A short course on negotiation.
Moscow, summer, negotiation room. A young salesman is fiddling with the wires of a projector.
It’s 15 degrees in the room because of the air-conditioner, but his palms are wet and dark, wet blotches are spreading from under his arms. A young woman enters the room.
– I’m sorry I’m late. My name is Elena, senior specialist of purchasing department. My supervisor Olga couldn’t make it today, so you’ll be talking to me.
He extends a cold, wet hand. Her hand is warm and firm. They sit down, he pushes aside the dusty wires lying on the table. The dust rolls up in clumps on his wet fingers.
– So, you supply exercise equipment to sports clubs. Can you tell us why we should work with you?
He starts to talk, but his throat is dry. He pours water from a bottle into a glass, his hands shaking.
– I’m sorry, I have to warn you that I have 20 minutes for this meeting. If you have some kind of presentation, let’s speed it up.
Now he can feel the drops of sweat on his forehead and the back of his neck.
– Yes, Elena, it’s a pleasure. Our company is an exclusive supplier of sports equipment. Since the year 2000 we have been supplying…
She types a message on the phone.
– Okay. Do you have a quote or a presentation or a catalog?
– Yes, of course, but I can’t get it hooked up…
– Unfortunately, I have to go. Send your presentation by mail, please, and we’ll call you back if we’re interested.
– What’s the address?
– To info dog sportsprofi dot ru.
It goes out. This firm certainly won’t buy anything, and it’s not about sweaty armpits. This salesman could be the sweatiest guy in the world and sell everything if he knew the secret. And while Tinkoff Business is getting ready to release its unfading book for entrepreneurs, we’ve pruned this chapter on negotiation from them.
The classic sales pitch.
Let’s start with the classics. You open any book on negotiation and they show you roughly the same steps of negotiating with anyone.
Identify the decision maker. Find out who in the company makes decisions on your purchases, get out to him and do not waste time on the servants. Do not negotiate with a manager who does not decide anything.
Establish a rapport. Before you go on the offensive, you need to defuse the situation. Tell a joke, comment on traffic. The goal – to relax the opponent, so that between you established a more trusting relationship. So the client will be harder to refuse.
Talk about yourself. When your opponent is relaxed and in a good mood, you finally tell him what a great product we have and what its competitive advantages are. It is important to show the product in such a light, that the competitors will be ashamed of their worthless products, and the client, dazzled by the brilliance of our proposal, asked for dark glasses and a glass of well water.
For this stage the salespeople are trained to look expensive, to speak with confidence, to show bright slides and make a presentation a little show with storytelling, neurolinguistic programming and other cryptochiratomania.
Work off the objection. When the opponent has recovered from the shock, he is likely to come up with objections: It’s expensive, we don’t need it, we already have it. The classical school of negotiation teaches us to ruthlessly suppress these objections with pinpoint bombardment. There are even ready-made techniques for dealing with these objections. For example: “Yes, it’s not the cheapest product, but thanks to the five-year warranty, the price of ownership per year will only be… And that’s much cheaper than…”.
The exercise is repeated until the buyer runs out of rational arguments to contradict you.
Close the deal. Now it’s important not to let the client go off the rails. The danger is that the client may tentatively agree now on emotion and then, in a calm environment, begin to think. To prevent this, the client is asked to sign something, make an advance payment or otherwise secure a commitment while he is still warm.
The classic scheme may have variations, but in principle we are always taught the logic: get to know the client, show the product, remove objections and sell. And this scheme certainly works: sellers all over the world use it, deals are closed, and everyone is happy.
What’s wrong with the classic scheme
The classic negotiation scheme has two problems that prevent it from being many times more effective, easier and more reliable.
Struggle. The classic scheme is a confrontation scheme in which you have to beat the client. And a good long-term relationship is one of partners, not winners and losers.
