Selling & Negotiation Skills_3

Preparation for Negotiation

• For the negotiator, preparation means understanding one’s own position and Interests.
• The position and Interest of the other party or parties.
• The issue at stake and the alternative solution.
• Understanding your BATNA, reservation price and those of the other parties, the zone within which an agreement can be struck.

Step 1: Consider what a good outcome would be for you and the other side
• Never enter into negotiation without first asking yourself." what would be a good outcome for me? What are my needs, and how do I prioritize them”.
• Rather ask the same questions from the perspective of the other side.
• Negotiate a shorter leave.
• Schedule the leave for the slow part of the year.
• Ask Laura to work out a plan with her coworkers that clearly accommodates the business needs of the Unit.
• Negotiating experts refer to the Interests of the various parties when they urge people to prepare.
• Determining the interests of the other side, however is sometimes difficult, especially when that side conceals its Interests.

Step-2: Identify potential Value Creation Opportunities.
• Once you Understand what a good outcome would look like from your Vantage point and from the vantage point of the other side.

• You can Identify areas of common ground, compromise , and opportunities for favorable trades.

Step 3: Identify your BATNA and Reservation Price, and Do the same for the other side.
• You can avoid appearing needy by building a strong BATNA and letting the other side know that you are prepared to walk away if it demands to many concessions.

Step-4: Shore up your BATNA
• Anything you can do to improve your best alternative to a negotiated deal will put you in a stronger position.
• Shoring up one’s BATNA is an Important part of preparation, but is not limited to the “pre-Negotiations” phase. Good Negotiators work to improve their BATNAs before and during deliberations with the other side.

Step-5: Anticipate the Authority Issue

• There are real advantages to negotiating with the person who has the power of authority.
1. All of your reasoning is heard directly by the decision maker.
2. The benefits of the good relationship built at the bargaining table are likely to be reflected in the deal and its implementation.
3. There are fewer chances of disputes or misinterpretation of particular provisions.
4. If your aim is to make the person on the other side of the table hungry for a deal with you, your efforts will do no good if the real decision maker is somewhere in the background.

• Dealing with negotiators who lack full authority, however may have advantages:
• Confirm the ground rule that neither side will be committing his or her company in the negotiation.
• Suggest using the opportunity to discuss your respective interests and to come up with creative options and packages.
• When negotiating about money issues, leave yourself some wriggle room in case the final negotiator pushes harder in a second round. If there is no wiggle room, strongly convey the message that this is your best offer.
• Who will be at negotiating table?
• What is that person’s title and area of responsibility.
• How long the other side’s representative has been with the company.
• How the company is structured.
• How the negotiator is viewed within the organization.
• As for your side, always know exactly how much authority you have in a negotiation:
1. Are you authorized only to commit to a predetermined range of deals for which committee approval has been obtained? What if you can negotiate something better? what would committee consider to be better.
2. Are you authorized to commit to a deal in the best way you can? Would your company prefer that you bring such a deal back for normal review and approval?
3. Is your authority limited on money issues but not on other creative options without significant financial implications.
4. Are you authorized to provide information about your company’s needs, Interests and preferences, if the other side engages in a good-faith, reciprocal exchange.

Step-6: Learn all you can about the other side’s people and culture, their goals, and how they’ve framed the issue.
• Who are those Individuals on the other side of the table?
• Are they experienced negotiators or novices?
• Are they aggressive or they conflict-avoiding accommodators?
• Is the culture of their organization bureaucratic or entrepreneurial?
• Are the people on the other table authorized to make a deal.
• What are they attempting to achieve and how critical is this negotiation to their business.

Step-7: prepare for flexibility in the process, don’t lock yourself into a Rigid sequence
• Start with the assumption that the process will not unfold in a predictable, linear fashion.
• Be prepared for changes on both sides: new people and unanticipated developments.
• Treat every change as an opportunity for learning.

Step-8: Gather External Standards and criteria Relevant to fairness
• Both sides want to believe that any deal reached is fair and reasonable.
• If the parties expect to have continuing relationship, a sense to fairness and reasonableness matters.
• External objective or criteria can often be used to establish what is fair and reasonable.
• An important part of the preparation is:
• Researching which criteria might be applied.
• Being prepared to show why those more favorable to you and are more relevant.
• Being prepared to show why they are less relevant and less favorable to you.

