Good dealmakers reach agreements, not compromises. Learn from experts who’ve led tough negotiations from business sales to hostage crises.
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Conventional wisdom says negotiations work by moving the goal posts. One way or another, you keep whittling down the price until you arrive at “win-win” — the magical point of equal pain and gain.
“But win-win is all about compromise, and that’s the worst thing you can do,” argues Jim Camp, an international negotiation expert based in Dublin, Ohio, and author of the popular guide “Start With No.”
This advice may sound contrarian, but Camp has the credentials to back it up. Besides having coached thousands of executives for companies like Intel, Merrill Lynch and Cisco Systems, Camp is the expert the FBI called to help train its hostage crisis unit.
Entering a negotiation with the idea of “getting to yes” or compromising is defeatist, he says. It leads to deals you will regret. “I’ve seen entrepreneurs go out of business by doing win-win. They get so wrapped up in making the other side happy, in being likable, that they give away their margin of profit.”
$1 is never worth 92 cents
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Politely refusing to budge on price doesn’t mean you walk away. Negotiate by asking open-ended questions to learn what the other party needs or expects, says Camp. For instance, “What else do you need?” Not, “Is there anything else you need?”
“People will pay full price if they see that what’s being delivered has value,” he explains. “One dollar is one dollar’s value, not 92 cents.” Sliding prices and terms send a subconscious message that you’re not worth it. So adversaries will downgrade your offerings, expect greater price breaks or both. Instead, “create a vision of what you’re delivering and the value it brings,” says Camp.
Fear is the enemy
While self-defeating compromise may be the biggest negotiating mistake entrepreneurs make, there are several others. Typically, such missteps are driven by “fear of losing a deal and fear of a vendor taking advantage of you,” says sales trainer Troy Harrison, author of “Sell Like You Mean It!”
To control those fears and gain more of what you want, here are other common negotiation mistakes to guard against:
- Thinking short-term. Eager to seal a deal and reap the immediate benefits, owners often forget to “consider what will happen during the life of the agreement,” says Ross Kimbarovsky, co-founder of crowdSPRING, a crowd-sourced marketplace for creative services. He advises owners to negotiate terms that provide long-term protection, such as provisions for no-penalty early termination.
- Sending unconscious messages. “Realize that whatever is in your head will come out across your face sooner or later,” says Olivia Fox Cabane, an executive coach with expertise in body language. Research shows that people quickly read “microexpressions” — involuntary facial expressions that flash as fast as 1/25th of a second, especially when you have something at stake.
“So you need to learn to manage difficult thoughts,” says Cabane . In addition, if you’re anxious or self-critical, it will show up on your face, and your adversary will perceive it as a judgment against him or her, says Cabane.
- Talking too much. “Learn to pause and wait, and be comfortable with a silence,” says Lisa Skriloff, president of Multicultural Marketing Resources, a New York marketing agency. “The biggest thing to keep in mind is not to negotiate against yourself.”
- Requiring face-to-face meetings. Studies just completed by Marlone Henderson, a psychology professor at the University of Texas at Austin, found that negotiators who were several thousand feet away from each other reached more mutually beneficial agreements than those who negotiated within a few feet of one another.
“When there is more distance, people tend to concentrate on higher-priority items by looking at issues in a more abstract way,” says Henderson. “They go beyond just thinking about the options presented to them, and consider the higher-level motives driving their priorities.”
- Being too pushy. “Small-business owners tend to push people to say yes, and it looks desperate,” says Camp. “You have to give people permission to say no. Just say you’re going to show some ideas and concepts and tell them they can always say no, that it won’t hurt your feelings.” That will let people relax and move the negotiation beyond talking about pricing.