Negotiation plays a key role in any business, not just importing and exporting. At all stages of business, negotiations are held and deals are made. Having a good solid negotiation strategy before attempting to get the deal done is a very wise thing to have.
The Likeability Factor
As we look deeper into negotiation styles, there’s one important factor to negotiation that’s often not talked about..likeability. Deals are done, more often than you may think, on the basis of matching personalities and the likeability between both parties. Money will likely be a big factor but it’s not only the monetary cost alone that can seal the deal.
Dealing with buyers/suppliers on a personal level can be great for a business relationship and further your business objectives. Keep this in mind in your negotiations, it’s not always solely the money.
The Art of the Deal
I’ve not read Donald Trumps’ ‘Art of the Deal’ but I have had 35+ years of experience and I’ve learned that the start of any negotiation should be in the preparation. By being prepared, the success rate is much higher than when you negotiate on the fly.
Begin with L-I-M:
- Step One: Understand what objectives you would LIKE to achieve. What does your perfect deal look like?
- Step Two: Make sure you know your objectives and what you INTEND to achieve. Prioritise this list as you may need to sacrifice one or two to land the deal.
- Step Three: What is the MINIMUM that you’ll accept? Knowing this, is important as it will serve as your ‘breaking point’. If you don’t achieve your minimum, that’s the point that you’ll walk away.
What’s Your Strategy?
A strategy is important and there are really only two outcomes that you need to consider:
- a win-win
- a win-lose
A win-win, as you will probably expect, is usually the best strategy. Win-win leads to collaboration and flexibility and is without, really any doubt, the best step toward a long term business relationship.
A win-lose strategy has its place but is not advisable for the long term. Usually with deals that are a one-of, just make sure it is a one-off or you may find it harder doing a second deal.
Listen, It’s Not All About You
Listen to what the other side wants and try to understand their needs and work towards bridging the gap.
Is what they are asking for reasonable? What can you do to accommodate? Can you meet them halfway?
Methods of Persuasion
There are 5 styles of persuasion. You may find you need to use more than one in a single negotiation.
- Logic: Simply and effectively, lay out the facts. Explain the positives, the negatives and talk each one through.
- Bargaining: Or discussion. This is seen on Dragon’s Den – when the Dragons like the business, they want to get involved and try to make the deal. This approach is a positive strategy as it shows a willingness to work together. Preparation using L-I-M and knowing what you’re able to give up will give you a better chance of sealing a deal.
- Emotion: This can be where your likeability can play into the negotiation. Both parties are more likely to do a deal if you like each other, so find some common ground on a personal level and play to those emotions.
- Threats: Certainly not the best place to start but threats can be effective. Usually most effective when you have something you can take away from the other party. For example, you’re a valuable client and you threaten to take away your business if they don’t accommodate. However, be realistic in this tactic, there’s no point in trying to squeeze a supplier to sell to you at a loss so have realistic expectations.
- Compromise: Of the five styles, this is likely the best. Through dialog, discussion and listening, compromise will give the best deal and likely a longer term relationship.
Every negation is unique so find the best method for you or maybe it will be a mix of a few depending on how the talks unfold.
Your own personality will play into talks and negotiations and you should take that into account. If you’re more of a “down to business” person, logic may be the best approach for you.
If you’re more personal, using emotion may suit you.
Find your own style and use that to your own benefit. Below is a handy guide to keep:
Alan Bracken BA has over 35 years experience in international trade and runs import export courses online which include one-to-one support.