Step-9: Alter the process in your favor
• Whoever set the agenda did so with a particular outcome in mind-one that benefits that reason or entity.
• People are deferring to someone with greater organizational clout-your argument not withstanding.
• Yours is the “lone voice in the wilderness” and out of step with others.
• Kolb and Williams make these specific recommendations about the process moves:
• Work behind the scenes to educate others on your ideas.
• Reframe the process.

Getting the other side to the table
• Offer Incentive: what are reluctant person’s needs: Money, time, your support? Determine those needs and pose them as potential benefits of negotiation.
• Put price on the status quo: spell out the cost of not negotiating.
• Enlist support: Allies can sometimes accomplish what other measures cannot.

Making a good start
• Express respect for the other side’s experience and expertise.
• Frame the task positively, as a joint endeavor.
• Emphasize your openness to the other side’s Interests and concern.
• Explicitly discuss the process.
• Listen carefully to the discussion of the process.
• Offer to explain some of your Interests and concerns first.

Tips for establishing the right tone
• Never Underestimate the value of breaking bread.
• Use small talks at the beginning to dispel tension.
• Learn from what the small talk reveals about the other negotiator’s style.
• If the other side is very formal don't speak too casually.

Anchoring
• Anchoring is an attempt to establish a reference point around which negotiations will make adjustments.
• You can gain an advantage by putting the first offer on the table.
• It becomes a reference point of subsequent pulling and pushing by the participants.
• When should you anchor?
• Where should you place your anchor?
• Your first offer proposal should be at or just bit beyond what you believe is the other side’s reservation price.
• Wherever you place an anchor, be prepared to articulate why your offer or proposal is reasonable or justifiable.
• Anchoring with a price (or a proposal) creates two risks.

A) if you are two aggressive, the other side may conclude it will be impossible to make a deal with you.
B) if you have made an erroneous estimate of the other side’s reservation price, your offer will be outside the zone of possible agreement.

Counter Anchoring
• If the other side makes the first offer, you should recognize and resist that offer’s potential as a psychological anchor.
• Anchors are most powerful when the uncertainty is highest.
• When no one has a clear idea what the price of a company or a piece of equipment should be.
• When no one has the clue as to the appropriate price.
• You can reduce the other side’s anchoring power by reducing the uncertainty that surrounds the issue.
• Don’t let the other side set the bargaining range with an anchor unless you think it’s a sensible starting point.If you think that anchor suggest an unfavorable or unacceptable starting point , steer the conversation away from numbers and proposals.

Be prepared for concessionary Moves
• Once an anchor point is on the table, the parties generally get engage in a set of moves and countermoves that they hope will end in an agreeable price or set of arrangements.
• Add an additional concessionary move and as an indicator of significant additional flexibility.
• The concessions are not always true, specifically when the other side is not in hurry.
• The best advice about concessions is to avoid the impulse to make them.

Tips for Inexperienced Negotiators
• Look to your BATNA before you consider making concessions, if your BATNA is very strong, a concession may be unnecessary in making a deal.
• If you are impatient to get it over with because negotiating is stressful, take a break before you consider a concession.
• If your need to be liked or seen as a reasonable person is urging you to make a concession, forget about it.

The ticking Clock
• From the buyer’s perspective seller should never be allowed to feel that he can indefinitely sit on the buyer’s most recent bid while he awaits a better offer.
• The seller will simply use this to improve his BATNA.
• The remedy is to have an Exploding Offer.

Package option for a favorable deal
• Package option has dual benefits, a) people don’t like to feel pushed into a corner. B) when the other negotiators wont discuss their interests, you can infer them by noticing which proposal they prefer.
• Before presenting alternative proposals, however do the following:
• Assess the value of each option to each side.
• Consider whether the diminution of one option would be offset by an enhancement of another.
• If you prefer one of the alternatives, adjust at least one of the proposals so that you feel equally positive about at least two of them.

Closing the deal
• Signal the end of the road before you get there: Speak about the parameters of what you would like in final deal.
• Allow flexibility if you anticipate going beyond the final round: Don’t show too much of flexibility so that the deal gets rejected by the other side.
• Consider whatever final trade you would be willing to make if you end up requesting significant adjustments in the final term.
• Discourage the other side from seeking further concessions: Express your willingness to accept the total package without changes.
• Explain that adjustment in their favor on one term would have to be balanced by in your favor on another.
• Write down the terms.

