5 Ways to Negotiate Like a Pro

5 Ways to Negotiate Like a Pro

 
 
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Negotiation is a skill that is not often taught to employees. Employees are often hired for a specific skill set and then expected to know how to sell and negotiate without receiving any training. Employees who end up in negotiations quickly learn that negotiating is a little more complicated than simply saying, “Show me the money.”

Fortunately, negotiation skills can be taught and learned. There are five practical tools we will share today that are successful practices in the sales world. Teaching your employees, and brushing up on these skills yourself, will increase your ability to be heard and get what you’re looking for in the give and take world of business.

On this episode you’ll hear:

  • A concise definition of negotiation
  • How to define your BATNA – your best alternative to a negotiated agreement
  • The wisdom of negotiating with the manager or owner
  • Why there’s nothing wrong with being outrageous (at first)
  • How to welcome the other party back into the conversation
  • The power of silence

If you and your team are ready to take your negotiation skills to the next level then this is one episode you won’t want to miss.

Resources

Transcription of This Episode

The gross profit podcast is your one stop shop on the path to profitability. Each week we share authentic advice on the positive practical steps you can take to make the company you love more profitable. If you’re looking for a positive plan to help you avoid common spending mistakes, control costs, and increase your profits, then this is the place for you.

I’m Ryan Cowden and this week we’re joined by James Kennedy and Garret Carragher. In this episode of the gross profit podcast, James and Garret discuss five strategies that will help you accomplish your goals. In negotiated agreements, negotiation is not a skill that’s often taught to employees. Employees are often hired for a specific skillset and then expected to know how to sell and negotiate without receiving. Any training. Employees who end up in negotiations quickly learn that negotiating is a little more complicated than simply saying, show me the money.

Fortunately, negotiating can be taught and learned. There are five practical tools we will share today that are successful practices in the sales world. Teaching your employees and brushing up on these skills yourself will increase your ability to be heard and get what you’re looking for in the give and take world of business. On this episode you’ll hear a concise definition of negotiation. Negotiation happens when two parties agree upon what to give and take and what the value of such a transaction will be. Next, we’ll discuss how to define your BATNA, your best alternative to a negotiated agreement. You should always have a backup plan to turn to. If the negotiation doesn’t go your way, then we’ll cover the wisdom of negotiating with the manager or owner, James and Garret. We’ll discuss the different facets of trust and how managers and owners usually have the authority and skills to accomplish what gets negotiated.

After that, we’ll talk about why there’s nothing wrong with being outrageous at first. The demand that is lower, high upfront anchors the conversation to a price point you are interested in and provides a reference point in your favor. For the rest of the conversation. We will also discuss ways to welcome the other party back into the conversation if they don’t respond well to your first outrageous offer. Asking for a counter offer is an easy way to diffuse a tense situation and keep the conversation moving along and finally we will share the power of silence. You don’t always have to talk to make a point and staying silent sometimes works in your favor. If you and your team are ready to take your negotiation skills to the next level, then this is one episode you won’t want to miss. There’s a lot of actionable advice in this episode, so grab something to write with because you’re going to want to take notes. As always. I’ll be back on the other side to wrap up any loose ends. So without any further ado, here’s our conversation with James and Garret.

So welcome to the latest episode The Gross Profit podcast. My name is James Kennedy, CEO, of procurementexpress.com and I am joined by Garret Carragher. Garret, how you are you?

Very good, James. How’s things, today?

I am living the life, living the life. My coffee’s good. Sun is out, I’m down in our South African office where you know a wine is cheap and the steak is cheaper. So I’m not going to complain.

Well I’m, I’m still here in Kildare, and the sun is not shining and the steak is still expensive. But super delicious, I must say, you know?

I would, if I was a better person, that wouldn’t make me feel happy to hear that the weather is not as good in the summer in Ireland as it is in the winter in South Africa, but I’m not. So thanks for sharing me up there.

Okay, no problem.

