By David Crary
Note: This is the seventh in a series of blog posts with tips aimed at helping field service businesses improve during seasonal slow periods.
Whether it’s the ongoing NHL negotiations between the labor union and owners, the failed negotiations between Hostess and their labor unions, or the ongoing negotiations between the Democratic and Republican parties in Congress as they attempt to avoid the so-called fiscal cliff, it feels like failed negotiations are taking away some of the things we here at HindSite love: The Minnesota Wild, Twinkies and money.
Don’t let failed negotiations ruin your business. The offseason is a great time to negotiate new deals with your distributors, negotiate raises with our employees, negotiate licensing agreements with your field service software vendor, negotiate for that new equipment you plan to buy to improve your business in the offseason, or negotiate financing with your bank. You have the time, you have the energy, and you have the clear head necessary to get a great deal.
With that in mind, here are 14 tips to help you in your negotiations:
- Ask for what you want. If you don’t ask for what you want, how are you going to get it? Don’t beat around the bush. Get to the point and state directly and clearly what you want. Many people don’t do this when negotiating because they fear their counterpart will use the information to better their position. But that’s the wrong approach. State what you want, why you want it, and how that will benefit the other party.
- Aim high! In any negotiation, odds are you’ll state a desired outcome, the other party will counter with a desired outcome and you’ll meet somewhere in the middle. So start somewhere higher than what you actually want to achieve. The worst thing that can happen is that you do even better than you expected!
- Listen. Listen. Listen. In her book Quiet, Susan Cain explains how, as an introvert, she was able to become a master of negotiation. It was simple – she listened. Her introversion helped her intermediate deals because she was able to listen to the other side. By listening, she better understood what they wanted and could craft a response that lead to a solution that left both sides happy. The best negotiators are those who ask a few probing questions and listen to the answers.
- Be Prepared. We were recently at a customer’s landscape management facility and the conversation turned to a sod-cutting machine that cut sod so precisely and efficiently, that they could stack two pallets of beautifully cut sod in two minutes, with only a single person. Obviously, it cost a significant amount of money.
My guess is that when they purchased that piece of machinery, they knew precisely how much labor costs would be reduced, how much more sod they could deliver in a day, what alternative solutions they had if they were unable to negotiate a feasible deal, what the long-term financing for the machine cost, what kind of maintenance is required, and a whole host of other data points. The more data you have, the better you’ll be at negotiating a deal that makes financial sense. - Be willing to walk away. My dad was a master at walking out during car negotiations. If he didn’t like the car dealer’s offer, he left. Your time is precious, so don’t waste it listening to reasons why a vendor can’t meet your price. Give them your contact information and restate what you’re willing to pay. Then leave. You’d be surprised at how frequently the person you’re negotiating with will eventually relent. It might take a while – maybe they are failing to meet their monthly quota – but if your offer is reasonable, you’ll often get it.
- Figure out what leverage you have and use it. You should have leverage in every negotiation, otherwise there wouldn’t be a negotiation. Figure out what it is and use it to your benefit. Some distributors have monthly sales goals and will be more willing to negotiate at the end of the month. If you do a lot of volume with a certain distributor, don’t be afraid to leverage that volume to get a better deal. Wal-Mart is notorious for this tactic; they’ll find small manufacturers who get the vast majority of their revenue from Wal-Mart and slowly squeeze them during negotiations. The manufacturers really can’t say no because they can’t afford to lose the revenue they get from Wal-Mart.
- Take your time. This is one of the biggest reasons why the offseason is a great time to negotiate: you have more time to devote to your negotiations. Don’t rush your negotiations. Take your time to think them through. Don’t say yes to the first offer. Carefully weigh it, search for alternative solutions, rerun the numbers, collect more data and make a counteroffer. If it’s an especially important negotiation, take some time to get other opinions and sleep on it.
- Clearly explain the benefits of your proposal. Our marketing manager was talking to me the other day about his fantasy football team. He said when he’s negotiating trades, he will always state why this trade makes the other team better. A few years ago, he traded Corey Dillon for Peyton Manning. At first blush, that doesn’t seem like a great trade for the Peyton Manning owner. But when you consider that he also had Tom Brady and no running back to speak of, it became a much better trade. And he was able to clearly explain how it made the other team better – instead of having Peyton Manning on his bench, why not get points from Corey Dillon who was at the time one of the top 10 running backs in the game?
Always explain in detail the benefit of your offer to your negotiating counterpart. They may not get everything they want, but if there’s a clear, measurable benefit to your offer, it’ll be easier for you to persuade them. - Don’t take it personally. The worst thing you can do in a negotiation is lose your cool. Don’t take the other side’s demands personally. And never make it personal. You may lose the negotiation, but you won’t lose respect. If people respect you and think you’re honest, they’re more likely to deal with you in the future.
- Be precise. I was shopping for software a few months ago and received several quotes. One of them gave me a price range instead of a dollar amount. Guess what I did? I took the lowest number in the range as my starting point, not the highest. Why? Because if they’re giving me a range, there’s no way I’m accepting anything other than the low end of that range. Never make the same mistake this software vendor made. Never give a range. State a precise number whenever you’re negotiating.
- Build a relationship. Most men have a hard time saying “No.” when their wives ask them to take out the garbage. It’s not because they love taking out the garbage, either. They do it because they have a relationship with their wife that isn’t worth losing because of last week’s rotting leftovers, junk mail and eggshells.
If you build a relationship based on trust and respect, your negotiations are going to be more successful. People are less likely to compromise with people they personally dislike. Take a look at your typical divorce proceedings for examples. So make sure you get to know your fellow negotiator and build a mutually beneficial relationship. - It’s not about winning or losing. Most people lose sight of the fact that negotiations aren’t about winning or losing. They’re about getting the most value for both sides. You’re probably going to have to give a little to get what you want, and that’s OK. If you’re stuck on “winning,” you’re probably going to lose. Why? Because you’ll get too emotionally involved in winning and could reject a great deal because you didn’t feel you “won.”
- Ignore face value. When you buy a car, dealers start with a sticker price. Why? Because that price frames the conversation. And it will. They’ll say “That’s $1,000 off the sticker price.” That sounds like a significant discount. But the sticker price is nothing more than that – a sticker price. It should play no role in your negotiations. If you’ve asked for what you want and done your research, you know precisely what the car is worth to you. So start the conversation with what you want to pay, not what the dealer tells you the price is.
- Be polite. What do you think of the neighbor kid who barges into your house, grabs a Coke from your fridge without asking, eats your potato chips and belches out loud? You probably don’t like him too much, do you?
When negotiating, be firm but polite. Say please. When you get a counteroffer that you hate, say thanks but no thanks and explain why. And even if you can’t come to an agreement, say thank you. Being polite can go a long way toward making an amicable, mutually beneficial agreement.
You’re probably not going to negotiate a lasting peace between Israel and Palestine using these tips, but you can certainly work your way toward a better deal on equipment, your office space and a lot more by following these 14 simple rules. Good luck!