Myopia. The classic negotiation scheme is designed to win the customer right now, while he’s lukewarm on the sales floor. Negotiator does not care whether the client is satisfied with his purchase, whether he will regret later and whether he will come back to us. He has to sell now and move on to the next client.
This can still work in retail: there deals are made instantly, and often the location of the store, price and assortment are more important than the salesperson’s work. Even if a person is disappointed in a purchase, he may not stop going to this store – maybe he lives close by.
Another thing is in corporate negotiations, where deals go on for a long time and require the efforts of many people. Can you expect normal long-term cooperation with a client who feels that you have bent him over? Will such a contract pass approval? Will the managers cooperate?
It’s much better when your client has a vested interest in the deal.
In addition to the classic school of negotiation, there is an alternative – it is called the Jim Camp school, the school of conscious negotiation and various other words. Here are its main tenets in our own free expression.
Make long-term deals. All negotiations are aimed at ensuring that the client does not regret the deal, either now or in a year. If we know that the client may regret something, we must warn him. Maybe even talk him out of it.
Figure out the pains. The first question in the meeting should not be “Why should we work with you?” but “What problems do you have now?” The negotiator’s job is not to sell a product, but to find out the customer’s true needs, then figure out how to help meet them.
Not “against,” but “together.” The salesperson should take a position similar to that of a partner or coach. The customer has a problem, he wants to solve it, and we help him with it.
Watch yourself, the client, and the environment. In a negotiation, the context, the situation, and the mood of the people are important: Are they hostile or friendly? Are they on our side or on the defensive? Do they want to talk to us or are they just tolerating us? Do they have time to listen to us or are they in a hurry? And base your actions not on your script, but on the situation.
Unnecessarily. When coming to a meeting, the negotiator should not feel the need to make a deal. The deal may or may not happen, and that’s okay. It’s important to think not about the result, but about the behavior: does he understand the client’s pain? Does he ask the right questions? If you do everything right, but the deal doesn’t work out, that’s okay, there will be another one.
We won’t pretend to explain all the nuances of this negotiating school in detail, but we will reveal a few things.
Anyone who has counted the sales funnel will tell you: a repeat sale is always more profitable than a sale to a new customer. Because a new one needs to be attracted, it takes longer to negotiate with a new one, new ones are more likely to fall off or ask for a refund. Old same you already know, he comes himself, to communicate with him a short time, to return the money he is unlikely to be.
So it is wise to work so that customers want to come back to you. And to do this, you need to think about the benefits for them in the long term. If the client thinks that the firm has cheated him, he won’t want to come back emotionally.
Good salespeople know: if the client buys crap, it’s better to stop him and discourage him from making that purchase. Put it bluntly:
You’re going to overpay now, because the build quality here is at the level of average models, and it costs twice as much. There is a model that is better in quality, but costs less.
I can, of course, take you on this tour, but there’s a very high risk that your vacation will be ruined. Yes, it was advertised on TV, but I was there in person, and I’ll tell you, it’s not so rosy. I advise you to consider…
You’re about to buy an expensive smartphone, and you have a small child. He’s going to break it. Every day we bring in three phones from children, the replacement of the glass will cost 10 thousand. You either have to get a case or get a model which is not afraid to drop. For example…
A customer who feels cared for will come to us again.
Consider three concepts: desire, problem, and pain. Here’s an example of a language school.
The desire is “it would be great to learn Spanish.” A person with such a desire probably won’t even show up at the doorstep of a language school. And if he or she appears, then right after the New Year’s holidays, to fulfill his or her goals for the year. On February 1, this person will already give up classes, because work is more important.
The problem is, for example, “I don’t speak Spanish, but if I did, they would send me on a business trip to Spain”. That is, the person seems to suffer, but not very much. The person is aware of the problem: yes, I am missing out on career opportunities. But apparently, the situation is not so bad as to do something.
Pain is a problem with which the person is ready to do something. For example: “They’re sending me to an internship in Spain, and if I don’t learn the language over the summer, I’ll be like a cormorant there, won’t be able to work, and they’ll fire me.”
