The 4-Step Negotiation Process Professional Negotiators Use to Seal the Deal

Negotiation process

When we employ negotiation tactics, we often come to the frustrating realization that other people are equally as complex, motivated, and human as we are.

Perhaps you discover this truth most often during spousal bickering. Maybe your boss shakes his head chronically while you are negotiating a salary raise. You might even be familiar with the heart-sinking feeling of being unprepared and/or losing money in a business-to-business negotiation.

I’ve been there. There is nothing more discouraging than coming into a negotiation process with a loose plan of total domination and leaving in a state of shock. In a professional negotiation, failing to prepare adequately will disappoint both your company and the cruelest judge of all–yourself.

Nobody is safe from failure in negotiation–not even the consultants. This is why it is so essential to be strategic, inquisitive, and alert. Never rely on old school charisma to pay the bills.

Business persons can be an anxious and resentful bunch. They may also be aggressive, using self-serving methods during meetings if they sense weakness from their counterpart. You must make sure there is no blood in the water.

To do so, you must be familiar with the numbers, historically informed and aware of the deeper psychology behind an otherwise logical concept of give-and-take.

 

“Where two principles really do meet which cannot be reconciled with one another, then each man declares the other a fool and a heretic.”

Ludwig Wittgenstein, On Certainty

 

Because the negotiation process is so complex, the preparation requires a four stage process. In this article we’ll explore each each stage and their specific action items in depth.

 

The 4 Stages of the Negotiation Process

 

The negotiation process begins the moment you know what you want and from whom. From this point on, you must acquire a foundation of knowledge, prepare emotionally, develop backup plans, solidify deals and maintain relationships. Yikes.

But, as the hackneyed saying goes, the journey of a thousand miles begins with one step. Let’s begin by mapping out the journey of your business negotiation.

 

1. Map Out

Negotiation Process: Map Out

 

“A goal without a plan is just a wish.”

-Antoine de Saint-Exupéry

 

Bring a flashlight if you’re coming into the negotiation process without a plan; you’ll be in the dark. As a standard, spend at least five hours per every year of contract length. That way, you can evaluate all possible issues and interests.

Realize that preparing for a successful “Map Out” is all about knowing the issues. Core issues might include the following:

1. Pricing 9. Deadlines
2. Volume 10. Testing
3. Productivity improvement 11. Payment terms
4. Technology 12. Scope changes
5. Design details 13. Testing procedures
6. Delivery details 14. Specifications
7. Warranty 15. Future orders
8. Service interruptions 16. Evaluation process

You don’t have to write a thesis that covers every potential issue in depth (with citations!) in order to have an effective negotiation tactic. What you should do, however, is ask yourself which parts of the negotiation process are most important and/or which aspects you are uncertain about. Then, dedicate your time to eliminating these blind spots.

Understanding your own desire is only the first step. How much authority does your negotiation counterpart have? Do they have a history of hardballing? What are their core issues and interests? Pretend you are negotiating a salary offer and think of what only you as a company can offer.

Your company files are a tremendous source of information. Check out previous agreements, Requests for Quote (RFOs) and Requests for Proposal (RFPs).

After exhausting the sources of information within your own company, start looking further afield. You may want to explore research indexes, other companies’ websites, annual reports, LinkedIn pages and relevant articles.

Check out Dun & Bradstreet, 10-K reports and Wikinvest finance. You have to become a negotiating Sherlock Holmes. Consider every avenue that will uncover your counterpart’s interests and drive through them full-force.

Next, you’ll want to practice your anxious brain’s favorite game: What if?

What if…

… another emerging supplier comes on board?

… our main operations engineer leaves and we need additional training?

… there is an earthquake?

Developing an alternate universe will help you think critically as you map out exactly what you want from the negotiation. This is where numbers come into play. When you are planning, it is wise to set both idealistic and practical offering goals:

1. The opening offer (Best Agreement to Make, or BAM)

2. The target (range of satisfactory outcomes)

3. The final offer (the least desirable but acceptable number)

You should, of course, open with your BAM anytime you are able to start the negotiation process. You know you have reached your BAM when the thought of actually asking for it makes you nervous. Worry not. Your BAM is not an ultimatum. You will make concessions, which will keep the other party at the negotiating table and hopefully end the process with the best win-win possible.

If you feel the counterpart isn’t budging to a degree you consider appropriate, it may be helpful to subtly suggest your Plan B. It is acceptable to let the other party know you are considering all options, including new emerging customers or suppliers. This negotiation style is comes across as authoritative without sounding threatening.

As a guideline, in order to have an effective negotiation, do not reveal your specific Plan B to the counterpart because 1) he or she may interpret your revelation as a threat and provoke inflexible win-lose negotiating and 2) your counterpart may use their knowledge to undercut your Plan B.

 

2. Meet & Greet

Before the negotiation process, it is helpful to set an agenda. Usually the side with more leverage establishes the topics and/or timetable. Here is an example of an appropriate agenda-setting email:

 

“Dear Counterpart,

I am looking forward to finalizing our agreement for the new Widget 900 Exfoliator. Below is a proposed agenda; let me know if you would like to add anything. The times are just approximate, to help ensure we address all the issues. I look forward to meeting with you and finding ways to meet our targets. See you soon.

  1. Check in: catch up, greetings (10 minutes)
  2. Review previous meeting and what was agreed upon already (10 minutes)
  3. Finalize the scope and deadlines for each phase of production and discuss foreseeable obstacles to meeting deadlines (40 minutes)
  4. Wrap up and agree on next steps (10 minutes)”

 

You can also set an agenda during the meeting’s warmup, the first opportunity to prove your negotiation skill. Warming up the room promotes a sense of affiliation and connection. When your counterpart views you as a partner rather than an opponent, they will be motivated to work towards a mutually satisfying outcome (it is much easier to make concessions to people you like).

