I-BN Blog

Negotiating Concession Strategy - Changing the Shape of the Deal

Posted by Bob Tobey on Apr 15, 2019 10:30:00 AM

Its About WinningThe negotiation over the US budget and border security is over for now. This negotiation will be a case study for years to come. A lot of negotiating factors went into this deal. First there was a DEADLOCK, then time became an issue and added power and pressure to both parties. Outside parties got involved, these were the 1000s of government employees not getting a paycheck. PLAYER SUBSTITUTION came into play when a bipartisan congressional group was formed with 9 Democrats and 8 Republicans. At this point in the negotiation, both parties had pretty much established what they wanted so the next move was to develop a NEGOTIATING CONCESSION STRATEGY.

The two key questions that kept coming up were:

  1. Will the President sign this bill?
  2. Will the Speaker of the House bring it up for a vote?

I can’t tell you how many times in my selling career that I’ve asked these same two questions: Will my manager go for this and will the customer buy it? For those of us who own your own business the questions become:

  1. Can I live with this?
  2. Is this worth my time?

In developing a NEGOTIATION CONCESSION STRATEGY, there are six step which take you through preparation, planning and implementation:

  1. When you’re preparing to negotiate the first thing is to set an agenda. The topics to be discussed and the issues that will be negotiated are the first things that needs to be agreed upon.
  2. Then you need to define your position on each issue; how much will you discount, how much are you willing to give, what’s your walk away point, etc.
  3. Next you need to guess your prospect’s positions by using your knowledge of their business and your knowledge of your competition.img6.1
  4. You want to have a “give to get” mentality only giving a concession if you get a concession in return so you need to develop a list of “gets”. You’ll probably find that developing a list of “gets” is the most difficult part of preparation. After you want to “get” the order most sellers come up with be a reference and then struggle to find gets.
  5. You need to adjust your aspirations. If your competition has a history of deep discounts, this will affect your negotiating attitude. If your customer has been delaying the decision and fence sitting, this too will affect your negotiating attitude.
  6. Finally, assess the power you have and determine areas where you can influence and increase your power.

During the negotiation:

  • Give only to get something in return. This is where preparation comes into play and you want to focus on giving the intangible things that don’t cost you much but are of value to the prospect.
  • Allow plenty of negotiating room. This is difficult if your prices are published. If prices aren’t published why not allow a little room. This is easier if you package different negotiables together.
  • Take small steps and go slow. I hear “I’ll meet you in the middle” a lot. Whoever makes the first major concession will end up on the other side’s win-win range. You can always give stuff away. Instead of giving a 10% discount, give a 7.8% discount. Instead of your next discount being 5% make it 3.9%. This has an impact on your prospect’s aspiration level and signals that you’re getting to the bottom of your range.img6.2
  • Call it a “concession” and keep score. If you’re giving and giving and the prospect isn’t, call them out on it. Recap your concessions and call it one sided. Even professional buyers have a sense of fair play.
  • Take back concessions if you must. Nothing is in concrete until the deal is signed. When you take something away, you’ll find out how valuable your take away it is to the prospect.
  • Always back away from surprise demands. Surprises don’t just come out of the blue and often these surprises come at the end of a negotiation. Sometimes these surprises are new concessions from competition. Sometimes they are newly discovered prospect needs. When you get surprised slow the process down and investigate where this new demand came from and how important it is to the client.

Having a solid negotiating plan will add money and clients to your bottom line.

So the budget is set until September 2019 when we’ll, no doubt, go through all this again. As I’ve said, this negotiation will be a case study for years to come. Was it a win-win and who won more? Both Democrats and Republicans are spinning the results to their side of the win-win range while at the same time saying they are not happy about anything. The fact is both parties in this negotiation are satisfied because they said yes to the final deal, but they cannot admit it, because, well, it’s politics. Our preamble and constitution is based upon We The People and its objective is “to form a more perfect union”. Our founding fathers were smart and clever enough to know that compromise is a good thing.

Materials for 90 Minds Members: I have video training that covers Win-Win negotiations, assessing Power and developing a Concession Strategy along with a Power assessment tool. Send me a note and I’ll be happy to share.

About the author: Bob Tobey spent over 20 years teaching managers, customer support and sales people how to be better at their craft. These blogs are intended to help the I-BN partner community improve their business.

I-Business Network has been managing cloud infrastructure since 1999, long before the cloud was even called the cloud. We specialize in hosting SAP Business One, Sage 100cloud, Sage 300cloud, Sage 500cloud, Sage CRM, Sage HRMS, Sage FAS and Sage BusinessWorks in two SSAE 16 data centers. For more information about hosting your ERP in the cloud, contact Bob Tobey at btobey@i-bn.net or 678-627-0646 ext 231.

 

 

New Call-to-action

Recent Posts

Posts by Topic

see all