Tactics for Integrative Negotiations
• Getting Started: Don’t start with numbers. Instead, talk and Listen.
• Frame the task positively, as a joint endeavor, from which both sides should expect to benefit.
• Emphasize your openness to the other side’s interest and concern.
• Don’t make proposals too quickly.
Instead of hastily throwing out an offer, try these techniques
• Ask open-ended questions about the other side’s needs, interests, concerns, and goals.
• Probe the other side’s willingness to trade off one thing for an other. ”do you care more about X or Y”.
• Inquire about the other side’s underlying interests by asking why certain conditions.
• Be an active listener.
• Express empathy for other side’s perspective, needs and interests.
• Adjust your assumptions based on what you have learned.
• Be forthcoming about your own business needs, interests and concerns.
• Striking a balance between empathy and assertiveness is essential to effective negotiating.
• Work to create a two way exchange of information. Stay flexible about who asks questions and who states concern first.
• Continue your relationship building efforts even after the negotiating has begun.
• Always remember that the other side consists of human beings with feelings, limits, and vulnerabilities.
• Refrain from personal attack, don’t accuse or blame. Maintain a sense of humor.
• When an issue seems to make another negotiator tense, acknowledge the thorniness of the issue. Don’t feel pressured to close the deal quickly, Instead generate options that offers mutual gain.

Tips for active listening
• Keep your eyes on the speaker.
• Take notes as appropriate.
• Don’t allow your self to think about anything but what the speaker is saying.
• Resist the urge to formulate your response until after the speaker has finished.
• Pay attention to the speakers body language.
• Ask questions to get more information and to encourage the speaker to continue.
• Repeat in your own words that you have heard to ensure that you have understand and to let the speaker know that you’ve processed his or her work.
Look for options that exploits differences
• Access to resources: Creating values for both sides.
• Future Expectations: The buyer will get a lower price and the seller will be able to capture the upside growth in the business he anticipates.
• Time preference: The timing of the deal can be a barrier to a mutually satisfactory conclusion.
• Risk Aversion: What is highly risky for one party is often less risky for another. Parties often have different risk tolerances.

Take your time
• Don’t be tempted to close the deal quickly.
• Spend a bit more time finding a deal that is better for both sides.
• Signal that the proposal on the table is worth considering.
• Begin the search for mutual beneficial option.
• Move from a particular issue to more general description of the problem, then to theoretical solution, then finally back to the actual issue.
• Pay special attention to shared interests.
• Consider joint brain storming with the other side.

Selling Skills – Selling to customer
• Customer Sales Planning:
• Once the prospect is been located and qualified the sales person is ready to plan the sales Interview.
• Planning is very important in actual sales.

Reasons for planning the sales call
• Builds self confidence: If you are to give a sales presentation before a large group of people, you tend to be nervous, this can be reduced simply by planning.
Develops an Atmosphere of good will: The sales person who understands customer needs and is prepared to discuss how a product will benefit the prospect is appreciated and respected by buyer.
• Created professionalism: Good business relationships are built on your knowledge of your company, your industry and your customer’s need.
• Increases sales: A confident sales person who is well prepared to discuss how products will solve particular needs will always be more successful then the unprepared sales person.

Elements of sales call planning
• Always have a sales call objective: A salesperson should meet with a prospect with an objective in mind. Sales call objective should be 1) specific, 2) measurable, and directly beneficial to the customer. E.g. the colgate sales person might have objective of checking all merchandise and having the customer make routine reorder on merchandise and sell promotional quantities of colgate toothpaste.
• Customer profile provide insight: As much as relevant information as possible should be reviewed regarding the firm, the buyer, and the individuals who influences the buying decision before the sales call is made.
• A customer profile should tell you:
• Who makes the buying decision in the organization.
• What is the buyer’s background? The buyer expectations of you?
• What are the desired business terms and needs of account, such as delivery, credit, technical service.
• What competitors successfully do business with the account? Why?
• What are the purchasing policies and practises? E.g.: does the customer buy special price promotion offers.
• What is the past history of account? Eg: Xerox.
• Customer benefit plan: beginning with your sales call objectives and what you know or have learned about your prospect, you are now ready to develop your customer benefit plan.
• Select the features, advantages, and benefits of your product to present to your prospect. This addresses the issue of why your product should be purchased.
• Develop your marketing plan, If selling to a wholesaler or retailer, your marketing plan should include how, once they buy your product, they will sell your product to their customers.
• Develop your business proposition, which includes such preposition such as your price, percent mark-up, forecasted profit per square foot of shelf space, return on investment, and payment plan.
• Develop a suggested purchase order based on your customer profit plan. A proper presentation of your analysis of customer needs and your products ability to fulfil these needs along with the satisfactory business propositions and marketing plan.