Negotiation – The Importance Of Trading Concessions

A “Win-Win” negotiation can only be achieved if both parties are prepared to concede some of their ‘would like to have’s’ in favour of preserving their ‘must have’s’. The way concessions are handled is a vitally important negotiating skill and can have a huge impact on the final result. Below are ten tried and tested tactics to help you.

1. Discover and agree all the points for negotiation before it begins. Ensure that for each one of these points you have identified whether it is a fixed or a variable point from your perspective. (Variable means that there is some flexibility of movement.) If you have a separate meeting scheduled for your negotiation, it’s a good practice to send out you points for negotiation prior to your meeting. This ensures that both parties aren’t presented with any sudden surprises.

2. Increase the number of points for negotiation (if possible) because you increase the opportunities for a trade. If you only negotiate on price you are potentially setting the stage for a Win-Lose outcome. People very rarely buy on price alone, which is why it’s important to do a thorough fact find at the beginning of the sales process, to flush out the buyer’s list of requirements.

3. Always trade concessions (as opposed to giving them away). This means that for each point where you agree to a concession, you’ll want the buyer to make a concession in return. If you give a concession without requesting a return concession then you’ll be unlikely to get one afterwards. Therefore, it helps to preface your concession with the words ‘what if’. For example, “What if I offered you this (specify concession), what could you offer me in return?” As soon as you begin the process of trading concessions you are creating a frame for agreement, this underpins the belief that together you can reach an overall agreement.

4. Make concessions in small incremental amounts, gradually. If you offer up a large concession too quickly you could create the perception that ‘you loaded the deal’. It’s always best to aim to hold something in reserve for those buyers that are tougher with their negotiations, and present every concession as if it has huge value to you. When presenting concessions use features and benefits to really highlight the value that you are offering.

5. If the price changes, change the deal. This can help to maintain your credibility and justifies the reason for the price change. If you simply comply with a request to lower your prices then you imply that you were asking too much originally.

6. Use a calculator to quantify the impact of price decreases overall. For example, a couple of cents or euros on a large deal could equate to a huge amount over a twelve month period. This can be useful to show just how much you are offering in the long term. It’s a good idea to calculate the long-term value of every concession you are offering.

7. It can be disadvantageous to have your opening offer completely disregarded so encourage the buyer to go first with their offer if you can. Sometimes the buyer offers more than the sales person was prepared to accept, yet avoids having to do so because they kept quiet and let the seller go first. It also provides you with the opportunity to evaluate their opening stance in terms of the possibility of getting an overall result. If their opening offer is ridiculously low then they may not be taking the negotiation as seriously as you.

8. Make each concession really count. People have a tendency to appreciate what they have worked hard to get. If the winning of a concession is too easy then you are depriving the buyer of some emotional satisfaction. This is also an ideal time to request the opportunity to consult with another individual within your organisation. If the buyer sees that their requested concession appears to be outside of your own authority limits, then this helps to build the case that they have negotiated well.

9. Be creative when generating concessions. Work with the other party to generate a variety of options and brainstorm each option neutrally. You’ll be amazed at how many good ideas are created when this process is allowed to occur. You can help this process prior to the negotiation by seeking input and ideas from other people in your organisation. Often, getting some alternative suggestions from people who are not involved in the deal, can provide you with some refreshing new insights.

10. Leave price until last so you build a sense of agreement between both parties. Aim to discover what the buyer really needs when they request a particular price. At the end of a negotiation, the buyer has made an investment of time and has demonstrated a desire to do business with you by making concessions. Therefore, to reach a stalemate at this final stage will be viewed as a waste of their time.

Before tackling the price, summarise all the concessions that you have made and where possible attach a value to them. This amount can look even more impressive if you total this over a twelve month period. Always have a list of the buyers agreed requirements in front of you so that you can show the buyer just how many of them you have already met.

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