The Power of Negotiations and Persuasion

Defining Negotiation

Have you ever found yourself stuck at an impasse with another person? The problem: you can’t persuade the other side to take your position. It happens all the time in business and it requires effective negotiation strategies. Negotiations are all about your ability to a) persuade the other side to adopt your position and b) subsequently persuade them to take action. 

However, negotiations also require compromise. During most business negotiations, each side is entrenched in their own position. They think that their perspective is absolutely correct and they are resistant to outside opinions. The job of a good negotiator is to figure out what those positions are, how to break them down, and how to give each side something that they want or need. 

In essence, each party has to give up something they have to get something they want. This is why negotiations are an art form. Fortunately, they are an art that can be learned.

It’s a common misconception that people in business don’t negotiate within their company. The reality is that you have to negotiate with everybody. Negotiations are the essence of dealing with other people. 

As a business owner, you need to negotiate with your workers so that all parties are satisfied. You want your employees to use their skills to provide you with services you and your business need. At the same time, your employees want you to provide a safe work environment and fair compensation, among other things. In short, your employees must give their time and effort, while you must invest in your employees. If both sides can compromise and negotiate successfully, your business will run more smoothly.

Changing Your Perspective

Now that we’ve covered negotiating with people in your own organization, let’s look at how to negotiate with people on the outside, like vendors or contractors. During these negotiations, you should try to talk in terms of the other party and not yourself. You must ask the other party one simple question: what is your objective? 

People often focus on themselves and what they want during a negotiation. This strategy is a big mistake and very counterproductive. When you negotiate, you should always find out what the other side wants first. You need to understand their position before addressing your own. In the vast majority of cases, if you understand what they want, it will be very easy to make them receptive to what you want. 

Understanding Their Perspective

There are two dynamics that often occur during the negotiating process. First, most people come into a negotiation thinking, “I’m going to get whatever I can from this situation.” This causes both sides to become entrenched. Then, you’re left with two opposing forces, rather than two collaborative parties. So, what happens if you take the initiative to find out what the other party wants? What happens if you really try to understand their perspective, rather than simply pushing to get what you want?

We’ll look at a common example to find out. Let’s say your negotiation concerns pricing. First, ask the other party what price they want. Then, ask them why they want that price. Finally, ask them how much they would be willing to change that price. 

In some cases, the other party can’t or won’t budge. So, repurpose the question. Under what circumstances would you go lower? You’ll find that, even if the other party seemed immutable at first, they will likely be more receptive to compromise once you understand their position.

Repositioning the Conversation

If pricing talks have stalled, you can also shift the focus of the negotiation. For example, if the other party won’t budge on price, you can negotiate around deliverables. You could ask for more or fewer deliverables for the same price. Taking a different negotiating posture can help you get what you want and work around thorny issues. 

Here’s another example. Let’s say that you want a service that has several components. The other party offers the full service at a set price. In this situation, you can ask the other party how the price would change if they were to remove one or two components from the service. You’d be surprised to see that fine-tuning or adding limits to their offering will often result in a substantial price reduction.

By repositioning the negotiation to focus on the other side, you’ll find a lot of new opportunities to give both parties what they want. This happens because the other side feels like they got a fair shake out of it. Ultimately, that’s the purpose of any negotiation: to get a fair shake.

The same principle applies in the opposite scenario. Let’s say that you are selling a product and the other side doesn’t want to pay your asking price. From the start, you should ask them exactly what they want. From there, you can try to scale down the offering to a point where you feel comfortable with the pricing and the other side feels happy with the price. 

Perhaps you can remove certain components from your offering to justify a reduction in the price. This way, you can still make the sale and profit from the deal. In this case, both sides get what they want and nobody has to walk away from the negotiating table without a fair deal.

Mastering Your Negotiation Strategies

People often start a negotiation by saying something like: “I want this service with all of these components, but I want a lower price.” Nine times out of ten, the other party will respond with: “I’m sorry, but that’s the price.” The negotiation will screech to a halt just as it was getting started. Both parties come to an impasse, forcing everyone to walk away disappointed. So, let’s look at a few ways to avoid this situation:

The Principle of Rock Bottom

To illustrate the Principle of Rock Bottom, let’s look at another instance of price negotiation. It’s important to note that pricing is not the only issue that people negotiate, but it is something that business owners and vendors frequently get stuck on. Oftentimes during a negotiation, one side asks for a lower price. the other says no, and it continues on and on with little or no progress.

Instead, you should ask the other party the following question: what is the absolute lowest price (or “rock bottom price”) that you would accept? In most cases, the other party will give you a lower price that is feasible for them. You know with relative certainty that this is the lowest they can offer without making the deal a waste of time for them. The end result is that you get the best possible price, while the other party gets to sell you something at a profit. 

The Power of Silence

Silence is a powerful tool in negotiations. It also goes hand-in-hand with the Principle of Rock Bottom. Just ask one simple question: what is the absolute lowest price you’re willing to accept? Then, go silent. Wait for them to give you an answer. To negotiate effectively, you have to learn not to talk. If you say too much, you could lose out on a great deal. So, the less you say, the better.

In some instances, the silence can go on for minutes at a time. Both parties simply wait for the other to say something. Eventually, someone will flinch, but it better not be you! The first person to speak often loses ground by default. 

This is especially true if you’ve asked the question. When you ask a question and the other person refuses to answer or say anything, just wait. Eventually, they will answer or attempt to move the discussion forward in some way. Silence helps you keep the power to negotiate and prevents you from saying something that could jeopardize a fair deal. 

Negotiate Deadlines with Empathy and Wiggle Room

Now let’s move on to a tactic related to deadlines. Let’s say that the other party sets a deadline for a project or deliverable that is too long. They say that they can finish it up in a week, but you want it done in three days. You can push for a shorter timeframe with an appeal to empathy. 

For example, you can say that your boss or manager wants you to have the project ready within three days. Emphasize that it will be a big problem for you if it’s not ready on time. Then, all you have to do is ask for their help. You’ll find that many times, people will accept your proposition and go out of their way to meet your deadline. If they can, they probably will.

It’s also important to establish some room for negotiation if you have a firm deadline. For example, if you really need the deliverable ready in three days, tell them that you need it in two days. If you start off saying you need it in three, the other party may come back and say that they can have it ready in four days, but no sooner. So, if there’s no wiggle room with your deadline, make sure to ask for more than you actually need.

The Bottom Line

At the end of the day, this is how you should work with other people. In the Exit Mindset, you’ll be dealing with a lot of people for a lot of different reasons. Whether you’re managing your product, your infrastructure, or your conversation with consumers, you’re going to need effective negotiating skills to achieve the results you want and help others achieve what they want. Remember, action is everything. Use it or lose it. 

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Listen to Our Podcast

In this episode of the Exit Mindset, we join Rem Oculee, the Founder and CEO of Confidence Wealth Management, as he discusses the importance of using the right negotiation strategies, common mistakes and misconceptions about negotiating, and different ways to incorporate the Exit Mindset in your next negotiation.