The most successful people are the ones that are prepared for every eventuality. As ThriveGlobal points out, “successful people understand how to prepare for great opportunities,” and “success is born when preparation meets opportunity.” We might not always be able to control what opportunities appear in our paths, but we can control how well we prepare for those opportunities. Your approach to contract negotiations should be the same. You can’t always predict what sort of benefits you can obtain through negotiation, but you can make preparations to ensure you are ready to take advantage of those benefits if they arise.
Key Takeaways
- Negotiation preparation means defining your objectives, researching the other side, and setting your BATNA before you sit down.
- Answer nine key questions to build your plan, from your goals to your walk away point.
- High stakes deals need a documented success number and an internal coalition before you negotiate.
- Sales reps should map the client’s budget and decision makers, then apply the give to get rule.
What Is Negotiation Preparation?
Negotiation preparation is the work you do before you sit down at the table: defining your objectives, researching the other party, and building a plan for how the conversation should go. The stronger your preparation, the more leverage and confidence you bring to the room.
At Shapiro Negotiations Institute, preparation is the first of the Three P’s we teach in every program: Prepare, Probe, Propose. It’s also the subject of founder Ron Shapiro’s New York Times and Wall Street Journal best selling book, Dare to Prepare, which shows how the same habits used by elite athletes and Fortune 500 negotiators apply to any high stakes conversation.
Still, there is some debate on how best to prepare for such an event. Research is key, but when people hear the term research, they often imagine long hours spent poring through books and websites and old financial reports. Not that there aren’t some uses for such information, but memorizing a list of facts isn’t the best approach. It’s time-consuming, and you end up taking in so many details that you might overlook something important.
The most useful way to get ready to enter negotiations is by building a smart strategy to guide you in your negotiation plan, ensuring that you’ll be prepared for every eventuality. For this sort of approach to be effective, you can’t simply come up with a list of every possible argument you might expect and draft a response to address it. The second you are surprised with an argument that is not on your list, you’ll find yourself at a complete loss. If you’re creative and willing to try something new, you could look over some unusual negotiation preparation tactics from Shapiro Negotiations Institute. Another solution is to focus on putting together a basic outline that can be easily applied to a variety of situations, including ones you’ve never thought of before. Adaptability is key.
Build Your Negotiation Plan: 9 Questions To Ask Yourself
In order to start creating the outline best suited for your needs, it can be helpful to ask yourself the following questions:
1. What are your objectives?
To defend yourself and your proposal, you need to have a clear, concise way of communicating what you’re ultimately trying to achieve. How many objectives do you have? Are they feasible? Consider them individually. How important are each of those objectives? Are there some that you might be willing to part with? Use your answers to determine your best case scenario, what you’d be willing to settle for, and what you would consider a dealbreaker.
2. What are your motivations?
This will provide guidance when discussing the above objectives and goals. Why is it so important that your proposal be accepted? What are the big picture implications of a successful negotiation?
3. What are the objectives of the other party?
You might not be able to find out the exact answer to this question, but you can formulate a general idea based on their mission, values, and previous dealings. This will help you decide on the most suitable way to appeal to them.
4. What authority do you have to be handling this negotiation?
What authority does the other party have? The process will be much less frustrating if you have a clear understanding of what is and isn’t off-limits, so to speak. What sorts of decisions are able to make on the spot without anyone else’s approval? If you have a higher up you need to consult, can you touch base with them ahead of time and get their approval to offer certain alternatives during negotiations? The same goes for the other party. If you find you’ll be speaking to someone with very limited authority, are you able to reschedule the meeting with someone else?
5. What does the other party stand to gain?
What kind of benefits would motivate them to agree to your terms? Think about what the biggest overall advantage might be, and then list smaller concessions you might be willing to make to further persuade them to accept the deal.
6. What data do you have to support your position?
Do you have any numbers to prove that the benefits you can offer them aren’t just conjured up out of thin air? Unbiased sources of data are an excellent resource to convince the other party to accept your proposal. Make sure to arm yourself with relevant information ahead of time.
7. How do you plan to start the conversation?
You don’t need a script to negotiate a contract, but it doesn’t hurt to have a general idea of how you plan to organize your thoughts. According to the HoustonChronicle, “Plan to negotiate on the least-important issues first. Negotiating on the less-significant issues first can give you more time to focus on concessions that are more of value.”
8. Are you prepared to de-escalate the conversation if necessary?
De-escalation tactics are extremely useful in resolving any sort of conflict that might arise. Focus on developing your active listening skills, and avoid letting things get personal during negotiations. Keep in mind that taking extra time is another tool that is often overlooked. What does your timeline look like? Is it within your means to extend negotiations to a second meeting if necessary?
9. What will you do if you are unable to reach an agreement?
Per InTheBlack, “A critical part of this is knowing what you will do if negotiations fail.” Though not something we often like to think about, it’s an eventuality you need to prepare for. Even if you’re fairly certain that you’ll be able to come to a mutually beneficial arrangement, determining your best alternative to a negotiated agreement, or BATNA, will give you more leverage during negotiations.
Preparing For High Stakes Deals
When the deal is large enough to change your quarter, or your year, add three more steps to your negotiation preparation. First, define success in hard numbers: the specific price, terms, or margin that makes this a win. Second, build your internal coalition before you negotiate. Line up the stakeholders, finance, legal, or leadership, whose support you will need to close, so nobody surprises you mid negotiation. Third, know your exit strategy. If you can’t hit your numbers, decide in advance what you’ll do instead, and be prepared to walk.
Preparing For A Client Negotiation
If you’re a sales rep heading into a client negotiation, your preparation looks a little different. Review your notes from every prior conversation with this client so you walk in knowing exactly what’s already been discussed and promised. Map out who holds the budget and who makes the final call, since the person across the table isn’t always the person who signs. And apply the give to get rule: never lower your price or add a concession without getting something back, whether that’s a longer contract, a faster start date, or a referral.
Frequently Asked Questions
What is BATNA?
BATNA stands for best alternative to a negotiated agreement, the fallback you’ll pursue if this negotiation falls through. Knowing it gives you a clear walk away point and more confidence at the table.
What are the 5 C's of negotiation?
The 5 C’s are commonly described as Communication, Clarity, Compromise, Creativity, and Control, though the exact list varies by source. They’re a reminder of the core skills a strong negotiator draws on during a conversation.
What is the 70/30 rule in negotiation?
The 70/30 rule suggests spending about 70 percent of a negotiation listening and asking questions, and only 30 percent talking. The more you learn about the other side’s position, the stronger your leverage.
What is the 80/20 rule in negotiation?
In negotiation, the 80/20 rule (the Pareto principle) suggests that roughly 80 percent of the outcome is determined by 20 percent of the issues on the table. Identifying that critical 20 percent early lets you focus your preparation where it matters most.
It might seem strange to go through a checklist like the one above to prepare for a contract negotiation, but ultimately it will provide better results. These questions should help you build a solid foundation, which you can then use as a basis for every point you make and every response you provide during the negotiation. By creating this outline, you are also able to determine what sort of methods and tactics are most applicable in your situation. We have previously included helpful guides on such techniques, as well as factors to consider after building your negotiation plan. Once you have the context of your answers to the above, you should have a much easier time dealing with those factors.
Ready to put a repeatable process behind your team’s negotiations? Learn how SNI’s Three P’s framework can sharpen your team’s negotiation skills.
