6 Successful Negotiation Tips for Effective Strategic Relationships
Byon November 27, 2018
Those who rise to a position where they are responsible for negotiations must ensure they, and those in their procurement teams, are skilled in the art of successful negotiation; practised in its use – especially under pressure – and confident in their ability to employ it to create a strategic relationship with the greatest chance of success.
While many have the training and expertise needed in the discipline of successful negotiation, there are still others who could benefit from the amassed knowledge of a team that has been responsible for supporting hundreds of top-level negotiations across numerous public and private sector organisations.
Too often successful negotiation is seen to be one-sided: What can I win for my team? How can I get the most from this deal? But practised negotiators know that for a negotiation to be a success it is not the short-term back-patting won from getting the lowest price that’s important, but the praise earned through negotiations that create strong and productive outsourcing relationships.
While vital in many business situations, arguably it is on IT projects that your negotiation talent will be most challenged. These are often complex projects, and getting ever increasingly so, requiring a good understanding of the technical details if you are to effectively negotiate the best deal for all parties.
In a field that is constantly evolving, and where requirements seemingly change almost as often as the versions of the hardware or software involved, it is all the more important to develop a collaborative commercial relationship based on mutual respect and strong communication. And this all starts with the art of negotiation.
Successful Negotiation – 6 Tips
We have, therefore, compiled six approaches to successful negotiation that we’ve found work well for some of the best negotiators we’ve had the pleasure of working with:
1. A united front will offer successful negotiation bonuses
Clarity, just as in so many outsourcing situations, is hugely beneficial in negotiations. If you enter with your colleagues divided – with unclear goals or misaligned aspirations – your team will start negotiations from a weaker place. A skilled vendor-side negotiator will spot this and can use it to their advantage, to divide and conquer. At best, such in-fighting or lack of adequate communication will result in an unfavourable deal – at worst, it could result in a deal that is destined to fail.
To succeed in your negotiations you need representatives from each relevant department there with you, physically and strategically, so your aspirations for the relationship can be adequately assessed against a vendor’s capability of servicing them.
2. Know what ‘good value’ looks like
A good negotiator must recognise that no matter how well they understand their needs and the assumed best solution, the vendor may well have a better idea of how to go about achieving those desired outcomes. With their specific experience, a vendor may be able to offer a more cost-effective, easier to implement solution, with fewer regulatory hurdles that may add value at numerous stages. Openness to the possibility of walking away with a different deal to the one you intended to create, assessed for suitability by your multidisciplinary procurement, or Intelligent Client Function (ICF) team, may mean the difference between being a good negotiator and a great one.
Good value does not often refer solely to negotiating a great price, it can be achieved through any number of the ways in which your vendor could help you to see a better way of doing things. Awareness of the potential for unpredictable benefits is one thing, but it also makes sense to enter into negotiations with a clear priority list of expectations, with each weighted to determine their importance to the project and to those who initiated it.
3. Undertake your due-diligence
The more you know about your vendor, the stronger your negotiating position. Do they run a booming business or have sales been slow this quarter? Are they a small fish in a big ocean being circled by predatory competitors? What does the press say about them? How are their shares performing if they are a public limited company (the collapse of Carillion and major supplier announcements of ‘challenging times’ are reminders to tread carefully and undertake due diligence), and so on. There may be information buried in this research that could strengthen your negotiating position. Also, if you know what a vendor wants most – from your relationship or in their business – you may be able to incorporate this within your offering to sweeten the deal for both of you. Find your leverage and you find your negotiation strength.
Research should also extend to knowing what a vendor’s competitors would say and charge. It’s difficult to know whether you are getting the best value from your vendor unless you have done the market research to prove it. Always involve several vendors when considering buying from one, the competitive urge is strong and could improve pricing, and conducting your due-diligence may well offer you confidence that you have a fair deal when one is offered.
Your research should also help you to determine when it might be better to walk away from negotiations. Every negotiator should know what deal they hope to get, what deal they’d love to get, and a point at which the deal on offer plainly does not meet minimum expectations.
4. Enter with the right mind-set
Throw off the restrictions of ‘them and us’ and build a rapport with the vendor. These negotiations will create the foundation that your whole working relationship could be based on. Take the time to get to know your counterparts, to understand who they are, what they want, what they do. This information can help you in your negotiations, but more importantly it can create a bond of trust that could extend well beyond procurement and into the project itself, ensuring a more collaborative approach is taken.
Don’t get bogged down in your needs and wants; take an holistic view of the potential relationship and if there are opportunities for a win-win, investigate them, discuss them with your vendor, and the specifics may well fall into place naturally thereafter.
Focus on what’s important – getting the right deal with the right vendor under the right contractual terms. Each of these elements must be addressed with equal zeal, while ensuring that your costs are locked down in an ambiguity-free agreement.
5. Understand the power of emotions
Emotions are the enemy of rational thought. If you let yours get the better of you, you could take negotiations off on a dangerous course that may be difficult to come back from. Recognise the early warning signs and keep your emotions in check.
Yet, emotions can also be a useful negotiating tool. If you are able to recognise your own buttons, control your own emotions and appeal to those of your counterpart, then you may be able to guide the negotiations and craft the deal you are seeking. Recognise your own emotional ‘shortcomings’ and work to understand theirs (pride, fear, greed, compassion…).
Remember, it’s about building a strong working relationship, not beating them into submission, but to achieve this you need to appeal to their emotional side as much as to their logical brain.
6. Successful negotiation rarely stops at procurement
If you’ve managed to succeed in getting the strategic relationship deal you hoped for, great work. Done well, such a working partnership will be built on trust and mutual benefit but caution is advised. Throughout the life of your agreement, you’ll likely need to negotiate your way through various ‘wobbles’ and changes in response to the needs of the organisation and end users. Unfortunately, you won’t be able to put your negotiation hat to one side to focus on operations. Negotiation never stops. Every time a change request is raised, every periodic analysis of the agreement’s viability and every dispute or recognition of productivity fall-off is an opportunity for negotiation. Then there is the possibility of contract renewal or an early exit. Your negotiation skills need to remain polished throughout your relationship if you hope to maximise the potential you created at procurement stage.
Unlike the bad old days when a successful negotiation meant taking the shirt from your counterpart’s back, today’s enlightened negotiator recognises the need to listen, to learn, to engage and to ensure both parties clearly benefit from the deal. It’s about research, knowing and understanding the other side, and using this information to determine the best course of action to create a working relationship that will generate the greatest innovation and added value.
Negotiation no longer means getting what you want no matter the consequences – it means giving your vendor enough reason to want to help you to achieve the outcomes you desire.