Each and every negotiation completed on behalf of your organization sends a message to customers, competitors and sales forces.  You can't claim you're the value leader when everyone knows that at the final hour your prices will sink faster than the Titanic.   How you negotiate is either a deposit or withdrawal from your brand equity.  Giving away value tarnishes brand perception and signals competitors to do the same, triggering irrational competitive behavior that can obliterate everyone's margins.

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The first step in creating value through trading is the pre-work to understand what the ideal trading items are.  It is this pre-work, in fact, that actually enhances the value that is being negotiated in a deal versus simply shifting value from one party to another.  Creating value for trading is actually good for both sides.

Many sellers continue to believe that buyers are only interested in low price.  But almost any business-to-business negotiation in which a professional buyer is involved is likely to be a complex one with multiple criteria to be met on both sides, and buyers are certainly aware of that.  Let's start by looking at the kind of analysis you need to do when dealing with professional buyers. 

As we report often, detailed and objective analysis of each side’s alternative to reaching agreement (what we call CNA or Consequences of No Agreement) is the central point of business negotiation planning. Regardless of our feelings about whether management or labor did the right thing here, we can learn a lot from their respective negotiation strategies. 

Determining the answer to this question is important because it affects how both sides think of the negotiation and, as a result, how they behave.  Those who think they have more power in the negotiation tend to overestimate the value of their offer.  As a result, they're more likely to play hardball in the negotiation and are less willing to consider making trades.  And when either side is unwilling to make trades, it makes creating value difficult for both sides and increases the likelihood of impasse.  On the other hand, those who think they have less power are likely to underestimate the value of their offer, are likely to roll over too easily, and, in the process, unnecessarily give up value to the other side.

The key to establishing a successful business strategy is stakeholder involvement.  That's certainly true of all members of the company's internal negotiation system.  This means not only the field salesforce but all those in the legal department as well as in sales, product, and senior management who are involved in negotiations.  It's essential to include these groups for several reasons.  Perhaps the most important of which is they all have their own particular roles in the process, their own methods and their own interests in the outcome.

There are essentially only two kinds of impasses in business negotiations.  The first, the emotional impasse, occurs when a deal is on the table that's better than both sides' Consequences of No Agreement (CNA), but they still don't come to an agreement.  Situations like this are usually the result of one or both sides misdiagnosing their CNA.  The best way to deal with this is to go back and evaluate the CNAs again, validate them again, diplomatically educate the other side about them, and re-present the offer.

As you're preparing to close those year-end deals, we don't want you to miss out on what your peers are finding worthwhile reading:

- The classic "sales-marketing" disconnect

- Your best response to commoditization pressure

- Achieving true greatness in business negotiations

- Do you have a differentiated value proposition?

- 4 questions to ask co-workers before negotiating that deal

I imagine you've heard the old 80/20 rule to guide your listening and speaking, respectively.  This couldn't be more important in a validation meeting, where the primary purpose of meeting is to gain information.  The fact that most customers don't even see sharing information as part of the negotiation actually works to your benefit because, as a result, they're likely to share more freely.  Ultimately, of course, it's trading information that enables you to learn more about what your customer wants and to let him or her know better what you want.  And that, in turn, is what enables you to format offers later that create real value.