It’s not hard to guess that the best way to negotiate is to recognize the client’s pain and work only with it, not with his wishes or even problems. A typical problem is when the negotiator confuses wants and problems with pain. This is especially evident in active sales.
An exercise equipment salesman asks: “Wouldn’t you agree that it’s great to have a strong abs?” The client replies, “Well, yes, it is. But obviously, if the client does not have such abs, it means that it was not important enough for him to do it all these years. Even if he now buys the machine, he will not use it, the trainer will be under the bed, the client does not show off his new figure to anyone, will not attract new customers, and generally think that we have fooled him. Or even return the goods.
If they ask you for a discount during negotiations, one of the reasons may be the lack of genuine pain. A person with a headache won’t ask for a discount on painkillers, he’ll simply pay for them and take them (or even buy the most expensive one, just to be sure). The same with any other purchase: if they haggle, it means that either the principle is always to haggle, or they do not really need the thing.
A good way to check for pain is to ask what happens if the client doesn’t get what you’re talking about now. An option is how the customer is now living without your product:
Look, so what happens if you have the same figure you have now a year from now?
Here it’s important to ask without being pushy, but with genuine interest and concern. Because I really wonder why the client will want to spend time and effort on your work together if he or she doesn’t really need it.
There are other ways to learn about pain, but they all start with simple questions: “Why does this matter to you?”, “How does this relate to your life, your main job?”, “Why do you want this?”
This is where it’s important to be empathetic and have enough perspective to find inconsistencies in the client’s words. Often the client can start inventing non-existent pains or problems so as not to look like a fool, and then it will be difficult to find out what the real pain is:
– Ivan Petrovich, why do you need a website?
– Well, clients, attraction…
– Uh-huh, uh-huh. And how do you attract now?
– Okay. Let’s pretend that you have this website, all according to your assignment. How is it supposed to help you in sales?
– Oh, I don’t know. Everybody has a website, and I should have one, too.
We just found out that the client doesn’t understand why he needs a website. This is a serious problem, we need to dig.
You can do both “wants” and “problems.”
Nothing prevents you from doing projects where the client has no pain. Pain is just a measure of the client’s involvement in the project. If there is no pain, the client may not pay attention to the project, which means we have to work in it ourselves.
In retail, people very often buy things not because they have pain, but because they just wanted the thing. But since the thing doesn’t ask for much attention after purchase, it’s not a problem either.
But if we’re doing training, websites, PR, or anything else that requires the client’s attention, the lack of pain can hurt.
There’s a concept of useful action, which is the answer to the question, “How will our product benefit the customer?” The only reason to buy something is if people want the beneficial effect of the product. A low price, good delivery terms, a system of discounts and bonuses, and other nonsense – this is not useful action.
In negotiations it is important to find out what action the client expects, and show the product from that point of view. The key word is “find out”, because one and the same product can have a different useful effect for different people. For one, the phone to call, for another – to give, for a third – to apologize, for a fourth – to be accepted as his. Without finding out the customer’s expectations, you can’t guess.
It is a typical mistake of the classical school of negotiation to talk about the features and benefits of a product in isolation from its usefulness. A phone has a so-so camera, a so-so processor, and it lasts so much longer, but it’s important to a person that it be red, because red is a symbol of passion.
Conditionally, useful action is divided into pragmatic, emotional, and social.
Pragmatic is all instances in which a person solves simple everyday tasks. “This car is supposed to take me from point A to point B.” There will be talk of properties, functions, characteristics.
Emotional – when a person likes the product externally or has fond memories of it: “The most beautiful car in the world”. Here it is necessary to show the buyer a picture of the product, let him touch it.
Social – when a product is bought to meet the expectations of people around: an expensive suit for meetings, a car “so as not to be ashamed”. It is important to show who and how is already using the product.
