Market Meltdown: Using Your Negotiation Skills To Negotiate For Survival

One can see an air of insecurity in the world financial markets wherever you go - for the first time - regardless of geographical location.

Warren Buffet stated that it is only when the tide goes out that you can see who is wearing no swimsuit. In other words, it is easy to be successful when the economy is doing well; it is only when tough financial times arrive that we can easily discern quality & commitment.

How can you use your negotiation skills, negotiation training or purchasing training to sidestep losses in the present economic situation?

Use 'Loss Framing'

We are more motivated by evading loss than by attaining the very same gain. Kahneman & Tversky's Prospect Theory work describes how people will become risk seeking when trying to avoid a loss whilst they are more likely to be risk averse when pursuing advantages. In the way that we negotiate, we can make the other side aware of the unique items that they stand to lose if they don't move in our direction and otherwise gain if they do.

Create Alternatives

In times of uncertainty it is vital to create alternatives so as to support our negotiation position. The ability to create options is key in the context of negotiation and the strength of alternatives to concluding a transaction is the primary driver of our negotiation power.

We normally wait until we know that we are not going to be able to do a transaction before we begin to think about other options. We risk entering into unfavourable transaction and if we have not investigated all the options. Similarly, thinking about the alternatives available to the other side in the negotiation will give you a clear understanding of their relative position of strength in the negotiation. If they have good options available then they will be more competitive and if they don't, they will tend to be more accommodating.

Use Reciprocation

Reciprocation is one of the key principles of powerful persuasion skills, because we are most likely to return to others the form of behaviour that they exhibit towards us. In times of economic uncertainty it is key that we perform in the interests of our counterparties if we would like them to act in ours. Use this principle to your advantage by acting first and invoking the rule of reciprocation. One note of caution and ensure that you record the indebtedness with the other side.

Move from price to value

It is key to take the focus off price and concentrate on the Total Cost of Ownership. For any service, product or solution that we buy or sell, there is always an exchange between value & price. If we only focus on the price, the best that we will do is to barter and it is only once we start to study the total lifecycle of the service, product or solution that we buy or sell, that we begin to uncover opportunities for negotiation. Before you mention price in negotiation, examine your counterparty's long term strategic fit, expertise, switching costs should they wish to change a business partner, financial steadiness and possible risks or negative consequences that may occur when your counterparty doesn't reach an agreement with you.

Remember that the magic in negotiation is found in the quality of your preparation. In times of economic uncertainty it is more important than ever to commit enough time to preparing for your negotiations.

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