Feb 6, 2023

Striking Your Best Deal: Smart Negotiation Strategy


Negotiation is an essential part of any business transaction. Whether it’s a contract negotiation, the purchase of goods or services, or even salary negotiations, having a good negotiation strategy can be the difference between getting what you want and leaving empty-handed.

Knowing how to use negotiation leverage effectively is key to achieving success in any type of negotiation. In this article, we will discuss some strategies for smart negotiation that can help you to strike the best deal possible.

What are the Phases of a Negotiation?

The following phases represent a solid negotiation strategy process. Phases can differ from party to party, but here are some fundamental phases that can help you navigate a negotiation effectively.

1. Preparation: Research & Discovery

Preparation is the first phase of any negotiation process and is often considered the most important step— research is key.

During this phase, both parties systematically collect information and analyze their respective positions.

This includes researching their own interests, understanding the other party's perspective, analyzing market conditions, and considering potential strategies to achieve a successful outcome.

It also involves recognizing potential obstacles that could prevent reaching an agreement.

Proper preparation allows each side to identify their bargaining points while also understanding what they are willing to give up or compromise on in order to reach an acceptable solution.

Additionally, consider the legal implications of any agreement made; make sure that all parties are agreeing to abide by rules and regulations set forth by governing bodies or industry specific standards.

Here are 13 answer in order to prepare for a negotiation:

There are plenty of questions to ask during the preparation phase. If you the right questions, your research and discovery will be more efficient and timely.

2. Goal Setting: Outcome & Objectives

Goal Setting and preparation are very similar, but often differ after the research and discovery phase has been completed. You start with ideas and goals before research takes place; goal setting is then where you begin to craft your arguments based off your research.

It is important that negotiators come up with realistic goals that are acceptable and beneficial to both parties involved in the negotiation.

Having well-defined goals allows both parties involved in the negotiation to assess their priorities and determine how much flexibility they can offer or need from each other.

Negotiators should also include contingency plans to help them prepare for unforeseen events that could derail a negotiation.

Establishing clear project objectives prior to entering negotiations is essential for success.

It also helps avoid misunderstandings or disputes between negotiating parties down the line.

Here are some high-level project goals I tend to look for:

goal: to create a reliable asset that will generate money, save time and/or positively influence my target audience

3. Scope: Requirements & Deliverables

Getting the scope of work right is another key element of successful negotiations.

Before beginning a negotiation, both parties should come up with a list that clearly articulates requirements and deliverables they'd like to see addressed; these items should then be discussed openly in order to ensure alignment on all fronts prior to signing any agreements or making commitments concerning resources and finances.

Consider all aspects of the deal at hand before diving into the scope - this includes financials, timelines, roles & responsibilities and anything else that's relevant to satisfy the needs of both parties.

(i.e.. here is what I am willing to spend, here is how long I am willing to work, here is what I will need from your team, when do i want to be paid? how do I want to be paid? etc.)

Make sure that everyone understands their responsibilities under the terms of negotiation and ensure that all participants agree on what will be discussed, what will be included in any final agreement and when there should be follow-up meetings or reviews about progress toward these objectives.

Negotiators should also consider that any agreements made are enforceable by law or through binding contracts between both parties.

This helps give clarity around expectations and minimizes chances for misunderstandings later on in the process.

4. Negotiation: Dialogue & Compromise

During this phase of negotiation, negotiators must use effective communication techniques such as active listening and questioning in order to better understand each other's point. The definition of negotiation is as follows:

Negotiation is an intense dialogue between two or more parties aimed at reaching a desired outcome, compromise and/or agreement.

Dialogue is another crucial aspect, which focuses on clarifying each party's interests and exploring possible solutions for addressing them.

It’s important for both parties to remain transparent throughout this process and maintain an environment of collaboration where ideas can be openly discussed without judgment or criticism.

Negotiators must also be aware of their own behavior as it can have a significant impact on how successful a negotiation will be.

Bargaining is another key element in negotiations, which requires both sides to negotiate terms of a potential agreement while making concessions within predetermined limits based on their respective positions.

At this stage, it’s important for both parties to engage in a “win-win” approach where no one feels as though they were taken advantage of or disadvantaged by the deal reached at the end of negotiations.

Part of this process involves assessing how each party benefits from different scenarios in order to create an equitable result that makes everyone feel satisfied with the outcome.