So today we are going to talk about negotiation. Now, the weird thing is most companies don’t train their staff on how to negotiate. Do you think that’s true?

Yeah, I worked for many companies. I can’t really remember any of the staff getting trained. Now, when I think about it more, like a lot of that staff to come in on kind of their hired based on their kind of competencies. Some of their, kind of skills they have already and the knowledge and experience they have. So when you hire a sales person in, you’re actually not thinking I need to train the sales person up or I need to train this purchasing person up in negotiating, or selling skills. You know, you’re kind of thinking yourself, they already have it, they’ve already done it. They should know what they’re doing and that’s why I’m hiring that person in. But it’s always good to train the staff up. I think everyone negotiates every day. You think that you can think of loads of examples. From buying stationary, to buying your main products. It’s the key skill to have, and it’s one that can be taught I think as well.

Well I think you know, there’s definitely a couple of things that you can arm people with. What we’re going to go through is five tips on how to negotiate better. If nothing else, even if you’re not going to send your staff off on a training program, get them to listen to this podcast for 20 minutes and at least they’re armed with something, right? They’re going into battle with something as opposed to nothing. And I think I can actually save your company quite a bit of money if everyone knew at least these basics. Because I’m on the sales side of the house as well a little bit. So I know the tricks that salespeople use sometimes. So I’m going to try and warn you about those and maybe you can use it for your personal life as well. Okay. So we get going. So we have five tips. I guess what, let’s define it a little bit. Maybe, Garret you could tell us what is negotiation.

Negotiation is when a process where two parties decide what they want to give and take between themselves. You know, so it’s really discussing and trying to come to an agreement. Even a longterm agreement or arrangement between two parties or maybe sometimes more, to try and understand the value can pass between one to the other. So that could value, it could be services, it could be products, it could be obviously cash, and our time, I suppose as well. And it’s all about coming to an agreement that both parties are happy for that to happen.

Spot on. So I think ironically my first tip or the first tip we have here is something called a BATNA. It’s not Batman. It’s BATNA, so it stands for best alternative to and negotiated agreement. We should basically, not being forced into having to do a deal. You have to know what alternative you could have. Maybe Theresa May should have listened to this podcast. If we time travel back and made it available for her.

Boris Johnson can listen to it. We must send them a copy, actually James.

Maybe we’ll send him a copy as well. I think he gets the idea because his negotiated alternative to negotiated agreement is hard Brexit. So he’s getting ready for that. Before you go and deal with a supplier, before you even pick up the phone, what do you do to make sure you have an alternative?

First of all, I would put down, you know, you need to understand what your red line issues are. So you need to understand what issues am I not going to move on. Okay. So you said these are my number one issues and I’m not going to move on. So if they don’t come to pass, and there become an issue and you can’t negotiate them, that’s when your BATNA comes in. And you need to know that and have that in your back pocket.

So your BATNA, in this case, might be if you’re trying to buy a product, you might understand, well actually I can buy a substitute product. I can buy a product from a different supplier. Or, I might not buy this product at all. And that’s your negotiated, that might be your BATNA. You might have that in your back pocket and you do, your negotiation doesn’t work out. You’re not happy with the price, you’re not happy with the terms, you don’t have the conditions, whatever that might be. And then you can say, do you know something? I actually have an alternative here. I’m going to use that at this stage. So it’s going to go with that rather than signing an agreement I’m not happy with.

Sure. And I might be willing with another supplier. So doing your research on alternatives, if you can find other prices or, a completely creative way of fulfilling the same need, without buying something specifically, so that makes sense to me. Next thing I like to do, is always ask to speak to the manager or the owner because they will be able to do a better deal for you than the end of the line salesperson. What do you think?