People are very social and emotional, so these useful actions will be the strongest. It’s pretty useless to tell a person about megapixels if they just want a smartphone “like everyone else at work.” And often these helpful actions work at the same time: the person wanted the phone because everyone at work has one, but ended up buying it because it actually has good features.
Negotiation is when both parties can walk away from a deal at any time and not experience terrible consequences from it. If you come into a negotiation in need, it’s not a negotiation, it’s nonsense.
When an employee basically has enough money to live on, but would like more, that’s a negotiation. If the employer tells him to curl up with a pretzel for a raise, the employee can send the employer away and go back to his business.
Another thing is when the employee has nothing to eat and if he doesn’t get a raise now, he and his family will starve. He has a specific, tangible need, and the employer can take advantage of that. For example, he can raise his salary by a quarter and give him twice as much work.
Need has two problems, one for each side.
The party who is in want may agree to terms that are disadvantageous to him and suffer for it. For example, a vendor in need might give too big a discount that eats up all the profits or take a bite out of that same vendor’s commission.
The person on the other side may also get hurt. When his partner realizes that he agreed to an unprofitable deal, he may try to get it all back, and if that doesn’t work, he may try to stick his hand in the wheel. The salesman gave too much of a discount, he got his cap in the company, and now he will impose unnecessarily expensive services on the customer.
Camp teaches us to watch our fortunes and not go into negotiations in need: that is, when we can’t help but make that deal. We need to organize things so that we want the deal but don’t need it. This is not a matter of negotiation, but of the whole journey of life: trying not to find ourselves in situations where our well-being depends entirely on one particular deal.
The meeting begins. The salespeople are in place, and the client is 15 minutes late. When the client walks in, he says, “We have 15 minutes, let’s get started quickly.” If you were the salespeople, would you start the presentation?
Usually those salespeople who have a need will start the presentation. They’re sure they need to invest in those 15 minutes now and they’ll close the deal. They start gibbering away at the presentation, the customer gets bored for 15 minutes, then politely says goodbye.
If the salesman doesn’t have a need, he remembers that he’s not the only one who wants the deal. The client wants something out of the deal, too. Experienced negotiators in a rush situation do this:
Ivan Petrovich, we have prepared a presentation, but I have another proposal. We are unlikely to have time to discuss your task in detail, and I would very much like to understand in detail how we can help you. So I suggest that we start discussing your task and agree on the next meeting, where we can continue. When would be convenient for you?
That is, he immediately indicates that he will talk about the client’s problems (and not read his presentation), and immediately schedules the next meeting.
It could be that the client doesn’t know why he was brought here. He thought he would sit for 15 minutes and go about his business. Obviously, you can’t make a lot of money with a client like that. Then you can honestly say:
Oh, Ivan Petrovich, I think there’s been some kind of misunderstanding. I had a feeling that we could be useful to you as an agency, and we want to help you. But we don’t understand your tasks yet.
If you have no problems with advertising and promotion, it would be foolish of me to waste your time listening to our presentation.
I’m serious: we do advertising. If you don’t have tasks in this area, then we’re just wasting our time now. If we can be of service to you as advertisers, let’s discuss your tasks specifically.
An experienced negotiator remembers that he’s not here to sell, but to understand the client’s needs and offer him a good solution. He won’t perform a circus act with a powerpoint in 15 minutes. He will make the client himself want to tell him about his problems. And there is no rush.
The basic tool of a good negotiator is open questions. These are questions that require a detailed answer. Here is an example.
How to negotiate?
Daniel Galper, CEO and founder of Grow Food
Take the time to thoroughly prepare. You should have a clear idea of the person with whom you will negotiate: know your opponent’s strengths and weaknesses, his behaviour during the meeting, and situations when negotiations are deadlocked.
Social networks, speeches at conferences and in the media, plus some insights can help. Before the meeting, briefly and succinctly talk about your business, your achievements, your company’s growth prospects.
I do not recognize pompous seriousness in negotiations, so I do not use business cards and prefer to friend the person on Facebook right away.
