by Bill Hellkamp
One of my favorite workshops deals with how to increase your power and confidence when negotiating. It is crucial when negotiating to have a strong position so that you have a chance to hold your own in the final contract. Often, however, we find ourselves forced into situations where we aren’t strong and therefore have little confidence when facing the other party. The purpose of this article is to help you identify those factors which cause you to negotiate from a weak position. By being aware of these circumstances, you will have a better opportunity to defend against them.
You really need this business.
All organizations and salespeople understand the ebb and flow of business. And when business is slow, you will be encouraged by sales managers and upper management to get those contracts closed. These pressures are some of the main reasons for weak negotiating. It’s almost as if the person on the other side of the table can sense your desperation! Perhaps we are putting out subtle (or not so subtle) signals that we are willing to lower our requirements in order to get this job done quickly.
Your need is urgent or you are in hurry.
Other than needing the business, there are also situations where you must have the product or service in order to keep your business going. Perhaps you are a manufacturer who has just received a large order for one of your products. Now you have to go to your suppliers and ask for extra parts. Because this request is unusual, it could become apparent to the supplier that you have an urgent need. This could put upward pressure on their pricing and damage your negotiating position. Timing is a big factor in a negotiation. If you are selling a house in order to buy a house you may be willing to drop the price of the house or make other concessions in order to get it sold so that you can make the down payment on the new house.
The items you need have become scarce.
Scarcity of anything (product, service or commodity) will cause the price to rise. Unfortunately, you may still need to get hold of those scarce items to further your business goals. If this item is a commodity (salt, oil, silver), the price won’t be as negotiable because the market is well established. However, you could look to make gains in the areas of quality, shipping, terms, etc. If you are searching for manufactured items that are scarce, you may be able to look for other suppliers or alternative solutions that don’t have the same perceived scarcity. But be assured, when demand is high, price will reflect that.
Your level of authority is too low.
There comes a time in a negotiation when you will need the authority to make a particular decision. If you don’t have that level of authority and have to contact someone else in the organization, it can slow down the process and make you feel less competent. An adept negotiator on the other side of the table may use this as an opportunity to question your capability to participate in the negotiation. For example, they might say, “If you need to keep running the decisions by your boss, perhaps we should bring her in to handle this contract?” The purpose of this is to put you off balance and to doubt your own abilities. Or it might embarrass you into making a decision that would be better run by someone who is more experienced. When there is an imbalance in authority (or title, or number of participants), the person or group on the lower side can be at a disadvantage.
You undervalue your product or service.
The mindset you have toward the price you are charging for your product or service will have a great effect on how strongly you are able to stick to your guns when the buyer starts to put downward pressure on your negotiation. When you get challenged on price, your body posture, eye contact and voice strength can all give the buyer a sense (not always at a conscious level) that you don’t have confidence in the asking price. And like a shark sensing blood in the water, a savvy buyer will eat you up in a moment. I often find that when an employee doesn’t mentally and emotionally support the price structure, they don’t have a full understanding of what it costs to run a business. They focus only on the manufactured price of the item and forget the cost accrued through overhead, shipping, marketing and even their own salary. Before going into a negotiation you need to be convinced of the total value of your solution.
These and other factors can lessen your resolve when you are negotiating. Awareness of these weaknesses will allow you to be more thoughtful about how you enter into the process. Learning effective negotiating skills would help you position the deal in a way to minimize your weakness and maximize your strengths. REACH Development Systems offers the program, Negotiating the Win-Win which will help you to become a more effective negotiator.