I think that’s very, that’s a very good point. There’s something here I’d like to bring up, which I think is important. And some of it I experienced through my own work life to this, which is when you’re dealing with something you need to understand, if you can trust this person, right? Now, people think of trust, they only think of it in one dimension, which is, they mean what they say. So if I’m talking to you, James, and I say, can we do this, can we do that? And you say, or can I do this, can I, James, or will you do this for me? You say, yeah, of course I will. Now, I believe you, and I know you’re an honest person, so I trust you. But there’s actually two other dimensions that people sometimes forget about, and I think it’s critically important when you’re talking to the owner or manager or whoever you’re talking to trying to do the deed, you understand these as well.

So the first one is, obviously this person honest, do they mean what to say. But the second one is, do they have the skills to pull this off? So if I say to you James, will you take me for a spin in your car at 200 kilometers an hour along the road, along the coast there in South Africa? You might say, yes, of course I will. I know you’re honest, I know you will. You meet what you say. But I think does he have the skills to drive the car at 200 kilometers an hour along the coast road? I think perhaps not. So that can be, that can be something you need to keep in the back of your mind. If you’re talking to someone in another business or company, or you’re hiring someone in to do maybe some work for you. Does this really person really have the skills?

They might be honest, but they don’t have the skills to pull it off. The third aspect of trust. Another key part that sometimes people don’t think about until it’s too late is, does this person actually have the authority to do what they say? So again, when I talk to James, I might say to James, I would like to fly a helicopter in the, into the middle of Cape Town. Can we do that, James, and James goes, yes we can. Yes, we definitely do that. And I know James, James again is honest and I know James has a pilot’s license so he can fly the helicopter. So I know he’s, I can trust him in those two aspects. But does he have the authority to fly a helicopter into the middle of Cape Town? I don’t think so. I think that we would need sign off from a much higher authority than James.

And again, if you think about buying from the business, if you discuss with someone in the business and they say to you, yes, you know we can supply this product and you know he has the skills to deliver that, you know that this person is honest. But did they really have the authority to sign off on this agreement? Did he have the authority or does it need to go to a higher level? So when I think trust, so when I think of step two, there on on this five step process, when we’re talking to someone like in a business and trying to do negotiation, I like to tick off those three points and make sure that I’m talking to the person who controls. So do they mean what they say, the skills to do it, and also the authority to do it.

Very good. So next up when you’re going in, if you’ve done your research, you’re talking to the right person at the right authority. If especially when you’ve done your research and you have an idea of what the prices are like, there’s nothing wrong with being outrageous, with your first expectation. Even if you’re just anchoring the price to a lower number. So if you know something’s worth $100 there’s nothing necessarily wrong with just going in mentioning a much lower figure, say $20. The risk you run there is with different personality types, some people might say, Oh, this guy’s a messier, I’m going to walk away. Or they might think, this guy doesn’t know what the service is really worth. Either way though, takes a little bit of gumption to do this, but if you can pull it off and go in with a outrageously low figure, it anchors the rest of the conversation to a lower figure even if you have to go much higher after that.

Yeah, I think that’s really good idea. One caveat I would just add, which is obviously you need to understand this is for more of the experienced negotiator. It’s not for the amateur, because you need to understand the culture you’re going into as well. So the culture of the country you might be dealing in, and also the business. So in some countries, if you make some kind of statement, they might feel you’ve actually under valued or demeaned their product or their business. And that can be, that can be counterintuitive and counterproductive for you as well. What I mean [inaudible 00:12:31] counterproductive for you when you’re, negotiating or somewhere else they could take this as a, you know, it’s just part of the culture. You know, in negotiating, if you think about the markets and Marrakech, or dealing with someone in Turkey, like the first price they give you is, this is just for a laugh and actually the negotiating and the bargaining is part of the fun. It’s actually part of the deal. You know when you have a cup of tea afterwards, after you paid 5,000 quid for a rug.

Yeah. Especially with some contractors where let’s say you’re the person delivering the service person quoting on it, they can get quite emotionally attached to the price they charge. So that’s why my next tip is aimed at managing that situation, which is to invite people back into the conversation. So if you go in there with a outrageous first offer, if there’s nothing wrong with just saying to people, listen, this is what I think this service is worth, but you know, I’m open to talking about it and invite them into the conversation again to reopen it up and you’ve nothing lost in my view. Then, you can easily just ask them to come back in and open it up again.

