Begin with a goal to "create joint value and divide it given concerns for fairness in the ongoing relationship."  There are numerous small steps involved in attaining this goal, including estimations of the consequences to both sides of not reaching agreement (CNA) and estimations of items each side is interested in including in the deal.  All of this work done so far has been engineered to bring you to this point -- the point at which you can actually begin to create value.  You create value in two ways.

There are numerous ways to solicit information about a business negotiation and the more obvious you are, the less likely it is that you'll get the information you're looking for. When you're validating your estimation of your customer's wish list, are you getting good answers to these three questions?

Chances are your buyer cannot get the "same thing" cheaper. In virtually every business negotiation where there are professional buyers on one side of the deal and professional sellers on the other, the business solution being negotiated has virtually no chance of being "the same" as what your competitor is offering.

Think! Inc. provides research-based training, responsive to the root causes of your unique situation to help your salespeople become more successful negotiators.  All the countermeasures, tactics, behaviors, tips, tricks and gimmicks typically taught by negotiation "training" or other "experts" aren't cures. In fact, they have few, if any, long-term, positive effects on the negotiating skills of an individual or the negotiating competency of an organization. A company training its salesforce in such a traditional soft skills approach to negotiation can expect a 2% bump in negotiation effectiveness.

The concept of trading for something of equal or greater value avoids value-detracting concessions and expands the opportunity for all. Learning this was a good first step in helping the Key Account Managers (KAM) at Nalco prevent value loss. They practiced expanding the financial pie of a negotitation by adding in as many value-creating elements as possible. A more in-depth analysis taught them how to prioritize and articulate the risks (terms and conditions) and investments (prices) for both sides.  

At the risk of oversimplifying the relationship between selling and negotiating, the former is about meeting the customer’s stated needs while the latter is about capturing the value in a deal that benefits both sides. In other words, they go hand-in-hand, or at least they should. For example, even if a salesperson does a great job selling, that is, creating value, without a sound negotiation strategy it’s unlikely that full value will be captured, and the salesperson will probably end up with a deal that rewards him or her with less value than the customer receives. Alternatively when a salesperson does a poor job selling, even if he or she is fortunate enough to have a negotiation, it will almost always default to a price only discussion.

Unfortunately, even among those organizations that provide salespeople with training in both sales and negotiations, more often than not sales training is offered in one fiscal year and negotiation training in the next, so they appear to be separate and seemingly unrelated activities. As a result, the training fails to address the interconnection between the two processes. In effect, training salespeople in this manner is the same as training a carpenter to use a hammer one year and a saw the next. The salesperson (or the carpenter) would essentially be out in the market for a year with only one half of his or her toolbox. And to make matters worse, the supplier who provides the sales process training is usually different from the supplier who provides the negotiation training. So the sales team now has two disconnected processes designed to fill out two different kinds of blank forms. This is not only difficult for salespeople to deal with given their daily challenges, it’s also difficult for coaches to coach to, or for management to embed into the customer relationship management process.

A very common trap, one that surprisingly enough is even taught by some business negotiating books, is that we make only one offer.  What does this accomplish?  Since deals always involve making multiple buying influencers happy, one offer most likely focuses on addressing the needs of only one buyer but not all of them.  It communicates that you have assessed their situation and are now in the best position to tell them what they need most.  And it immediately sets up a competitive atmosphere:  if they disagree, they have what they need to shop around, whether for a better price or more features for the same price.

Sometimes when you're solving a problem, your assumptions are flawed or out-of-date, so problem solving suffers.  If you assume business negotiation is unpredictable, you will be more likely to lose control and lose the deal when the unexpected happens because you approached the problem as unpredictable.

Am I the only one who is mystified by this? There are three days left to go in an auction on ebay…3 people have been outbidding one another for the last two days in an attempt to "win." The only one winning is the seller as the price goes up and up. Is there any reason why we wouldn't wait until 5 minutes, or as I do, 1 minute left to go in the auction? There is a zero percent chance someone will "win" bidding one, two or three days in advance, yet that whole model is predicated on people acting irrationally.

If you think this doesn't happen in B2B negotiations, have you ever been part of a reverse auction or watched competitive bidding drive down pricing and give away free service until there is no margin left in the deal for the "winner?"

If we know where and what most of the traps are in business negotiation, and we know they are fear driven, why do we keep reacting in the same way?  There are two key tactics used by 97% of buyers - mention an alternative and leverage it to start the bargaining.  This then creates three key problems:  commoditiztion pressure, price pressure and selling "value" and then falling back to negotiating price.  Value is a word we hear a lot these days.  It's supposed to denote something worthwhile, significant, tangible and durable.