Negotiate for a Living

The Research Topic📘:

Book: The Art of Negotiation - Tim Castle

How can we learn to use negotiation to our advantage in real-life situations?

Why is it important to me? 

Negotiation is used in everyday life, in business, and in our finances.

Building negotiation skills allows you to get what you want more.

Learning the 3 P’s:

 Persuasion, Pain points, and Power in a negotiation will “literally” earn you money. Now let’s learn what this looks like:

Additional Resources below for extra learning….

Understanding the Fundamentals:

Here are the basics you need to know to negotiate.

Look for the 3 P’s throughout this article, and answer this question:

What negotiations are a part of my everyday life, that include the 3 P’s?

Bench Marks ( Anchor Points ) - define the outcome of a negotiation by setting the expectations

Example:

“ I only have 24 hours to do the deal “

“ I can only go as low as $500 “

It can tie the negotiation to situations that don’t reflect today’s world.

Restaurants will often use benchmarks; On some menus, they will have a meal for $500, and right below is a meal for $100.

The $500 meal is a decoy made for you to believe you are getting a deal, but in the end, they are getting you to spend the $100. The $500 meal is used as a benchmark, to influence your buying decision.

Negotiation Theories:

Distributive - taking as much of a share as possible

Example:

Imagine negotiating a price for a car, and you get a killer deal against the salesman; although you sacrificed building a connection and a fair deal to get there.

You took home the better portion of the deal, but now you have ruined that relationship for the future and have used it to take advantage of the other party.

Integrative - stems from the principles of cooperation and collaboration

When buying a car, take your time to learn about the car salesman, use your persuasive skills to move the negotiation in your favor, and form mutual respect.

Integrative systems work well if we know how to persuade, but first, let’s look at the stages of a negotiation.

A Deeper Dive:

4 Phases of the Negotiation Process:

Negotiation Preparation: create absolute clarity of what we want from the negotiation. Self-examine and prepare the information needed.

1. Who are you dealing with ( status, number of people, negotiation style )

2. History of the relationship ( what history do you have with this person )

3. What does the other side want from the negotiation

4. Time of the day the negotiation will take place

5. Context of the situation ( are their time constraints )

Exchange of Information: uncover more details regarding the agreement's purpose and establish boundaries. It is the time to share personal information, learn about the other party, and build trust.

• Question the other party for specific details

• share personal information to build trust

Bargaining Stage: understanding through active listening, empathy, and emotional intelligence. Mini-negotiations will take place regarding the specifics of the deal.

• pay attention to the other parties’ micro-expressions

• Agree on elements in isolation while still taking into consideration the bigger picture

Closing Phase: you should push for commitment, getting to the point rather than asking if they want to do the deal.

For example:

“ So what price can you do “

“ Have you seen something today that would suit your needs “

These negotiation phases can be used to your advantage if you can learn persuasion.

Let’s build that skill by learning strategies in a conversation:

Trust:

A strategy we can use is trust, you must recognize to be trusted you need to start by showing it yourself.

• selectively share information and reveal your interests that don’t put you in a compromising position.

• If then the person reciprocates, continue to open up in the following rounds, share selective information, and watch the other party open up

Humor:

This builds a human connection and lightens the mood in a negotiation.

A study was conducted by Karen O Quin and Joel Aronoff (1981) who explored the effect of humor in a bargaining situation.

The results:

Bargaining with Humor - parties agreed to pay an average higher price than those in non-humorous conditions.

Humor was found to be the bridge that puts ego aside and provides an overall satisfactory experience in a negotiation.

BATNA ( Best Alternative to a Negotiated Agreement ):

• An alternative option outside of the negotiation, which will be opted for in an agreement that cannot be reached in an appropriate time frame

  

  - Santander Open Academy

Create a Sense of Urgency:

Close the other party by making them feel a need to finish the deal.

• If a negotiation needs pushing along, a healthy sense of competition early on creates this momentum

Example:

Realtors will schedule their house-showing appointments stacked on top of each other.

As one client walks out, another walks in. Creating a high sense of urgency.

FOMO ( Fear of Missing Out ):

In a negotiation suggesting a BATNA or a possibility of retracting the offer, creates a persuasive effort towards the other party budging.

You can apply this to your negotiation by discovering the other party’s pain points and using this to your advantage to structure a counter.

Negotiations are simply complicated. To become a master you must have experience, let’s provide you with some here…….

Actionable Steps to Success:

Before entering a negotiation, let’s understand:

What exactly am I looking to achieve from this negotiation?

Your Steps to Success before a negotiation is preparing:

• the appropriate price range

• what a phenomenal deal is

• what an acceptable deal is

• what’s a rip-off

• why they are negotiating

• Questions to ask

How to Turn a No into a Yes: 

Ask yourself is it possible?

First question your approach:

• Did I bring the appropriate charisma?

• Did I ask the right question?

• Have I paid attention to the other party’s micro expressions?

Find an alternative:

• If you asked for $5 and they said no, try asking for $1

• Re-word your statement adding in the perspective of their pain points

• Envision the outcome turning in your favor

How to Negotiate When the other Side has More Power:

Let’s first define power -

• the perceived capacity of one side to produce an intended effect on another through a move that may involve the use of resources

How can we shift power?

Ask yourself: Do they have more power, or is it perceived?

Information Scarcity is a common factor of less power.

This is a spectrum, and your place on the scale determines the level of power you have in a negotiation.

To shift this power we should:

• Identify our BATNA

• Consider a Contingent Contract

• Use a fear of loss

• Exploit the power of their emotions

These skills can be dangerous when used effectively. Now let’s do that to get some real results….

The Capital Challenge: 

The Capital Challenge is where we get the real proof of these strategies working to our advantage.

Here is today’s Capital Challenge:

Negotiate for a discount the next time you buy something.

Walk into a store, a restaurant, or a dealership and use negotiation in your favor.

You will be surprised by asking upfront for a discount, and how often you get a yes.

Your Strategy:

Walk in with a smile, and a friendly approach.

The clerk/salesperson is much more likely to give a discount to someone that makes their day easier!

For Restaurants and Retail Stores:

• Be upfront that you want a discount

• If you get rejected, adjust your offer ( ask “Can you throw in (a low-priced item ) for my troubles?”

The point of this challenge is to get a small negotiation win to build that motivation.

For larger ticket items/services:

• Don’t show that you are in the market to buy

• Mention that you have gone to other places that have sold at lower prices (BATNA)

• Make the salesperson sell!

If you don’t know where to start, ask in the comment section of this post!

Get out there, and negotiate the small items, so that one day you can negotiate where it counts.

Additional Resources:

Check out this informative article!

• Only repetition, not reason, can conquer the fear of “no.”

• The law of reciprocity states when someone gives something, the natural tendency is to give something back.

• In negotiations, it's best to go for the big ask first—people will say yes more often than one might think.

This article covers 6 points to shifting power in a negotiation:

1. Having the mindset to create leverage

2. Building Alternatives

3. Effective Preparation

4. Exploiting the Power of Emotions

5. Using a Fear of Loss

6. Penetrating the Other Party’s Organisation

Checkout this video from a former FBI hostage chief on negotiation:

• What Drives People

• Negotiation is not about logic

• Emotionally Intelligent Decisions

• Mitigate Loss Aversion

• Try Listeners Judo