How to Create Value in Your Negotiations

Business leaders are involved in negotiations on a daily basis. Typical negotiation scenarios include leasing office space, hiring new staff, creating partnerships, signing up suppliers, and seeking finance.

As you may notice, these scenarios are rarely one-off negotiations. These typical negotiation scenarios definitely aren’t winner-takes-all situations. Business negotiations are about creating long-lasting, profitable, and valuable relationships.

In NY negotiation training classes, leaders learn that in long-lasting business relationships, money isn’t the only important metric. The handshake at the end usually indicates not an end to negotiations but the beginning of the relationship.

Therefore, it is crucial for negotiators to create value using a collaborative approach. There are several key strategies for creating value in negotiations.

Share Information

Negotiation training courses affirm that negotiation is often about problem-solving. Negotiation requires collaboration and a “give-and-take” mindset before you can achieve a win-win outcome. Reciprocal sharing of information makes it easier for all sides to better understand each others’ concerns, expectations, challenges, and needs.

Armed with shared information and your own research, rank your needs and the needs of the other side. Look for high-low trades, as these are integrative issues where you can offer something of high value to the other side but low cost/value to your side.

While sharing information, ask about future collaborations and how you can make them happen. What are your buyers’ current unmet needs which can be incorporated into your contract? Talk to your customers and suppliers, if possible, to determine whether there are any shared high-ranking goals that you can satisfy.

Explore Alternatives

While some impromptu bargaining may be inevitable, most negotiation settings are planned in advance. Thorough preparation and negotiating training is necessary for a consistently positive outcome. While it is possible to get exactly what you asked for, more often than not, you’ll need to exchange some value. Be prepared by exploring alternatives both before your negotiation meeting and while negotiating.

What if some haggling is required? Do you have a fallback position? If there’s an impasse in negotiations, what’s your Best Alternative to a Negotiated Agreement (BATNA)? What’s the other side’s BATNA? Remember, your BATNA helps you determine what your reservation point is. The other side’s BATNA helps you uncover what value they might be willing to provide to avoid an impasse. Once you know and have starting progressing your alternatives, you’re better prepared to come up with creative symbiotic solutions and are more likely to avoid sales negotiation mistakes.

Analyze Interests

Once at the negotiating table, ask probing questions and actively listen to the replies. The responses may offer insights to hidden interests which were not previously shared. To model the answers you seek, you should reveal your own interests. Otherwise, you risk eliciting guarded responses.

By analyzing interests, you might uncover overarching values with the potential for high-low trades. For instance, suppose you’re a bakery owner supplying a big retail chain. You may employ negotiations techniques focused on price but switching the packaging to an environmentally-friendly material may appeal to the retailer’s environmental values. Switching packaging material may give you an edge over competitors who are still using plastic with little or no additional cost to you, making it more likely that you get the negotiation outcome you desire.

Practice Reciprocity

Negotiation training prepares you to know beforehand what you can give away in your offer and where you draw the line. Negotiation preparations give you the confidence to make magnanimous gestures which create high value for your negotiation counterpart at a low cost to you (high-low trade). According to Cialdini’s Six Principles of Influence, showing generosity will, in turn, make the other team more willing to give up a term, such as lowering their price or adjusting a time frame in your favor.

For reciprocity to work in your favor, be the first to make a kind gesture. The gesture should be a gift, not a compromise. After making your offer, resist the urge to make any further concessions until your counterpart reciprocates. Remember, savvy negotiators may ponder your offer for a while, waiting for you to get nervous and make even bigger concessions.  

Negotiate by Creating Value

It’s important that all sides to a negotiation come out with a deal they feel is fair and well-balanced. Business leaders grow their ventures by creating value for mutual benefit with their customers, lenders, suppliers, and other stakeholders.

Negotiation training equips business leaders to create mutually beneficial value through collaborative problem-solving. Sharing information creates an understanding of needs and expectations, which often leads to more value and better deals. Exploring alternatives enables a negotiator to offer valuable trade exchanges. By analyzing interests, a negotiator can introduce creative solutions for overarching values. Finally, practicing reciprocity ensures that the give-and-take provides a positive end result for all sides.