Successful negotiations mean looking for chances to exchange value and make gains. Sometimes people leave money on the table because they can’t see that extra value. The negotiation process can be nerve-wracking, which can mean it’s easy to make mistakes.
Even the most experienced negotiators slip up sometimes. Often, the missteps are subtle and we may not realize we could have walked away with a better deal. According to negotiations.com, negotiation classes can equip you to avoid the most common negotiation pitfalls, which include:
Going In Unprepared
Quite often, people fail to land the best deal possible because they can’t communicate their worth in the marketplace. Avoid going in unprepared by conducting research and collecting all relevant data.
It doesn’t matter whether you’re negotiating salary or a multibillion-dollar business deal. All effective negotiation plans rely on well-chosen strategies and tactics. Preparation makes use of data-driven intelligence and research rather than guesswork.
Most people are uncomfortable offering to pay less than the asking price. True, in Western culture, it’s probably not worth the effort bargaining on a loaf of bread at your local bakery. Yet, you likely expect to bargain for a car or a home.
Negotiation classes train businesses to avoid leaving cash on the table and to try seeking extra value. Negotiating a better deal means you get high value at the best possible price.
People also bargain to increase the amount of nonprice value for exchange. Say you’re a seller. Instead of competing on price, you can make your products more attractive by improving quality. You may also offer superior after-sales service or a unique selling point.
Negotiating Against Yourself
Preparation is crucial in understanding the other side’s goals and desired outcomes. However, don’t let the knowledge of the other side’s desires prompt you to take decisive action too early.
Avoid competing against yourself by only giving away more value whenever the other side demands that you sharpen your pencil. Whenever you consider making a concession, ask for something of equal or
In business deals, you can get creative with what you ask for. For example, you can sell for a lower price and ask for free advertising in exchange. The lower price might affect your margin on this one sale, but the deal can attract new customers.
In business classes, negotiators learn to operate with one golden rule. The rule is that customers have the potential of becoming the best customer you have ever worked with. While some transactions are one-off and don’t require relationship-building, most of your transactions will be with potential return customers.
Treat new customers with the view of a potential long-term collaboration. Imagine that this customer may spend on many deals with you. The customer may also bring the best connections and referrals for growing your business.
Not Considering Alternatives
What happens if you have too much riding on the outcome of a negotiation? Remember: The deal might collapse for any of many reasons. Also, if the other side knows how important the deal is to you, they may try to squeeze as much value as possible for themselves, to your detriment.
Sales classes teach the importance of going into meetings with options. Work out a viable plan B in case you need to cut your losses and abandon the deal.
Also, have more than one offer of approximately equal value. Presenting two or three suggestions of similar value signals that you’re flexible and have put a lot of thought into the other side’s needs.
For example, let’s say you are a contractor developing a private home. For the same budget, you could offer your customer a three-bedroom with a swimming pool, a three-bedroom with a hedge maze and parking garage, or a four-bedroom with a small patio. Multiple offers can provide insights into what the customer values most, making it more possible to sign a win-win deal.
Having the Wrong People in the Room
Who are the people on your team? What is the composition of the other side? Having the wrong people in the room can lead to a fruitless or failed negotiation. For instance, if no one around the table has the authority to sign off on an agreement, the discussion is likely to lead to lost time and perhaps also lost sales.
Having the wrong people on your team may also jeopardize your outcomes. How you compose your team depends on your needs and the complexity of the deal. For example, a high-stakes international contract may need a C-suite salesperson, legal counsel, a finance or accounting representative, and even a cultural liaison.
Mistakes in negotiation can cost you or your business a lot of lost value and revenue. Lack of preparation tops the list of the most common mistakes. Avoid losing value by arming yourself with the right information. Seek the support of a capable and qualified team.
Avoid negotiating against yourself, but always negotiate so you can increase the value available for exchange. Keep in mind that most negotiations are about building lasting and valuable relationships for mutual gain.