Oftentimes, no one side will get everything they want, but can agree to compromise to a situation that is evenly balanced and ultimately benefits both parties.

5. Resolution: Accept & Formalize

Resolution marks the end of negotiations where both parties have reached a decision on how to proceed with a particular issue or problem at hand based on what was discussed during the previous three phases.

The resolution should include all agreed upon terms as well as any commitments made by either party moving forward in order to ensure that everyone involved is held accountable for meeting those obligations when necessary.

Once an agreement has been reached, it must be documented in writing so that there is no confusion around what was agreed upon during negotiations.

This documentation can then serve as evidence if either side fails to follow through with the terms outlined within the agreement or contract.

Once both sides have established their needs and agreed upon a course of action, it's time to craft up an formalized agreement or contract which outlines all details pertaining to the transaction at hand including:

Before signing off on any document related to this negotiation process, review everything once more thoroughly; if necessary, involve a third party such as a lawyer or mentor who can provide extra guidance where needed prior making any commitments binding via contracts or other legal documents outlining expectations in greater detail than has been previously discussed during negotiations.

Tactics to Increase Your Chances of Winning

One of the most important aspects of negotiation is setting yourself up for success. By utilizing various tactics and strategies, you can increase your chances of achieving your desired outcome in any negotiation.

The goal, take an idea from unimaginable, to plausible:

Tactics such as setting precedents, creating anchors, and shaping dynamics can be incredibly useful in helping you reach an agreement that is beneficial to both parties.

Setting Precedents

Setting precedents involves creating a baseline from which negotiations will take place.

This allows you to establish expectations for each party based on past experiences or decisions that have been made during the negotiation process.

It also allows negotiators to make decisions quickly by looking back on what has already been decided upon in order to move forward.

Creating Anchors

Creating an anchor point is another tactic used to increase chances of success during negotiations.

An anchor point acts as a reference point throughout negotiations, allowing you to adjust your strategy if needed without losing sight of what is truly important.

Anchors can be anything from specific numbers or terms discussed during bargaining to general objectives that negotiators want to achieve.

Shaping Dynamics

Shaping dynamics involves using power dynamics, psychology, and communication techniques in order to gain leverage and create a favorable outcome for yourself in negotiations.

Negotiators should be aware of their own body language and tone of voice when engaging with the other party in order to effectively shape the dynamics of the conversation.

They should also make sure they are using persuasive tactics such as logic, evidence, and emotional appeals when communicating with the other side in order to get them onboard with their ideas.

Additional Strategies

The following six strategies are some additional ways to out-maneuver a counterparty.

Anticipated Outcomes

The best negotiators anticipate outcomes before they happen by anticipating different scenarios depending on how negotiations progress.

By doing this effectively , it helps identify potential deadlocks upfront which will enable negotiators to plan strategies for overcoming them before entering into conversations.

This also requires negotiators having an understanding of their own resources & leverage beforehand in conjunction with preparation mentioned earlier so they're better equipped when the situation calls upon them advice during discussions accordingly.

Positive Leverage

Leverage is something everyone has in negotiations, but it might not be obvious at first.

Consider what leverage points are available to use during negotiations such as deadlines or a competitive offer from another party.

Then, use these leverage points when appropriate but keep them subtle - any attempt at coercion could backfire if used too aggressively!

Timing & Sequencing

This oftentimes has an immense impact on negotiations, as the order in which certain topics are discussed or actions are taken can give one party an advantage over another.

By experimenting with the timing and sequencing of a negotiation, parties can put pressure on their opponents and extract concessions or achieve anchors that might otherwise not be made.

Stay Flexible & Adaptable:

As with most relationships, negotiations will often require flexibility in order for progress to be made towards an agreement

Try not to get stuck on one particular idea or solution, but instead remain open-minded when considering alternative options that could benefit both sides involved in the conversation (i..e find out what their interests are).

Additionally, don't let emotion drive your decisions; instead stay calm and focused on finding mutually beneficial solutions throughout the discussion phase of negotiations instead of dwelling on past grievances or issues being discussed within the same context.

Attentive To Nonverbal Communication

Body language can tell us a lot about how someone feels during a negotiation.

