5 Steps to Effective Negotiation
“I am sorry, we can’t match that.”
Probably the toughest words you can hear when you first start out in negotiation. Whether it’s a job offer, and off the rack t-shirt price or a car, knowing how to properly negotiate can significantly help you and the other party involved. In this article, I have taken my personal experience from negotiating job offerings and contracts to also larger deals where I have been behind the scenes of multi-millionaire dollar company acquisitions.
I work in a pretty weird industry- speaking. This is one of the only industries that has the product price (keynote speaking) always up for negotiation. What this means is, when I client reaches out, there is always a back and forth matching between what I want someone to book me and what someone is willing to pay. Every day at least myself or someone on my team is negotiating. From the thousands of negotiations, you start to see patterns and best practices on finding the best solution that works for both parties.
However, many people reading this post, probably are not in speaking. Maybe they are looking for a job or are looking to buy a car. There is a common thread running through all of them and I wanted to put that in this post. However, due to the variety of backgrounds, I wanted to make these steps more general to maintain applicableness to the reader.
Get a lay of the land
Instead of just throwing out a number, a probing period is necessary where you are asking questions and looking for what is motivating the other party. In addition, uncovering what makes your value attractive versus other people on the market. For speaking, I usually try to uncover why the event is occurring, who is going to be there, their past experiences with other speakers, the number of attendees, and what interests them about my background. For a car, it could be that they might have a quota and to meet their quota for the month they need to sell a specific car. For a job position, it could be that they have been trying to fill the position for the past six months.
Through this probing phase, a few things happen behind the scenes to that helps with negotiation:
- You understand where your leverage points are. For my field, if the last speaker that the company hired was an inspiration and now they want a practical speaker, that would be a leverage point and why they want me specifically. When I deliver an offer, I capitalize on that, in addition to building rapport during this initial phase.
- You listen to tonality and level of interest. Sometimes people have cold feet with others that are ready to go. Readiness will help with delivering an offer that will stick. If they have too many cold feet, probing on why and how you can expedite is important when drawing up the offer.
This step is where typical negotiation happens. The goal here is to uncover the starting point of negotiation. In this case, I want the other party to start at a price point. To uncover that, I usually ask a question like ‘do you have a budget for speakers?’ If they say yes and pause and ask for a response on my end, I need to go. About 40% of the time, when I ask this question, I am able to get a price.
However, when I have to offer a price, in cases where they ask directly, or you ask the other party and they won’t give you an answer, I give a quote of what I typically do, but also have in my mind the lowest that I will go in the deal. When I deliver the quote, I make sure to highlight my leverage points uncovered in step one so that the quote itself is customized and is aligned with the other party’s interests.
Hold Your Position
This is probably the most critical point of the negotiation if you have to give the first prize on the table, your goal is to hold strong. That means not saying anything and letting the other party soak it in. Very often, people feel insecure about negotiation and before the other party and even say anything, the person doing the quoting is undermining what they quoted by stating something like ‘but I can negotiation’ or ‘but we can discount it’.
More often than not, the person on the other end is waiting for this quote and is writing it down which leads to a bit of lag time. These few seconds, just quote and hold and let the conversation go where it needs to go.
Compromise to your breaking point
If the offer you present fits, great you are done. If not, they will most likely come to the table with a counter offer. If that offer is not within your range, state the lowest you can go, and if they can’t match that then the deal is no good. Unfortunately, in the speaking world, associations usually have a fixed budget so haggling won’t get you very far in juxtaposition to someone trying to buy a car.
Push where they aren’t
Now that you have effectively negotiated the most important thing price, at this point, find those extra things you want in the deal as well that might not be very valuable to the other party but are very valuable to you. For instance, we like to have our clients film the event, or hire us to write a few articles on their website afterward. If its a job offer, once the salary is agreed upon, you can then negotiate other nuanced items like commuter benefits, work from home benefits. If it’s a car, it would be extras like warranties, seat covers, etc.
Well, that’s it. There are many articles around the web on this particular topic, this is my perspective on how typical negotiation works from a simple perspective. It’s a pretty simple approach, many people skip the first step and stumbling on pausing. With this broad view of negotiation, you can walk into any negotiation situation and understand some of the processes that are happening behind the scene. If you are an expert in the negotiation then this post was probably a waste of your time and unfortunately, you won’t be able to negotiate any of your time back.
Jeff Butler Internationally respected speaker and consultant, Jeff Butler helps bridge generational gaps between Millennials and companies looking for their talent and patronage. Butler has quickly built his reputation as a memorable presenter with tangible solutions for attracting, retaining, and engaging Millennials as employees and customers. Within just the past three years, he has spoken at two TEDx events and multiple Fortune 500 companies such as Google, Amazon, and LinkedIn.
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