One Source Of Power For You In A Negotiation: Your Competition

Just how well do you know your competition in a negotiation?
Just how well do you know your competition in a negotiation?
Image Credit: Steven Pisano

One of the biggest challenges that we all face when we are negotiating is not the negotiation styles or negotiating techniques that will be used, but rather the simple fact that the people that we are negotiating with have other options. If they don’t like what we have to offer to them, then they can go and do business with our competition. Knowing this puts pressure on us. We do things like lower our price, etc. because we fear that our competition can offer our customer a better deal than we can. However, is this really the case?

The Challenge Posed By Your Competition

I am more than willing to admit that I can feel intimidated when I am entering into a negotiation where I know that the other side is also negotiating with some of my largest competitors. As you can well imagine, I am very aware of what my competition has to offer and I’ve lost a number of deal to them in the past. I sure don’t want to lose the one that I’m currently working to them.

More than once when I’ve been involved in a negotiation, the other side has told me that my product is just like everyone else’s. What they are saying is that for this deal, nothing else really matters except for the price that I’m planning on charging them for my product. They’d like to have my price, then they’ll go talk to my competition and since everyone’s product is more or less the same, they’ll just end up buying from whoever can offer them the lowest price. Does any of this sound familiar to you?

This kind of talk may sound legitimate to you. I mean, you do have a number of competitors who have products that may be very similar to yours. The other side of the table knows that these competitors exist and you have no reason to believe that they are not currently talking with them about the deal that you are working on. However, what you need to realize here is that all of this talk only means something if you believe it. If you believe that your competition has a good chance of winning this negotiation, then you are at a disadvantage. However, do they really?

Why Your Competition Might Actually Make You Stronger

Just because you have some (or a lot of) competition does not necessarily put you at a disadvantage in a negotiation. The reasons why can seem a bit mysterious and so perhaps we need to take a moment and see if we can find out what is really going on in the negotiations so that you’ll understand how your competition is actually making you more powerful.

Just because there are other firms that offer what you are offering does not mean that the other side of the table can select them. The reason for this are many and varied. If the other side of the table has done business with one of your competitors and it went badly, then they’ll have a negative impression of them. Who would want to strike a deal with someone who had not delivered in the past? Another way that the number of actual competitors that you are up against may be limited is if they can’t provide the product or service when the customer wants it. Yes, they do offer a product that is very similar to yours but if they are out of stock or all booked up, then it’s as though they really don’t exist.

The reasons that the other side of the table can’t select your competition go on and on. One subtle issue might be the terms of the deal. If your competition’s company insists on being paid up front because of issues that they’ve had with customers in the past and your company is willing to give customers up to 30 days to pay the bill, then the customer my end up eliminating your competition from consideration. Another point for you to consider is if you are even competing with anyone. Sure, you know who your competition is, but does the other side of the table? Even if they do, did your competition show up to negotiate with the other side or were they too busy or viewed the deal as being too small or too much effort? Who knows, you may be the only player in the room.

What All Of This Means For You

As negotiators one of the biggest things that we dread when we are going into a principled negotiation is having to compete with our competition. We are highly aware of all of the advantages that they have over us and just how similar our products and services may be. The other side of the table may remind us that we are competing with other firms and if we start to believe this, then we may feel that the only way that we’ll be able to reach a deal is by offering the lowest price.

What we may be overlooking as negotiators is the simple fact that although we do compete with a number of different firms, they may not be able to negotiate a deal with the other side for this deal. They may actually be making us more powerful by not being able to participate. The reasons that they can’t win the negotiations may be varied but it could have to do with the fact that they provided poor service in the past, their payment terms don’t line up with the company’s, or simply that they don’t have the product to deliver to the customer when they want it.

No, you can’t make your competition go away. However, as a negotiator you need to realize that just because you have competition does not mean that all is lost. Rather, what you need to realize is that because you have competition you may actually be in a more powerful position because the other side of the table can’t select them – you may be the only person that they can do a deal with!

– Dr. Jim Anderson
Blue Elephant Consulting –
Your Source For Real World Negotiating Skills™

Question For You: What would be the best way to find out how many companies the other side is currently negotiating with?

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What We’ll Be Talking About Next Time

As negotiators we understand that a great deal of what it takes to be successful in a negotiation resides in our head. How we view the negotiation, how we view the other side of the table, etc. are all key parts to what kind of deal we can expect to walk away with. However, there is one critical thing that we can all too easily overlook if we are not careful. This thing is commitment and just how much of it we have can make all the difference in what kind of deal we’ll be able to secure.