5 Negotiation Secrets That Work!
Advanced neurolinguistic programming, aggressive sales tactics, do-or-die decisions, and the pressure of everything riding on the outcome of a single conversation…
That’s enough to give anyone instant anxiety. Unfortunately, that’s what many people think of when they hear “negotiation.”
The reality is that effective negotiations are more like casual conversations. Sure, there can be some serious moments and compromises, but it doesn’t have to be stressful.
Today, I’m going to give you five negotiation tactics that can provide you with an advantage in your conversations and give you more confidence in working through deals.
#1. The Law of Price and Terms
In short, if you get your price, I get my terms. If I get my price, then we can go with your terms. This is significant because it allows for a wide range of options and creates the possibility for a win-win scenario.
For example, if I’m acquiring a business and the seller insists on their price, I may require options like 100% seller financing, a deferred down payment, an extended financing term, or a combination of favorable financing options.
If I think something is worth $50,000 and the seller is asking for $500,000, the law of price and terms could potentially allow me to acquire it, provided I could make payments of $100 per month for 5,000 years, right? Of course, no one would actually finance something for 5,000 years, but the point is that favorable terms can enable both parties to achieve their goals.
Bonus: I typically refer to this principle as “our standard terms.” Labeling something as “standard” or a “law” often encourages others to adhere to conventional business practices.
#2. The Fairness Zone
There’s a quote by Brit Hume that goes, “Fairness is not an attitude. It’s a professional skill that must be developed and exercised.” Within any given deal you do, there will be some point at which the deal is too much in your favor, you shouldn’t go past that point. There is also a point where the deal is not enough in your favor, and you should not go below that point. The area in between those two points is what I call the Fairness Zone.
For example, I was looking to buy a camera lens for my son. I did some research and found a listing on eBay. I made a low offer for the lens that was still in line with what the lens was selling for in other listings. The seller replied, saying, “Ok, I’ll take your offer, but it really sucks because I needed the money to…” and he went on to list his reasons.
Now, I could easily argue that this was within “fair market value” based on sales prices from other sellers, but for him, it was outside of the Fairness Zone. You should always stay within the Fairness Zone in every deal you do. If both parties don’t feel good about the deal, it can often lead to problems in the future.
#3. The "Sound of Silence"
Few things are as agonizing to the average person as moments of silence in a conversation, especially during a negotiation. This can be used to your advantage. Attorneys often employ this technique during questioning, building up a quick-paced dialogue that inadvertently leads to the divulgence of subconscious information. Then, they pose a critical question and shut up.
I recently applied this strategy in a Consulting For Equity negotiation. The company had seven figures in both revenue and profit and insisted on a buy-in. I was reluctant to pay for providing consulting in exchange for equity. So, I responded, “I understand why you’re asking for a buy-in, but after examining the company, I see three major problems we’re facing: Problem 1 is…, Problem 2 is…, and Problem 3 is… So, honestly, I think the buy-in should be zero.” I then fell silent, letting the discomfort linger until they spoke next, leading to a successful deal.
Leveraging uncomfortable silence, rather than providing easy outs, can be a powerful tool in negotiations.
#4. Collaborate, Don't Negotiate
I don’t view a negotiation as a conversation between two parties on opposite sides of the table where there can only be one winner. I see negotiation as a conversation between two parties who can help each other get what they want.
Napoleon Hill said, “You can succeed best and quickest by helping others to succeed,” and it’s so true. You can have a win-win deal where everyone gets what they want.
In many negotiations, I’ll physically move my chair to the same side of the table, sitting side by side with the other parties, to show that I am literally collaborating with them, not competing or negotiating against them.
#5. Rotten Tomatoes Strategy
The Rotten Tomatoes Strategy is all about setting the stage in such a way that the only palatable option is the one you want the other party to choose. It’s like being at a movie theater and having only two films to choose from: a critically acclaimed blockbuster and a series of poorly reviewed films. Naturally, most people will gravitate towards the blockbuster.
During your negotiation, instead of positioning yourself or your offer as the only option, which may come off as insincere, freely discuss alternatives. This gives you the ability to carefully frame the alternatives in a way that makes them unfavorable or ‘rotten’, making your preferred choice stand out.
Whether it’s discussing other potential partnerships, financing options, service contractors, or anything else, leveraging this strategy allows for effective dialogue that can easily strengthen your position.
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