When we enter into a sales negotiation, we often rely on what has worked for us in the past. We don’t spend a lot of time thinking about what new negotiation styles or negotiating techniques we could bring to this negotiation because we assume that one sales negotiation is going to be like all of the others. However, that is where we would be wrong. It turns out that if we are willing to learn some new sales negotiation techniques, we just might be able to get to the deal that we want quicker with a better result for both sides.
It’s All About Framing
When we are involved in a sales negotiations, if we make the first offer it is generally a smart move. Negotiators need to understand that the first offer can anchor the discussion that follows and can have a powerful effect on the final outcome. This of course brings up the question about what to do it the other side makes the first offer. In this case you’ll need to be prepared to frame your counteroffer carefully. What is meant by framing in negotiation? Simple, it involves crafting your offer to improve its appeal. When you take the time to frame your counteroffer with a strong rationale, you may increase your odds of re-anchoring the discussion.
During A Negotiation Choose the Best Rationale
As we start a negotiation, we need to choose which rational we want to use. Two of the common types of rationales in business negotiation are (1) constraint rationales and (2) disparagement rationales. A constraint rationale is one that focuses on what’s holding you back from accepting the other side’s offer, such as not being able to afford what they’re asking. In contrast, a disparagement rationale is one that critiques what the other party is offering – for example, by suggesting the quality is low.
One of the biggest questions that negotiators have to deal with is trying to determine which of these two types of rationales works best during a negotiation. It turns out that sellers are significantly more swayed by buyers’ constraint rationales than by their disparagement rationales. The reason for this is because sellers may view the criticism in a disparagement rationale as inaccurate and rude, and react by standing firm on price. The other reason is because when buyers describe their financial constraints, sellers may take them at their word when they say they can’t afford the deal on the table.
So what’s the best way to respond to a seller’s offer? A buyer is likely to get a better deal if they supplement their counteroffer with information about their financial constraints than if they tries to diminish the value of what’s being sold. Similarly, a seller facing a buyer’s first offer may get a better deal if they say that they can’t afford to go lower than if they disparages the buyer’s BATNA (best alternative to a negotiated agreement).
Always Highlight Losses Rather Than Gains
It turns out that negotiators are more motivated to avoid losses than they are to achieve gains. Because losses weigh heavily on our minds, framing the exact same price as a loss during a negotiation likely will have a greater effect than framing it as a gain.
Negotiators prefer to gain money in installments but to lose money in one lump sum. In the process of business negotiation, when you are making a price concession, it can be smart to divide it into two or more smaller concessions. However, when you are asking for a concession on price, make one demand rather than two or more partial demands.
Never Overjustify Your Offer
Negotiators need to realize that even making a poor justification for a first offer can be more effective than not making one at all. However, negotiators tend to rebel against more significant requests with weak justifications. When a justification for an offer is easy to counter, it can inspire a backlash from the other side. If during a negotiation you have shown off the many attractive features of your product, you can let your first price offer stand on its own.
What All Of This Means For You
When we enter into out next sales principled negotiation, we will want to get the best deal possible. However, the way that we’ll go about getting that deal may be based on what has worked for us in the past. What we need to realize is that we may not be aware of the things that we can do to have a better chance of closing a deal. What we need to do is to make sure that we know what all of our options are.
During a negotiation, you want to be the person who makes the first offer. You want to frame your offer in such a way that it appeals to the other side. There are different rationales that we can choose during a negotiation. We need to choose the one that is going to work the best for us. Negotiators are going to try to avoid having losses more than they are going to try to maximize their gains. Every negotiator likes to get a gain in installments but if they have to lose something, they’d like to lose it all at once. Your offer to the other side is good offer. Never make the mistake of trying to overjustify it.
As negotiators we are always trying to become better at what we do. We all know that we don’t know everything and so we’d like to be able to learn from others. If we can become aware of what all of our options are when we enter into a business negotiation, then we’ll have more ways to reach a deal with the other side. Consider what we’ve talked about and see if you can use these ideas to get a better deal out of your next negotiation.
– Dr. Jim Anderson
Blue Elephant Consulting –
Your Source For Real World Negotiating Skills™
Question For You: How can you tell if you are in the process of overjustifying your offer?
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What We’ll Be Talking About Next Time
Let’s all agree that each one of us has a unique negotiating style. We may not be aware of just exactly what our style is, but it is most defiantly there. In fact, if we talked with other people they could probably describe our style to us. What we need to be aware of is the fact that in a negotiation, everyone brings their own negotiating style to the table. This means that we need to be able to identify the different styles and what they mean. Can you do that?