Every negotiation is different, I have a saying I use in training sessions, “Negotiation is circumstantial”. There isn’t a proscriptive approach that will work for every negotiation. You have to change your style and strategy to suit the circumstance of the situation. As a point of reference I will refer to what I call The Wheel of Negotiation as a guide to help establish what type of negotiation you are involved in. Many of the tips I am including in this series “5 Tips etc…” will vary to a degree depending on the type of negotiation. You can read about each style or type of negotiation independently if you wish by visiting the Negotiation Basics page.
Opening Position – just like first impressions, your opening position is the most important move in any negotiation. It begins the process of setting and managing the other party’s expectations. You want to be as extreme as you dare, yet realistic within the parameters of the situation. I want to stress the realistic part, if you are unrealistic you run the risk of crossing the piss-off-point and deadlocking the deal unnecessarily. If you are involved in a Hard Bargaining negotiation (distributive) be very extreme, if it is a Win Win negotiation (collaboration) you can not be as extreme because of the need to establish and maintain trust. The main idea here is to open up ABOVE what you want. By opening extreme but realistic you provide yourself room to move. If you open with exactly what you want, you either get less….. or worse yet if you are unwillingly to move from your position, you will increase the likelihood of deadlock. Expect a “No” to your opening position, in fact, you want them to reject your first offer. That’s right, I said you WANT them to say no initially. If they say yes right off the bat, you have left a lot on the table. By getting a genuine “No”, you start the process of managing their expectations. They start to even shift their position to try and close the gap. Also, by opening extreme yet realistic you get an opportunity to see a genuine “No” from the other side. PAY ATTENTION!! Watch how they say “No”, listen to the words they use to reject your proposal. This initial response is your baseline response. In negotiation people are always telling you “No” even when inside they are screaming “Yes!”. If you pay attention you will see and hear when this baseline response changes, which tells you your offer is acceptable, regardless of the response (but I will cover this in a later post in more detail).
The age old question with opening is always “Who goes first?”. Like school yard kids behind the teeter-totter, “I’ll show you mine if you…”. In Win Win types of negotiation it isn’t as crucial who goes first as creativity tends to dictate power. However in the more distributive types of negotiation like Hard Bargaining, Concession Trading, and Auction/Bartering who goes first is critical. Regardless of which side you are on (buyer or seller)…. YOU GO FIRST!! Lots of consultants will tell you the exact opposite, don’t believe them. The only time you let the other side go first is if you have no idea about the valuation and market information isn’t available and you are sure you are going to make a HUGE mistake. Otherwise, in 90% of all negotiations where you have intel you want to start anchoring the discussion around your position, so GO FIRST! In the next post I’ll discuss Anchoring in detail which will help dispel this old wives tale of letting the other side go first.