In sales, all that matters is the bond between the seller and buyer. The buyer always finds arguments to have a better deal than the quoted one, and that is when the negotiation skills of the seller comes in! Negotiation skills are much like a language. People who are unacquainted with the concepts and terminology of negotiation may find it intimidating. With proper training, constant use and practice, it can be learned and mastered.
- Distributive Negotiation – This type of negotiation often results in a win-lose scenario. The parties involved in this type of negotiation work towards getting the most out of a fixed value or sum. Hence the gain of one party results in the loss of the other. Say for example, you are bargaining to buy a gift from a foreign trip where you are not going to purchase from the seller again. Given the nature of this strategy, very few negotiations are truly distributive.
- Integrative Negotiation – This type of negotiation is carried out with the objective of achieving a win-win scenario. The deals negotiated with this strategy are meant to create and deliver value for both the parties by integrating their interests. Examples for this type of negotiations can be mergers and acquisitions or the relationship between a manufacturing company and its suppliers.
Kenneth W. Thomas identified five styles of negotiation based on dual-concern model.
- Accommodating – Individuals who emphasize on preserving personal relationships and consider other party’s problems during negotiation.
- Avoiding – Individuals who do not enjoy negotiation and try to avoid the confrontational aspects of it.
- Collaborating – Individuals who enjoy the problem solving aspect of negotiation and tend to use creativity to come to mutual agreement.
- Competing – Individuals who enjoy and dominate the negotiation process.
- Compromising – Individuals who are eager to close the deal by being fair to all the parties involved.
Preparing for Negotiation
There are four steps to prepare for a negotiation:
- Consider what would be a good outcome for both parties. The negotiator should determine the interests and objectives of his party as well as those of the other party. This is to done by thorough research or by having a dialogue with the other party. Areas of common ground, compromise and opportunities for favorable trade need to be understood.
- Learn about the people on the other side before negotiation. Negotiating is an interpersonal activity. Experienced negotiators know this and try to learn as much as they can about the people on the other side. Experience of the negotiators, their negotiation style, their levels of authority, the culture of their organization and the importance of the deal for their organization are some of the things that can help you during negotiation.
- Gather external information about the deal points and negotiate from your positions of strength. Each side wants to get a fair and reasonable deal at the end of the negotiation. It is a good practice to benchmark with industry standards for the negotiation. There are many criteria for fairness and reasonableness. During preparation, it is essential that the team research the criteria that is more favorable to them and should be ready to show that those criteria are more relevant than other factors.
- Determine the authority position of the person with whom you are negotiating. Ideally, the negotiator on the other side should have similar authority as the negotiator on your side. To determine the authority of the negotiator on the other side, one must try to figure out the decision making process of the other side.
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