It’s important to pay attention to non-verbal cues such as facial expressions or gestures as these might indicate potential areas of agreement between both parties as well as potential pitfalls if not addressed correctly upfront (i..e body language indicating distrust).

Active Listening

Active listening requires you to really tune into what the other person is saying without interruption or judgement.

This can help both parties better understand one another’s needs and wants which will ultimately lead to more productive negotiations overall.

Make sure to pay close attention and ask clarifying questions if needed – this will show respect for their point of view while helping you focus on finding common ground where possible between both sides' perspectives.

By understanding these tactics and incorporating them into their negotiation strategy, negotiators can give themselves a greater chance at achieving their desired goals during any negotiation process.

Through careful planning and execution, these techniques can help ensure that both parties leave the table happy with their results and satisfied with the agreement reached between them.

Creating Win-Win Situations

An ideal outcome of a negotiation is when both parties are satisfied with the results and feel that their interests have been met.

When negotiators get to this point, they’ve achieved what is known as a “win-win” situation.

In order to reach a mutually beneficial agreement, both parties must be willing to compromise and come up with creative solutions that meet the needs of both sides.

Negotiators should also keep in mind their BATNA (Best Alternative To a Negotiated Agreement) when attempting to reach a win-win situation.

Knowing your BATNA gives you leverage during negotiations, as it ensures that you won’t settle for a deal that isn’t in your best interests. Additionally, having contingency plans in place can help you to quickly react if the negotiation process suddenly takes an unexpected turn.

Negotiators should also look for opportunities to create value throughout the negotiation process.

When you create value, you allow for team collaboration between the parties at hand, thus creating a united initiative.

Recognizing Common Pitfalls and Counter-Tactics

Here are some of the most common pitfalls and counter-tactics I have seen in negotiations:

  1. Allowing a party to become demoralized by the many details of the situation.
  2. Making emotional decisions or taking disagreements personally.
  3. Allowing scope creep on either side, it creates resentment.
  4. Overreaching on topics that were not carefully researched.
  5. Relying too much on tactics and not the situation at hand.
  6. Not considering win-win situations, or compromised alternatives.
  7. Undermining the value of future negotiations.
  8. Focusing exclusively on maximizing the deal at hand.
  9. Lack of research and brainstorming that result in major miscalculations.
  10. Not knowing when to walk away (what is the point that it will not work).
  11. Not discussing a time to renegotiate.

Foundational Rules of Negotiation

  1. Understand the phases of a negotiation.
  2. Articulate value.
  3. Analyze the situation from both sides.
  4. Set precedents, create anchors, shape dynamics.
  5. Stay positive and enthusiastic.
  6. Illustrate belief in self/abilities.
  7. Use persuasive language.
  8. Present facts strategically.
  9. Master the art of presenting.
  10. Don’t allow the other party to get anything for free (bargain, it’s all about position).
  11. Figure out how to ask for more than you need.
  12. Understand the impact of timing and sequencing.
  13. Identify areas to compromise.
  14. Establish trust with your counterpart.
  15. Demonstrate reasonable and good faith.
  16. Anticipate outcomes.
  17. Prepare for the worst, but do not trigger it.
  18. Avoid being under maneuvered by the employee.
  19. Avoid scope creep.
  20. Recognize common pitfalls.
  21. Consider beyond the current deal.
  22. Have meaningful negotiations or none at all.

Closing a Deal and Moving Forward

When the negotiation process is coming to a close, it is important to evaluate the final agreement against the goals and objectives of the negotiator.

A successful conclusion should not only be one that meets the project objectives but also one that preserves relationships in a professional manner.

Once an agreement has been reached, negotiators must ensure that they follow through with its terms and conditions.

No negotiation is ever complete until the terms and conditions of the agreement have been fully implemented and all parties are in compliance.

Negotiators should be prepared to handle any misunderstandings or disputes that may arise during this time, as well as to proactively monitor their performance against the contract. By doing so, they can ensure that both parties are meeting their obligations and that the agreement is achieving its intended purpose.

Final Thoughts

Negotiation strategy may be complex that you can utilize as a powerful tool to get the best deal possible.

By understanding key principles and applying them effectively, negotiators can maximize their leverage and create win-win situations that result in mutually beneficial agreements.

By understanding how to leverage negotiation techniques, you can shape the dynamics of the conversation and help ensure that both parties leave the table satisfied with the outcome.

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