To build rapport and affiliation, find and discuss things you have in common. Keep a file of the people you negotiate with yearly so you can remember their “small talk” pieces. It is difficult to make a perfectly applicable how-to guide for this sort of business, but here are a few tips:

  • Ask about their family, if appropriate.
  • Bring up a subject they enjoy speaking about (sports, politics, business, technology, a TV series, etc.)
  • Provide refreshments

Remember that cultural differences can be problematic during warm-ups if they are not considered in advance.

You must also take the “trust temperature” of your counterpart before negotiating. The trust temperate is the measure of how willing your counterpart would be to hand you their first-born child or, put simply, the measure of your counterpart’s trust in you. Do they view you as a hostile win-lose negotiator or a trusted partner?

Consider how past negotiations with your counterpart’s business have gone. Do they have reason to mistrust you based on past “unfair” exchanges? Always brainstorm ways you can put skin in the game and show your counterpart that you are invested in mutual success.

Setting rules of engagement might seem childish or inauthentic but they can help ease tension or set boundaries before conflict arises.

Here are a few Rules of Engagement examples:

  • One person talks at a time (no interrupting)
  • Attend meetings on time
  • Seek creative win-win solutions
  • Answer questions truthfully
  • No intimidation or hardball tactics
  • Not giving misleading information

Once you’ve worked to build trust and guarantee fair play, you can dive into the “gives and gets” of negotiation.

 

3. Gives & Gets

Negotiation process: give and gets

Open with your BAM–we’ve been through this. Unfortunately, the hardest part of the negotiation process is not asking for too much but sinking from your BAM to your target.

You can discover your counterpart’s interests through past agreements, trust, listening, and probing. Probing involves asking open-ended questions in a non-threatening manner. This gives your counterpoint an opportunity to explore their interests and the many ways they can be met.

Probing inquiry is the most important tool to achieve a win-win agreement. Knowing what your counterpart wants is the key to leverage. Your counterpart’s responses to your probing will signal how prepared they are and how much authority they have. This type of questioning can turn a stalemate into a problem solving discussion. When your counterpart says “no,” probing seeks to discover what is behind their refusal. This is when you should probe:

1. Before any offer is made: Probe your counterpart for information about every aspect of this negotiation. Ask the questions that you could not answer during the planning phase. Test your assumptions about what your counterpart really wants, as well as what he can offer you.

Here are some examples of before-probes:

  • “Who else helped plan this negotiation?”
  • “How often do other suppliers request similar changes to the products that we requested?”
  • “Have you met with other potential suppliers yet?”
  • “What is your decision-making process?”

2. After your counterpart makes an offer or states a position: Inquire to fully understand what your counterpart is offering and why this offer is being made. Ask what the data is based on, which part of the agreement they could be most flexible about, why they need something at a particular time, etc.

Here are some potential questions to ask after an offer is made:

  • “What are your reactions to those numbers?”
  • “Do you agree with our research?”
  • “What questions do you have about what I just said?

A well-prepared probe is best. Each probe must be designed to elicit a clear response. Instead of asking “Why are your labor costs so high?” say, “I see that your labor costs have fluctuated over the last two years for the contract systems analysts. Can you explain why that is?” Make sure the probes are open-ended. Ask questions that invite the counterpart to explain and explore his/her own interests and issues.

A negotiation is a problem-solving session. You want to create give-and-take, knowing that offers and counteroffers lead to a more mutually satisfactory outcome. Hearing a “no” is an opportunity to expand the discussion. I’m going to say the phrase “probing inquiry” again, because it is the best response to a “no.” The key is to move from their “no” into an open-ended question that explores the motivation behind the rejection.

4. Seal the Deal

Once you’ve reached the pearly gates of consensus, it’s time to lock it shut behind you.

Don’t leave the negotiating table without a verbal review of the agreement. You can do this by asking the other party to verbally summarize what you just agreed upon or by summarizing the agreement yourself. Follow up immediately with an email summary. This will often clarify a point that might otherwise cause confusion in the future.

Debriefing is the single most effective tool for becoming a master negotiator because it allows you to:

Receive feedback about you as a negotiator.

Address frustrations that arose during the negotiation.

Improve rapport and foster loyalty by showing that you care about their satisfaction with the negotiation process.

Of course, you do not ask to debrief by saying, “Hello, I’d like to foster loyalty and see if I have adequate negotiation tactics.” You can instead ask your counterpart for feedback or offer your own comments. Start by discussing the positives and then introduce what could be done differently in the future.

Unless you have a strong relationship, some people are intimidated by offering honest feedback in a face-to-face meeting, so debriefing might be more effective over email.

After you’ve debriefed with the counterpart, have a similar conversation with your team or negotiating mentor. Ask yourself if you’ve achieved the goals you set out to and what could be improved upon next time.

Keep These Steps in Mind When Developing Your Negotiation Skills

Now that you have a plan of action and a few tricks up your well-ironed sleeve, it’s time to get negotiating. Commit your time to preparation and avoid the grievance of embarrassment or failure later on.

Remember that a great negotiation process begins with your positive self-talk. Your attitude and beliefs create your persona and drive you in an optimistic direction. Positivity and anxiety management is absolutely necessary if you’re planning to start with your BAM, ask the important questions and seal the deal with certitude.

Happy negotiating.

Do you have any questions about this negotiation process? Let me know in the comments!

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