To get what you want you must be able to negotiate. It's often a skill that is overlooked and is rarely taught. Yet it's one of the fundamental skills you need to succeed in business along with being able to close sales.
There are no hard rules when negotiating, but here are ten commandments you need to follow to give you the upper hand in any negotiation.
The 10 Commandments of Negotiation
1. Know When to Stop
Don't negotiate for negotiation's sake. Don't let pride and egos get in the way of making a good deal.
Know when to stop and get out. Don't bicker over small details that don't matter in the bigger picture.
In some cultures negotiation is part of everyday life. A price is given, then negotiation is expected. Let’s say you are buying a t-shirt and the asking price is 15 dollars. You think this is too expensive and offer to pay 7 dollars. The vendor counter with 13 dollars, and you then counted with 8 dollars.
At some point, you will be met in the middle. You offer 9,5 dollars and the vendor offers the T-shirt for 10 dollars. At this point, it’s not so much about the money but rather about pride and ego.
Who will give in first? You don’t want to look bad so you walk away empty-handed. Instead, you could have had the t-shirt discounted at 5 dollars, which would have been a great deal if you only would have taken the vendor’s final offer.
2. Have a Pleasing Personality
A whole book could be written on this one point, so we are only going to touch on some key aspects of what makes a personality pleasing.
a) Have a nice warm welcoming smile
b) Be agreeable. Use the word yes and discard words like no, but, and however.
c) Be mindful of your tone of voice. 33% of communication is through tone of voice, while only 8% make up the words that are being spoken.
d) Find commonality. We like people that are like us. Find common ground before starting any negotiation.
e) Have a positive mental attitude. Nobody likes working with a negative person. Always approach business and people with a can-do attitude.
3. Keep a Record of Information
Collecting and recording information when negotiating is essential. Whoever keeps the most information usually wins.
Keep records of what has been said and store all information about the other side in an organized and systematic way.
A great way to keep information could be a little black book that you carry with you. You could also set up a digital “black book” like Microsoft OneNote or Notion.
The benefit of using a digital system is the amount of information you can enter. Nowadays these softwares have mobile apps, meaning you can access them anywhere.
4. Define Your Goals
We often underestimate how powerful our minds are. One of the reasons we don't realize the full power of our mind is that we rarely clearly state exactly what we want. Stating what you want in written form is incredibly powerful.
Know exactly what you are looking for so you don't end up with things you don't want or need.
An example would be if you go to a market. You might go there to get one thing, but you might end up leaving with a bunch of other things you don’t need thanks to the sales skill of the vendor.
In this case, it might not be a big deal, but if you are negotiating bigger purchases, this can have severe financial consequences later on.
5. Do Your Research
Gain leverage by gathering adequate information before the negotiation. 80% of your time should be spent researching and gathering information, while the remaining 20% should be used to make an offer and close the deal.
Understand that people are driven by self-interest. Conduct research to uncover what is most likely motivating the other side.
For example, ask yourself if the other side is gaining something by selling a product. Do they have a stake in the company that is selling the product?
6. Always Present an Offer of Greater Value
Don't make your offer only about money. What other intangible value can you offer? Can you solve a problem for the other side? Will there be more future business opportunities?
A great way of adding extra value to a proposition is to throw in bonuses that are of no great cost to you but can be of value to the other side.
Business is a value exchange. Money is just a by-product of that value exchange. Therefore, focus more on the intangibles, like building a great relationship. Put your best foot forward and be a pleasant person to work with.
7. Limit the Number of Concessions You Give
In negotiation, there is a metric called the rate of concession. A person with a higher rate of concession usually ends up losing the negotiation.
Do not give away concessions easily as it will compromise your value proposal. When you give concessions, give something small and ask for something (or multiple things) in return.
For example, don’t be the first to lower the price of the things you are selling. This will make it seem less valuable. Always be hesitant to lower your price and only do so if they can give you something in return.
8. Take What You Want, Give What They Need
There are wants and then there are needs. Usually, the other side will start the negotiation by stating their wants. Try to peel back the layers of what is being said and find out what they need instead.
Aim to give them what they need while you take what you want. Whoever gets both their needs and wants met wins the negotiation.
For example, if someone is selling their property they might only need 80 000 dollars to break even or walk away with a small profit, but they want 100 000 dollars.
Ask questions and try to get an understanding of the situation so you only give what they need in the end.
9. Use Non-Linear Time to Your Advantage
Slow down, speed up, take a break or go backward as you see fit. Be unpredictable and manipulate time to your advantage. When they want to go fast, you go slow. When they want to go slow, you go fast.
Putting pressure with limited time usually evoke an emotional response, not a logical one, in most people. Don't be afraid to put things on hold during a deadlock and resume negotiations later.
Time is one of your most valuable assets. By controlling time you will also appear more powerful. Manipulate time as you see fit.
10. Understand Human Nature and Irrationality
Us humans like to fancy ourselves as rational creatures. Nothing could be further from the truth. Ask anyone in sales or marketing.
To become good at negotiating you must understand the irrationality of human nature. Speak to people's emotions, not their logic when negotiating.
For example, if you are negotiating the price of a product don’t appeal to the features of the product. Talk about how owning the product would make them FEEL and how others will perceive them once they have obtained the product instead.
Here's a quick recap:
1. Know When to Stop
2. Have a Pleasing Personality
3. Keep a Record of Information
4. Define Your Goals
5. Do Your Research
6. Always Present an Offer of Greater Value
7. Limit the Number of Concessions You Give
8. Take What You Want, Give What They Need
9. Use Non-Linear Time to Your Advantage
10. Understand Human Nature and Irrationality
Summary
Knowing how to negotiate is not only a business skill but a life skill. The 10 commandments of negotiation are a great starting point for anyone who wishes to master the art of negotiation.
Credit goes to Stefan Aarnio and his book X: Negotiation. If you want to dive deeper into the topic of negotiation I would highly recommend his book.
Do you agree with these 10 commandments? What do you think is important when negotiating?
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