem here is that my client has no cash to pay upfront.
As soon as the project took shape,
we fell into a deadlock,
my clients thought the deal was slipping out of hand.
I am forced to propose a mutually beneficial solution.
“Looks like the end goal involves $3.3 million,”
I said. “We agreed to pay the $3.3 million you requested.”
“Our side will accept all the conditions discussed over the past three days,
including the payment of $3.3 million to the city,
but we need you to make a concession.
We would like you to agree to let us pay this $3.3 million
at the rate of $10,000 per lot when the lots are sold to construction
and development contractors.”
A silence enveloped the discussion.
Finally, the mayor spoke up.
“Well, of course we want to get paid in full in advance,” he said,
“but if the best thing you can do is to make partial payments
when the plot is sold, then we have to accept it.”
Agreement is signed.
This story of mine helps you in your search for a win-win solution.
Be always creative.
Be clear about what each side is required to get in a negotiation
and see if you can find a settlement that works for both parties.
Success tends to bless those who are most committed
to giving it the most attention. – Grant Cardone