“What’s the single-biggest mistake most individuals make in their negotiations?” a seminar participant once asked me. “And what can they do about it?”
The biggest mistake? Most individuals negotiate instinctively, not strategically.
Assume you’ve always wanted to own a red Corvette and recently saw an ad from a Chevrolet dealership offering free hot dogs and sodas to everyone who stopped by Saturday. Since you didn’t have much planned for Saturday, you stop by. No harm in a test drive, right?
After test-driving a new red Corvette, though, you fall in love.
Three hours later, after crunching the numbers and using your trade-in and year-end bonus for the down payment, you drive off the lot a proud new car owner. You even feel pretty good about the negotiation, as the dealer knocked a fair amount off its sticker price.
I would bet a year’s salary you — and almost anyone in this situation — left money on the table, probably a significant amount. Why? You largely relied on your instincts to get the best deal.
No matter how finely honed your instincts, they rarely will be a good match for a well-trained strategic negotiator. And most car sales professionals have had extensive strategic negotiation training. Few of their actions will be instinctive.
So what can you do to more strategically, and thus more effectively, negotiate? Here are five rules of thumb:
1. Strategically prepare.
Strategic preparation is a constant theme in many of my columns. If you’ve read it here before, great. Hopefully, you’re already doing it. If not, comprehensively research all the factual issues underlying your negotiation and explore all the possible strategic and tactical negotiation issues.
You can do this strategic homework by going through my Five Golden Rules of Negotiation:
- Information is power — so get it;
- Maximize your leverage;
- Employ “fair” objective criteria;
- Design an offer-concession strategy;
- and Control the agenda.
2. Write down your goals.
You can’t negotiate strategically if you don’t know where you want to end up. So write down your goals at the beginning of the process. Then design a strategy to increase your likelihood of achieving your goals.
And if it’s a significant negotiation, don’t just write down your overall goals. Also write down your goals for each negotiation session. What do you want to accomplish in your first meeting or telephone conversation? Do you want to start by jumping into the substance or by initially establishing some personal rapport?
These are critical questions. Answer them before you sit down at the table.
3. Brainstorm to expand your strategic thinking.
Grab a colleague or two and engage in some strategic brainstorming. Get those creative juices flowing. Toss around the advantages and disadvantages of making the first offer or instituting a short deadline. This will help you change your mindset from instinctive to strategic. The benefits will far outweigh the time involved.
4. Keep track of your lessons learned.
Everyone makes mistakes during negotiations. It’s inevitable. A key to negotiating strategically is not repeating the same mistakes. So keep track of your lessons learned.
Don’t just make a mental note of them. After each negotiation, write down in a negotiation journal two things you did effectively — what worked — and two things you could have improved upon — what didn’t work. Then write down why they didn’t work. Review this ongoing list before each negotiation. Learn from your mistakes.
5. Be disciplined and do this every single time.
Finally, don’t just think about these strategic steps. Implement them. Start by cutting this column out (or print it if you’re reading it online) and posting it somewhere you’ll notice before your next negotiation. This visually will remind you to negotiate strategically and help prevent you from reverting to your instincts.
Most negotiators largely rely on their instincts to get them what they want. Don’t. While you may at times achieve success, often you will leave value on the table. Instead, learn to negotiate strategically. You will be better off as a result.
Published January 9, 2004 The Business Journal