Negotiation is the strategic process of discussion through which 2 or more people resolve an issue and reach a mutually acceptable agreement. For any negotiation to be successful and self-sustaining, all people involved must make some concessions or compromises. There exist many types of negotiations for example - between individuals, businesses, or government, and usually consist of the steps of Preparation, Exchanging information, Bargaining, and Closing the Deal. Negotiation is a skill that can be learned. Those who wield it successfully most often do so with flair and panache because of their innate ability to listen, think under pressure, articulate with absolute clarity, and compromise without losing the big picture.
Successful negotiation requires bringing researched information that not only supports your cause but also justifies your position. It requires having empathy for the other people involved, by being able to see things from their perspective. It requires keeping your emotions in check to avoid decisions being made from an emotional frame of mind be it anger, loss, love, etc. It requires knowing when to walk away as sometimes stepping away from a stalemate or taking time to get a fresh perspective can make all the difference.
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For this article, we will keep the context within the realm of Advertising, Marketing and Sales. Negotiation and negotiation strategies are an essential part of day-to-day life whether you are in the business world, international affairs, or within your environment at home. A successful negotiation leaves everyone involved - satisfied that they have got a fair deal that they can live with. It has to be a win-win for everyone if there is to be a long-lasting agreement.
Applying negotiation strategies in Marketing and Sales usually revolves around collaboration, value creation, strategic thinking, relationship-building
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Consultative Selling: Understanding customer needs and proposing solutions that provide value
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Strategic Partnerships: Creating long-term benefits for both organizations
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Price and Term Negotiations: Focus on creating value for both the buyer and the seller
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Customer Relationship Management: Understanding the needs and interests of customers via tailor-made strategies that help maintain positive relationships with customers to establish loyalty and continued business
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Data-driven Marketing: Leveraging analytics to develop new marketing strategies, product pricing, and even brand positioning
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Value-based Selling: developing new ways to create additional value for clients
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Risk Management in Deals: Mitigating risks during marketing and sales transactions to ensure favorable outcomes
4 Steps to prepare for a negotiation
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Research for Information. The foundation for any negotiation is knowing the opponents/customers’ background, and understanding how they think, feel, believe, and operate. What are their strengths, weaknesses, wants, needs, and desires that will help you better anticipate how customers are going to respond to your proposals?
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Understanding Priorities. All parties involved even if they are your customers have an interest in coming to an equitable agreement they wouldn’t bother to even engage in a negotiation. Knowing what their priorities are enables you to formulate better strategies to begin with.
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Defining Outcomes. Beginning any negotiation without understanding and defining the outcomes you want to achieve is not only the longest way to achieve any success but also almost guarantees that you will have settled for less than what you will be comfortable with later on.
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Potential Concessions. Give too few concessions makes you appear to be playing hardball; give too many or too much and you weaken your position too soon. Finding those concessions that make you comfortable and those that the other party finds acceptable will ensure that the deal closes quickly and successfully.
5 Styles of Negotiations
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Competitive Negotiations (I Win - You Lose) are those negotiations that are usually aggressive and assertive because one party follows a need to win at all costs (even at the expense of the other party). This style doesn’t always work because one party is almost always unwilling to compromise, is overly aggressive, and demonstrates low cooperation. Even if this style does succeed it is because one party is weaker/ has a greater need than the other. The pitfall of this style is that the ‘weaker’ party can easily prepare for this and eventually both parties reach a deadlock. It also can put a tremendous strain on the relationship.
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Collaborative Negotiations (I Win - You Win) are those negotiations involving a pleasant working atmosphere for all parties concerned. It is where problems are solved in a win-win, open communication format, where a balance is struck and the wants, needs, and desires are met equitably. The pitfalls of this style are when collaborating with a party who is unwilling or not reciprocal in sharing information.
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Compromise Negotiations ( I Win/ Lose Some - You Win / Lose Some) are those negotiations that usually ‘split the difference’ between the parties. This style is usually adopted when both parties don’t have enough time and already have some form of a trusting relationship between themselves. The pitfalls of this style are that neither party is prepared enough or is usually winging it. When faced with a competitive negotiator in a compromise negotiation most often the competitive negotiator will win
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Accommodative Negotiations (I Lose - You Win) are those negotiations where one party makes a ‘sweetheart’ deal (because it prioritizes the relationship, and is highly cooperative and willing) now for a more ‘balanced’ deal in the future. This style intentionally puts one party at a disadvantage from the very beginning as they do not look at seeking a win now and hope that down the line they can recover the ‘loss’. The pitfall of this style is that you give away too much, too quickly which sets a bad precedent for future negotiations
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Avoidant Negotiations (I Lose - You Lose) are those negotiations where one party intentionally avoids addressing the issue and thereby avoids conflict. Usually, one party is more aggressive and competitive than the other which results in the weaker party adopting a passive-aggressive style. The pitfalls of this style are that it indicates that the other party is avoiding you because they are not really interested
Negotiation Style Amplifiers
Any form of negotiation can bring up differences for all people involved. To overcome and deal with these differences, leveraging common beliefs; approaches such as culture, emotions, and interests can be used in combination with the above styles to achieve the desired outcomes.
