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Market Meltdown: How To Use Your Negotiation Skills To Safeguard Your Security
One can see an air of uncertainty in the world financial markets wherever you go - for the first time - regardless of where you find yourself in the world.
Warren Buffet said 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 thriving when the markets are thriving; it is only when tough financial times arrive that we can clearly discern quality & commitment.
How can you use your negotiation skills, negotiation training or purchasing training to avoid losses in the current economic situation?
Use 'Loss Framing'
We are more motivated by avoiding loss than by attaining the very same gain. Kahneman & Tversky's Prospect Theory work describes how people will become risk seeking in an attempt to avoid a loss whilst they are more likely to be risk averse when seeking rewards. 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 acquire if they do.
Create Alternatives
In times of uncertainty it is vital to look at other options so as to support our negotiation position. Creating options are important in the context of negotiation and the strength of alternatives to concluding a deal is the primary driver of our negotiation power.
We normally wait until we realise that we are not going to be able to do a transaction before we start thinking about alternatives. We risk entering into unfavourable transaction and if we have not explored all the alternatives. Similarly, thinking about the alternatives available to the other side in the negotiation will give you a clear view of their relative position of strength in the negotiation. If they have good alternatives available then they will be more aggressive 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 prone to return to others the form of behaviour that they exhibit towards us. In times of difficulty it is key that we act in the interests of the other side if we would like them to act in ours. Use this principle to your benefit by acting first and invoking the rule of reciprocation. Be careful and ensure that you register the obligation 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 all services, products and solutions 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 haggle and it is only once we start to explore the entire lifecycle of the service, product or solution that we buy or sell, that we begin to uncover options for negotiation. Before you mention price in negotiation, analyse your counterparty's long term strategic fit, expertise, switching costs should they wish to change a business partner, financial stability and potential risks or negative consequences that may occur when your counterparty doesn't reach an agreement with you.
Don't forget 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 dedicate enough time to planning your negotiations.
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