Power in business negotiations is when one party influences the benefits and decisions of another party. Bargaining power will directly determine the outcomes of business negotiations.
Sun Zi famously said in “The Art of War” that the military leader who shows up first to the battlefield often wins. Negotiation preparation includes analyzing the competition and the target company. It is important to understand their values, traditions and commercial history. Be prepared to socialize and share food with informal business partners, but dress well and follow proper protocol when negotiating with serious and formal business partners. Always bring back-up material that supports your position, such as price lists, market research and government regulations.
Promote a Sense of Urgency.
All salespeople like to use the sales technique that focuses on narrow time frames and imminent deadlines. During the proposal phase, find out how the client will financially suffer from things like increased costs, poor sales numbers and operational problems. Focus on how your products or services will benefit the client and minimize these problems. To ensure success, carefully study the target’s operations, company and industry. During negotiations, present fact-based evidence that uses statistics to show the tangible benefits of cooperation and the consequences of delays.
Negotiators are always told that they must be confident and assertive, but they must remember to be humble and flexible. True confidence comes from competent skills and collaborative efforts. Negotiators who do their job properly qualifying the prospective client should emphasize the mutual benefits of contractual cooperation. If negotiations break down during the initial discussion of basic terms, stop and review everything in order to identify what is bothering the client. The client may not like a certain contract term, but because it’s trivial they may feel uncomfortable sharing their opinion. Be sure to emphasize that mutual problem solving is the priority and view the problem from the client’s viewpoint.
Focus on the Opponents Emotions
Most people make personal and commercial decisions based on their emotions. This is true when deciding between competing brands and when deciding between competing companies that both want to secure a lucrative contract. Negotiators must evaluate the negotiation parties in order to understand their preferences and motivations. For example, an older business executive who is reluctant to revolutionize products and processes will appreciate a negotiator who strives to preserve corporate values and norms while incorporating new ideas and recommendations into proven strategies.
Be a Gracious Loser
Sometimes, the target business partner will decline the offer. Instead of flaring up with emotions, stay calm and be gracious. Keep in mind that the future holds opportunities for cooperation opportunities. Remaining mature and professional during stressful and heated negotiations will establish a reputation that will pave the way for future opportunities. When faced with similar business partners, the target client will most likely choose the one who demonstrated civility and competency during the negotiations.
Overall, the ultimate goal of the negotiation process is not to obtain everything that you want, but to establish a positive relationship with the target business. Proper cooperation and communication will result in a mutually beneficial business relationship.