Market Meltdown: Using Your Negotiation Skills To Negotiate For Survival
One can see a great deal of uncertainty in the world financial markets wherever you go - for the first time - regardless of geographical location.
Warren Buffet stated that it is only when the tide goes out that one can see who is naked. In other words, it is easy to be successful when the markets are doing well; it is only in tough times that we can clearly discern quality & commitment.
How can you use your negotiation skills, negotiation training or purchasing training to sidestep losses in the present economic climate?
Use 'Loss Framing'
People are more interested by avoiding loss than by attaining the very same gain. Kahneman & Tversky's Prospect Theory work describes how individuals will become risk seeking in an attempt to avoid a loss whilst they are more likely to be risk averse when pursuing advantages. In the way that we negotiate, we can make our counterparties aware of the items that they stand to lose if they don't agree to our requests and otherwise acquire if they do.
Create Alternatives
In times of uncertainty it is very important to look at other options so as to support our negotiation position. The ability to create options is key in the context of negotiation and the power of options to securing a deal is the primary driver of our negotiation power.
Usually we wait until we realise that we are not going to be able to do a transaction before we begin to think about other options. We risk entering into a less than ideal deal and if we have not investigated all the alternatives. Similarly, thinking about the alternatives available to your counterparty in the negotiation will give you a clear view of their relative position of strength in the negotiation. If they have good options available then they will be more competitive and if they don't, they will tend to be more agreeable.
Use Reciprocation
Reciprocation is a key principle of powerful influencing skills, because we are prone to return to others the form of behaviour that they demonstrate towards us. In times of difficulty it is vital that we perform in the interests of our counterparties if we would like them to perform in our best interests. You can use this principle to your benefit by acting first and invoking the principle of reciprocation. Be careful and ensure that you record the indebtedness with your counterparty.
Move from price to value
Remove the focus off price and home in on the Total Cost of Ownership. For all services, products and solutions that we buy or sell, there is always an exchange between value & price. If we only engage on the price, the best that we will do is to haggle and it is only once we start to explore the total lifecycle of the service, product or solution that we trade, that we start to discover options for negotiation. Before you state price in negotiation, analyse your counterparty's long term strategic fit, expertise, switching costs should they wish to change a business partner, financial steadiness and possible risks or negative consequences that may happen when the other side doesn't manage to reach agreement with you.
Don't forget that the magic in negotiation is found in the quality of your preparation. In times of economic uncertainty it is key to dedicate adequate time to preparing for your negotiations.
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