For example, it took me a long time to persuade our first investor, Alexander Borodich, to meet us on Facebook. Then we finally met in a bar – had a great conversation, and afterwards – received an angel investment. Warm, friendly relations always work more effectively.
2. Clearly define what you want to achieve.
Yegor Guriev, CEO and founder of Playkey.
You can talk a lot about etiquette and negotiation best practices, but in my opinion, there are a few basic clear and understandable rules which influence the outcome of the meeting.
- First, you must clearly understand the goal of the negotiations, what you want to achieve.
- The second is to fix a goal before the negotiations, for example: “After the meeting on the same day, we will sign a contract with such and such terms, and the money will come into the company’s account on such and such a date. Even if you’re not sure it’s possible, set that bar and aim for it.
An example of a good outcome of a meeting:
- You got the money transferred.
- Both parties signed off on the contact
- You were given the contact of the decision maker
Example of a bad outcome:
- The contact ended with the phrase “I’ll think about it.”
- You were asked to send a presentation/additional information
There are three key steps in a negotiation that get your business partner’s attention and should fit within the first three minutes of the meeting:
Stage 1: A clear presentation of yourself and your project. “Hi! We at Playkey are solving the problem of those computer game lovers who can’t play right now with a weak computer at home. And according to our data, there are about a billion of them in the world.
Step 2: Explaining to your interlocutor why you approached him specifically – be sure to pay attention to the significance of your opponent. “We approached you because you work for a leading company with such-and-such results and have done this in such-and-such a direction.
Step 3: Offer. “We offer you to earn X million more every month in this way.”
That is all. From here comes other nuances of building a presentation.
Further discussion should be built only around your offer and the mutual interest of the parties. Such a scenario would give maximum effect with minimum time expenditures.
Do not succeed – try again and again. Everything comes with experience. There is a classical rule of 10 000 hours, described by Malcolm Gladwell in his book “Geniuses and Outsiders. Why Some Get Everything and Others Get Nothing.” The formula goes like this: anyone can become a guru in his business if he spends 10,000 hours on it. Start with the first one now.
3. You need to know everything about your product.
Andrey Lyamin, Shiptor Director of Development
The logistics industry involves negotiations with partners from large international companies, which means stress for the team, careful preparation and development of contingency solutions.
The number of negotiations increases every year, and I have developed four clear rules for myself that I try to follow:
- The first is that you must know absolutely all the details about your product or service.
About a year ago, we participated in three-way negotiations with a large international company. During the meeting, the other party, our colleagues with whom we were planning to implement the project, tried to “put us in the puddle”. We seized the initiative just in time and brought counterarguments, because we had studied the project down to the last detail and explained to our colleagues in detail why our presence would bring more profit for both parties. We won that fight.
- Second, work out your exit strategy.
It is better if you run through with the team all the objections that may arise in the negotiations in advance. Decide for yourself what terms you are ready to accept, what you will offer to partners in case of a crisis.
- Third – forget about all the tricks of the negotiation books.
Cliché phrases from books by Dale Carnegie, the techniques of mirroring – all of this looks unnatural and irritating.
- And fourth, do not be afraid to ask questions if you do not understand.
For fear of appearing stupid in negotiations, important points are often left out. If you do not understand something, ask a question, clarify, and speak again. The gap will still come up, and the consequences can be serious.
4. Find the right outfit for the meeting
Andrei Filatov, co-founder of Privee tailoring atelier
You may think that the story of yourself to the participants of the meeting begins with a presentation of your projects or ideas. It only seems that way to you. From the moment you walked into a restaurant or a meeting room, your suit already begins to tell a story about you.
Costume etiquette involves not only the right combination of colors and clothing elements, but also their appropriateness. It would be wrong to wear a strict suit to a “no-tie” meeting, as well as to wear a polo and a loose-fitting jacket to a formal reception. How you are perceived will directly affect the outcome of the negotiations.
