One can sense a great deal of uncertainty in the world financial markets wherever you go - for the first time - irrespective of where you find yourself in the world.
Warren Buffet stated that it is only when the tide goes out that one can see who is wearing no swimsuit. In other words, it is easy to be successful when the markets are booming; it is only in tough times that we can clearly distinguish quality & commitment.
How can you use your negotiation skills, negotiation training or purchasing training to avoid losses in the present economic climate?
Use 'Loss Framing'
We are more motivated by avoiding loss than by achieving the very same gain. Kahneman & Tversky's Prospect Theory work describes how individuals will become risk seeking in an attempt to avoid a loss whilst they are likely to be risk averse when seeking advantages. In the way that we negotiate, we can make our counterparties 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 difficulty it is very important to look at other options so as to strengthen our negotiation position. Creating options are key in the context of negotiation and the power of alternatives to concluding a deal is the key driver of our negotiation power.
Usually we wait until we recognise that we are not going to make a deal before we start thinking about other options. We risk entering into a less than ideal transaction and if we have not investigated all the alternatives. Similarly, thinking about the options available to your counterparty in the negotiation will give you a clear view of their relative position of strength in the negotiation. If they have strong alternatives available then they will be more competitive and if they don't, they will tend to be more agreeable.
Use Reciprocation
Reciprocation is one of the key principles of powerful persuasion skills, because we are prone to return to others the sort of behaviour that they display towards us. In times of difficulty it is important that we act in the interests of our counterparties if we would like them to perform in ours. Use this principle to your benefit by acting first and using the principle of reciprocation. Be careful and make sure that you register the indebtedness with your counterparty.
Move from price to value
It is important 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 a trade off between value & price. If we only engage on the price, the best that we will do is to haggle and it is only when we investigate the total lifecycle of the service, product or solution that we trade, that we begin to uncover options for negotiation. Before you even state price in negotiation, evaluate your counterparty's long term strategic fit, capabilities, switching costs should they wish to change a business partner, financial stability and possible risks or negative consequences that may happen 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 planning. In times of economic uncertainty it is vital to dedicate sufficient time to planning your negotiations.
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