And how would you go about doing that? Would that be through a phone call? What kind of time would you put on that before you guys should go back and ask for a counter, is this a conversation you immediately say it to them, or would this be over a period of time?

When people come, if it’s over the phone or it’s in person, you know you can actually, this maybe a bit more advanced, but you can read a lot from their reaction. But a phrase, which is a nice phrase, which diffuses the situation if it’s a bit tense, is just to say, well, offer me a counter. Just straight forward, that’s what I understand this product is worth but I’m open to a counter. What do you think? And I use that phrase all the time or when I do use this strategy I use it. Just don’t run away. Make sure, cause even at first, people might push away a little bit, but you can just use time to invite them back into the conversation, which a little bit brings me onto my… My final tip, it’s my favorite tip because this is something that salespeople use on, I was going to say their prey, but I was going to say what salespeople use on prospects all the time, which is the power of silence.

And a lot of sales training will actually train salespeople to, at the right point in the negotiation, saying nothing. The intention being that whoever speaks next loses. And oftentimes, if there’s this uncomfortable silence, the natural intranet inclination is to want to fill that silence. So this can go both ways and it can quite easily use it on salespeople, which is to make an outrageous offer, ask for a counter, and then say nothing. And oftentimes people will negotiate themselves down a little bit by offering more in order to fill the silence and make it go away. Maybe it’s just my personality type. It’s not for everyone, but I particularly enjoy this little game when I get to play it. Would you do it?

Yeah, I think that’s a super tip there. I’ve done it before when I was working at a company and was negotiating pay raise with my boss. He was talking about this, that and the other. And then finally, at the end of it, he kind of went any other issues or is that it or whatever. He was expecting me to bring up something else, but you know, I was too long in the tooth to be caught by that. So in fact, what I started doing was, there was a calendar behind his head in the room, and I started counting the days on the calendar. And I got up to 42 before he spoke.

And you know that that’s the way it goes. But yeah, you do feel uncomfortable and that’s what it’s about. But in fact, if you bring your mind somewhere else and think of something else and do something like that. If you’re in a room and there’s nothing to count, start counting in your mind. But, don’t speak, don’t speak out. You know, I would let, I would’ve let it go to 300 easy and then I would have said, I’m off. But if you’re there and you’re not sure, and you’re feeling a bit nervous, just start counting in your mind. Don’t worry about it. Let the silence linger. It’s fine, it’s fine.

I love it, Garret. Great anecdote to finish the podcast on now. So there you are. Your five tips for if you know nothing about negotiation, use these five tips. Save yourself and your company a boatload. First one is always go in with a BATNA. Best alternative to negotiated agreement. Second up, speak to the owner or the manager, Don’t speak to the salespeople. Be outrageous with your first offer, and open up the conversation with asking for a counter. And finally, use the power of silence. So Garret and myself are hard at work at a book on this topic and to do with negotiation, and spend control, and getting more profit out of your company. You can get a free chapter at bookedupprocurementexpress.com. So, why not head over now to the website, download your free chapter, and learn a few ways how you can improved profitability of your organization. That’s all she wrote. Garret, anything you want to say before we go?

No, that’s it. Thanks everyone, and we’ll be back soon with another on podcast. Take it easy.

All right, folks, there you have it. That wraps up our conversation with James Kennedy and Garret Carragher. They shared a ton of valuable insights and advice today on how professionals maximize their effectiveness during negotiations. We also shared some tools and resources which will all be linked up in the show notes. Don’t forget to click on one of those links to get a free chapter from the book Profit Leaks by James and Garret. I hope you enjoyed our conversation. Please consider subscribing, sharing with a friend, or leaving us a review in your favorite podcast directory. Until next time, best of luck in all that you do and we’ll look forward to seeing you on the next episode of the Gross Profit podcast.

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