The art of negotiating is (or should be) a core leadership trait.
But just like many leaders, I was never a fan of it — until I met Dr. Victoria Medvec.
I was an okay negotiator. I would go into negotiations and usually got what I needed. But I also often left the room wondering if I could have gotten a better deal.
Since applying Victoria’s framework, my ability to negotiate the best deals for my business has been cranked up to a 100!
I met Victoria years ago at a YPO seminar and was immediately blown away by just how knowledgeable she is about effective negotiations. She really understand the psychology behind negotiating (along with a solid highly applicable framework).
And in this article, I want to share the 10 key components I've learned from her about negotiation effectively in your business.
What The Effective Negotiation Looks LikeFirst, a disclaimer. There's a lot of "tactics" out there that you can use to win in a negotiation.
But that only makes the other side feel as if they “lost” — and if you’re trying to build a long-term relationship with a client, this is never the way to go.
With her High Stakes Negotiations methodology, Victoria creates a space so both parties can walk away feeling satisfied with the deal. This is the best way to get an agreement. A true win-win.
She once shared one tip in her seminar that helped me double my sales: Always negotiate (or send proposals) in real-time aka in person, or by phone. Never through email or delayed-time.
It's those kind of results that make Victoria a master negotiator and negotiations strategist.
Here are the 10 key components from Victoria's methodology that we’ll expand on in this article:
10 Key Components To Negotiation Business Deals
1. Preparation Is KeyI would say that this is the most important step in negotiating. I would never step into a negotiation without prepping!
Proper preparation gives you the power in any situation.
There are three things any potential negotiator needs to prepare:
- You have to make sure you have multiple issues on the table.
- You must have a script.
- You must understand your goals, BATNA and the reservation point as well as theirs.
2. Establish An Ambitious GoalWhen it comes to establishing goals, I have learned that those that establish more ambitious goals come out winners — in every situation!
So fight the temptation to establish “reasonable” goals and shoot for the moon.
By doing so you create room to maneuver. And if you have to make adjustments you’ll give a perceived win to the other side when in reality, you’re the winner.
3. Improve Your BATNA (Best Alternative To Negotiated Agreement)Your BATNA is your biggest source of power in any negotiation.
It’s like your secret weapon, which is why it is important to always improve upon it. This is your “Plan B”.
Here’s a tip: Simultaneously develop your BATNA to build alternatives upfront, before starting negotiations.
Too often what happens is that we go in with one BATNA and when that doesn’t work out, only then we develop an alternative.
But this weakens your negotiating power. You don’t want to engage in negotiations unless you have alternatives.
4. Establish Your Reservation PointWhile ambitious goals are based on your assessment of the other side’s weaknesses, a Reservation Point (RP) is set based on your weaknesses.
Do not confuse the two, and do not use your goal as your RP!
Why is a Reservation Point important in the negotiation?Your RP is your bottom line. It is the indicator that tells you when to walk away, because beyond this point, you prefer to use your BATNA. Without a strong RP, you might end up making a deal you wish you had not made.
5. Create A Scoring SystemScoring allows you to compare your BATNA and RP from a bird’s eye view, instead of zooming into a single issue.
The goal is to quantify or create a way to measure all issues — generally in terms of dollars or points, because at the end of the day, this is what we end up focusing on.
I encourage you to build a scoring system. You can do that in three simple steps — but don’t underestimate its simplicity!
- First you want to start by listing down all the negotiable issues.
- Then break down these issue even further.
- And finally set the priority for each issue.
6. Analyze Their BATNASo you’ve now got your goal, BATNA and RP set, but in order to truly get an edge, you also need to analyze their BATNA!
The first time I learned this, I often missed this point, but as I continue to refine my skills, this becomes increasingly important. So let’s get to their BATNA.
To do this, you can ask yourself, “Where will they go if negotiations fall apart?” or “What alternatives will they use if they don’t do the deal with me?”.
They probably haven’t considered this and it leaves them in a defensive position.
The goal here is to try and estimate their RP.
The better you analyze their BATNA, the better you’ll be able to estimate their reservation point and take control of the negotiations. You may even find you can increase your goal when you know this one piece of information.
7. Negotiate At The Package LevelNow finally we are ready to enter the negotiation! The common thing to do in this situation is to find one issue, and then start negotiations there. Now here is where I learned a great strategy from Victoria that I’ll always remember and use.
Negotiate at the package level! Or negotiate package deals.
Which basically means, stay away from single issues! I mentioned this in point #1. By negotiating single issues, you don’t leave much wiggle room — or room for point #9 below (we’ll get to that soon).
Think of it like a company with a service you want, that only has one price offer — and that offer is way beyond your budget. Compare that with a company that gives you a few different price options. This leaves you room to find which price point suits your needs.
8. Make The First Offer And Build RationaleYou’ve probably heard that the biggest rule in any negotiation is to never make the first offer.
Well, I have learned my lesson and I’m here to tell you, you should absolutely go first. Those who go first, win!
Why? Because people who go first, establish an anchor and set the starting point for the discussion. Those who go second are at risk of letting the other side set the tone for the negotiations.
9. Leave Room To ConcedeHaving room to concede is not a sign of weakness! In fact, in every negotiation, you want to concede in order to make the other side feel as if they’re winning. You want them to be satisfied with the deal.
However, there is a catch. If you’re planning to concede, you have to make sure a couple of things are in place before you do:
- Make sure there are a lot of issues on the table. As I have mentioned a couple of times, if you are only negotiating one issue, you won’t have a credible way to concede.
- Secondly, you need the opportunity to concede.
This is especially good for maintaining a working relationship with the other side.
10. Make Multiple Equivalent Offers Simultaneously (MESOS)Finally, we come to the last component, that when executed well (and it should because you’ve done the preparation) will leave the other side spinning and confused to the point where they will take almost anything you offer them.
At the same time, you’ll appear cooperative and flexible… keeping the other side as friends for a long-term business relationship!
Making multiple equivalent offers simultaneously:
- Allows you to go first and establish an anchor.
- It also lets you signal your interests without going overboard.
- This means you can gather information about your counterpart’s interests.
- It demonstrate your flexibility.
- And finally it allows you to conclude the negotiation quickly and amicably.
Time To ImplementI know this is a lot of info to take in, but it will all start to sink in.
By applying even a fraction of these components (especially the preparation points), you could walk away from a negotiation with terms you are happy with and are good for your business. I definitely have.