If you read through business books, you’ll find a lot of tips, tricks and tactics on negotiating. And, for companies, getting negotiations right is absolutely vital, as you need to get the best possible deal.
But one thing that’s often overlooked is the relationship with the customer or partner that you’re working with, especially over the long term. Customers and partners are part of the bedrock of your business, and unless you thinking about your long-term relationship with them when making deals will inspire loyalty – something that can be very valuable when times get tough.
So when negotiating, try and start from a position of "win-win". This means looking for a deal which will benefit both you and the customer or supplier, rather than something which stacks everything in your favour.
But how do you create "win-win" agreements? There are five key elements:
1. Strive to understand the other party’s wants and needs
Although it’s always wise to have some insight into the other party, don’t go in to negotiations assuming you know what the other party wants. Be prepared to listen – listening is an oft-forgotten part of the negotiation process. Many bad deals are done simply because the two parties spent more time talking about their own needs than thinking about the other’s.
2. Attempt to solve their problem, as well as your own
Once you have a clear idea of what the other party wants out of a deal, think about how to solve their problem as well as your own. For example, if a supplier comes to you wanting to increase the price of something, can you solve their problem by retaining the current price but opting for a more fixed contractual relationship? This might suit their need for financial stability while not increasing your overall costs.
3. Be flexible
It’s almost a cliche that flexibility is important for businesses, and that you need to be flexible in negotiations. However, that doesn’t mean giving away concessions without getting anything in return: if you find yourself doing that, you’re turning a potential "win-win" deal into something that’s "lose-win" – with you on the losing side. Be upfront about this from the start, and whenever you’re asked to make a concession, engage with the other party to find out what you can get in return.
4. Focus on "growing the pie"
The best deals are the ones which not only give both sides a good deal, but which "grow the pie" – expanding business for both parties. Even when you’re negotiating with a company which may be in competition with you, you can both end up winning if you can expand the market in some way. So look for options which will expand business for you, either in the short- or long-term.
5. Don’t be afraid to walk away
Sometimes, you’ll be in a negotiation and realise that the other side really isn’t interested in creating a "win-win" relationship – they are more interested in you losing than in making something that works for everyone. In this situation, walk away from the deal. Establishing yourself as a company which can be pushed over in negotiations is a massive error in the long term, even if it’s a little painful short term.
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