High-stakes negotiations create anxiety that may cause negotiators to focus on perceived threats rather than exploring all possible forms of leverage and options, thus missing opportunities to capture more value.
Successful contract negotiations hinge on countering decision biases. Debiasing negotiation strategies have shown to increase ROI by up to 9 percent.
1. Understand the Other Side’s Needs
An informed negotiator can take control of their negotiation more easily when they understand where their leverage lies. Recognizing areas of leverage allows negotiators to formulate strategies for overcoming any potential obstacles to reaching an agreement.
Effective negotiators use questions during the discovery phase to gain insight into their counterpart’s objectives and constraints, thus creating options which satisfy both parties while acting as leverage in negotiations.
An organization looking to renegotiate subscription contracts with universities and libraries might tailor its solution specifically to each organization, creating a win-win solution that meets both parties’ needs while strengthening its reputation as fair and flexible.
Understanding the other party’s needs and interests is especially essential when dealing with non-dominant groups such as minorities or under-represented cultures or gendered populations. This can be achieved through active listening as well as regularly asking for additional clarification regarding statements made and nonverbal gestures made by them.
2. Create a Plan B
When it comes to negotiation, many people view their deal in two categories–cooperative or competitive. Although this approach may feel natural and effortless, it may actually hinder its successful conclusion.
An effective way of building leverage is by seeking new opportunities that can assist the other party in reaching their goals. The goal should be to find creative alternatives and compromises that bring value for both sides, rather than one-time savings or higher covering of moving costs.
Before entering any negotiation, conduct extensive research about your product’s market value and competitors’ prices to better establish priorities and form more persuasive arguments during negotiations. Be mindful about your timing. For optimal results, negotiate during sales seasons or end-of-month/end-of-year periods when sellers may be more motivated to meet targets; taking advantage of these times can bring substantial discounts or leverage during discussions. Umbrage positioning can also be highly effective at creating leverage during these negotiations.
3. Position Yourself as a Leader
Leaders strive to foster quality relationships built upon intimacy and earned transparency rather than avoid conflicts or engage in transactional interactions, with an ability to express differences, define mutual interests and engage in constructive rephrasing of competing positions. To do this effectively requires being open-minded when it comes to conflict expression and constructively reframing opposing viewpoints.
Negotiations is all about positioning. How you present yourself to the other side can have a dramatic impact on their perception of you as part of the relationship; confidence in one’s value and abilities can be an excellent way to convey their seriousness about their negotiating goals.
Timing can have an immense effect on negotiations. Knowing that a seller needs to hit sales goals before their fiscal year closes or unload inventory before releasing a new product may motivate them to offer competitive deals. Do your research beforehand, and come prepared with details about competitors, market conditions and any promotions or discounts which might be available.
4. Be Prepared to Walk Away
Have you ever found yourself negotiating with another party and feeling like you were being taken advantage of? Whether buying from a dealer who wouldn’t budge on price or receiving poor treatment during a job interview – walking away may help ensure a more favorable deal in the end.
An effective approach to negotiation leverage starts with thorough preparation. This should involve researching your counterpart and understanding their needs, preferences and limitations as well as evaluating your own resources and alternatives in comparison with those of their opponent.
Your own level of skill, familiarity and comfort in negotiation is another source of leverage. Be wary of tactics used by other parties to gain leverage and be prepared to counter them effectively. Furthermore, be clear in advance as to your wish, want and walk values before entering any negotiations.