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Culture / Cross-culture: Focuses on adapting to cultural differences and expectations. recognizing and respecting different values, norms, and communication styles, avoiding stereotypes, biases, etc, businesses can. build rapport, trust, and influence with the customer / other party and avoid further misunderstandings and conflicts. Depending on the context and objectives cross-culture negotiation can be used alongside almost any negotiation strategy or style.
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Emotional Intelligence: Focuses on understanding and managing the emotions of everyone involved during the negotiation process. Leveraging skills like self-awareness, empathy, self-regulation, etc helps build rapport, trust, and influence while coping with stress, frustration, and anger. Depending on the situation and goals, emotional negotiation can be used alongside any negotiation strategy or style.
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Principled / Interest-based: Focuses on a collaborative and integrative approach. Resolving the problem by separating the people from the problem. By focusing on objective criteria, generating multiple options, and insisting on mutual agreement this form of negotiation can create value and build long-term relationships amongst all people involved. It focuses on a win-win outcome that can also be used alongside almost any negotiation strategy or style.
5 top benefits of Negotiation Strategies that directly impact business growth
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Leveraging Negotiation Strategies helps businesses negotiate prices at the time of purchase thereby keeping more capital reserves that could be diverted to further business expansion.
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Leveraging Negotiation Strategies helps businesses maintain normal operating standards during times of crisis while all parties involved find a workable solution
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Leveraging Negotiation Strategies helps businesses maximize value between two or more parties through acquisitions or integration of solutions that didn’t exist earlier.
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Leveraging Negotiation Strategies helps businesses achieve favorable outcomes for all parties concerned even if they can’t completely agree and have to walk away with some concessions.
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Leveraging Negotiation Strategies helps businesses smooth out operations within the organization by ensuring all parties find resolutions to their problems - by developing new processes and procedures or even eliminating ones that have become redundant.
Caveats and pitfalls
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Don’t be in a rush to close the deal. Negotiations take time, they require personal sharing, building trust, authenticity, and transparency to even begin the main processes of negotiation
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Don’t take things personally. Getting emotionally involved can and will only hurt feelings and make the negotiation process more difficult
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Don’t accept a bad deal because you are tired of the process or want to quickly finish it and move on. It is better to just walk away
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Don’t over-negotiate a deal so much that it either affects the relationship or results in sub-optimum output in the long run
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Don’t make assumptions as it will lead to failure. Ensure that gather as much information as possible at the beginning and that the information is correct
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Complex and multiparty negotiations are most often never completely closed. Victories earned during these types of negotiations must never be taken for granted as they can turn out to be short-lived
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Always identify and nurture potential allies before asking for their support
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Be aware of your most likely and potential opponents at the beginning of your negotiations
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The greater the number of opponents - the greater the diversity and therefore the greater the chance of two or more forming a coalition
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Always listen to the concerns and address each of them to the best of your ability or the satisfaction of the concerned party
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Negotiation is not a 1 step / 1 shot wonder. It is continuous and ongoing and requires anyone’s support to succeed
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Always remember that it is a bad strategy to negotiate by continually conceding
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Time is the biggest enemy of any negotiation. The longer it takes to complete the deal, the greater the likelihood that something will occur to derail it
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Always get the help of the best advisors and lawyers to draft contracts and help with more serious negotiations
Conclusion
Negotiation happens every day and with everybody. It is not limited to work environments or just with world leaders but also at home with friends and family members. Negotiation strategies help people get what they really want in any given situation. You can be the initiator or the recipient of an offer. What matters is your ability to engage in a negotiation that benefits you and builds your reputation as an authentic and reasonable player. Remember to be the first to make an offer / Prepare the letter of intent or the Term Sheet so that you set the standard, and always provide set terms instead of the price range. Communicate clearly and choose your words wisely to build confidence and acceptance. Ask open-ended questions and be a good listener to understand your customers and address their concerns or pain points. Finally always offer a win-win scenario else risk buyer remorse, low trust, and poor rapport.
Additional Reading: Augmented Reality Marketing, Sell Happy Emotions, The power of PR, AI possibilities in Mar-Comm, Creating Effective Customer Journey Maps, Why Experiential Marketing Matters, Business Growth requires Customer Centricity, Consumer Insights Marketing Success, How to define and deliver Value, Behavioural Psychology for customer loyalty, Marketing Funnels in a disloyal marketplace, Customer PainPoints and more, Customer Biases for Brand Growth