A good suit is the best way to convey the characteristics of the interlocutor – focus, neatness, attention to detail (and vice versa).
If you wear it during the negotiations, remember that the jacket must fit perfectly, not jutting out at the waist, cuffs of shirts should stick out from under the sleeves by 1,5-2 cm and the width of a tie must be commensurate to the width of the lapels of the jacket.
Before correctly and convincingly presenting your thoughts at the negotiations, choose a good suit, shoes and accessories. You’d be surprised how much of an impact it will have on the outcome of the meeting.
5. Think positively
Arsen Lavrentiev, CEO and founder of Taboo.
I think that the most important rule – understand what your customers or partners need.
Second – analyze the information and always give feedback. When you understand your opponent’s needs, analyze them and give your opinion and ideas, the pros and cons that you see, share your experiences. Honest feedback is always better to dispose of the interlocutor.
Thirdly, think positively! It helps to find additional points of contact with your partner and look at difficult issues from a different angle. A person who thinks narrowly and cannot see the problem from a different angle is unlikely to succeed in a business discussion.
Fourth, look for different opportunities. During business negotiations, no one knows for sure what they will lead to. Focus on the details of the meeting and you may find non-trivial ideas for collaboration.
6. Be prepared for any outcome of the negotiation
Georgy Karakeyan, CEO and founder of the Organika agency
When you go to a negotiation, it’s important to be calm about the outcome. To avoid worrying about it, think that they will end in nothing.
Gather as much information about the client: if the meeting is a guest, I necessarily communicate with the staff, I can chat with the secretary, security guards. It seems senseless, but it will give you an idea of the atmosphere in the office, an understanding of the communication style adopted by the company. This is information you did not have before.
There are times when you come to negotiations and your colleagues are too tense and serious – you can try to lighten the mood. But don’t go overboard – it’s probably the way things are done here, you shouldn’t break tradition.
If you feel that your colleagues are overtly negative to you, remember, this is not the deal you had planned to make, try to convey your position and politely say goodbye – you will save yourself a lot of time.
If the interests aligned – great, no – goodbye. Be sure to find partners with whom you will be on the same page and agree on the price for your services and scope of work.
Of course, there are people with the only goal in mind “to sell at any price” – it’s wrong. Such managers are always bad for business.
7. Speak only in substance
Any meeting requires preparation. Both appearance and behavior during negotiations – everything affects the results.
The smart solution is to gather as much information as possible beforehand about the person with whom you are going to communicate: their interests, habits, negotiation behavior and business tactics.
Come to the meeting on time, or better yet, 10-15 minutes earlier, so that you can talk to your partners in a relaxed atmosphere and tune in. Put your phone on airplane mode for the duration of the negotiations: calls and notifications are distracting and annoying (and not just for you).
If you are meeting for the first time, I recommend making a short introduction: introduce yourself, the company’s business and products, and communicate your expectations for the negotiations.
During the discussion, behave confidently, speak only on the substance, listen to the interlocutor. A huge advantage when you speak not only about your own interests, but also to take initiatives that are beneficial to the other party. In this way, the negotiations will end in a “win-win” format – when both sides win.
8. Write down all agreements
Arsen Nersisyan, founder of Orator.Club, a private speaking club
Almost my entire day consists of meetings and negotiations – with club members, corporate clients and partners. When going to a meeting, the first thing I always observe the golden rule is to arrive in advance.
Late arrival is usually perceived as a sign of disrespect for the interlocutor and the business in general. Stand up, greet your guest, shake his hand – all these standard signs still work and form your image.
Don’t forget about the external aspect. This, too, affects the outcome of the meeting. Clothing should be organic and appropriate to the circumstances.
In addition to that, I always try to record the agreements made in writing. The interpretation of what two people say is always different, so I try to seize the initiative – to write everything down myself, and then read it to the interlocutor. Sometimes it is even possible to win more favorable conditions for oneself.