Building Confidence in Sales Negotiations by Understanding the Role of Power, Time, Information and Skill
Four basic elements determine how successful you will be in negotiation. These four factors are: power, time, information and skill.
Power is not what people might think. Power might be best defined as the ability to accomplish things — the ability to do, not necessarily the ability to order things to be done. Power is a state of mind. It is a multidimensional concept that involves how you think, feel and act. Power is not related to position. If you think you have power and project it, you have it. If you don't, you don't. Power is confidence. If you feel powerless, you cannot be an effective negotiator. You will communicate your lack of confidence.
How you experience and express your power stems from the way you think about yourself. If you allow levels, titles, experience, age and the salaries of the people on the other side to hurt your confidence, you will hurt your effectiveness. Not only that, you will make your counterpart more powerful than he or she might actually be.
If you approach your power as the power to get something done, you are less likely to be awed by the people you face across the negotiating table. They will intimidate you only if you let them. The appreciation of “power to” can do much to equalize what could be an unequal situation. When you lack personal experience, you must leverage the experience of your institution and your colleagues.
Your sense of confidence and power can be strengthened by:
- Your own knowledge and experience
- The knowledge and experience of your institution
- Your understanding of the customer's situation/needs
- Your relationship with the customer
- Your alternatives/flexibility
- Competition for what you have
- Your tolerance for risk taking
- Your ability to walk away from the deal
- The amount of time you have
- Your institution standing behind you
- Documentation (printed word) or previous deals
- Your decision-making authority
- You, yourself
Time is part of power. Time in the negotiation situation consists of two distinct phases:
- The lead time you have to prepare for the negotiation
- The amount of time you have to complete a transaction.
You should use lead time as the time to gather information that will be more guarded or completely unavailable during negotiation. Lead time should be used to set the groundwork and build a positive foundation for the negotiation.
Lead time is the best time to develop information that you will need to achieve your objectives. Use lead time to get closer to the decision-makers and influencers, to gather historical information, to become more aware of both product and nonproduction needs, and to develop an information base that you need to negotiate effectively.
Acceptance time is another important timing concept. It is the adjustment time that one party needs to adapt to something that at first blush seems totally unacceptable. What one party may flatly reject at the first hour may sound more than acceptable at the 11th hour.
Timing is having a sense of when to do what. Timing is in many ways an art, but there are certain guidelines you can use to develop your sense of timing. For example, as previously mentioned, it is very helpful to know that you should expect to get major concessions right before a deadline and not any earlier. Because of this, you should guard against the temptation to make a big concession before or at the deadline out of fear.
Key elements of time and timing include:
- Quick equals risk. The party working under the greatest time pressures negotiates at a disadvantage.
- Short time frames are the most risky for the party with the least information.
- Lead time should be used to gather information that won't otherwise be available during the "formal" negotiation.
- Most deadlines are negotiable.
- Customers use false deadlines to pressure you.
- Negotiators can become their own enemies by placing time pressures on themselves.
- The toughest issues should be negotiated later after time and energy are invested and trust is established.
- The most important customer concessions will come at the last possible hour. Don’t panic and make your big concession then.
- Acceptance time is an important timing concept; today’s “No” is tomorrow’s “Yes.”
The third major negotiation element is information. Information equates to relationship. Information is money. Like time, information is part of power. A lack of information can render you vulnerable; so you should develop as much information as possible. You must test every assumption and get to know your customer. You should ask questions (for example, why a particular deadline is set when it is), do analyses, study files, consider your past negotiation experience with the customer, check and recheck your data and determine what is at stake for all parties.
Use your information to plan negotiations. Use information to develop the case for how what you can offer meets the client’s needs. The information you develop should include a full analysis of the customer, his or her business and personal needs, the company process for making decisions, alternatives, options, time periods, limits and appetite for risk. This will help improve your negotiation position and reduce surprises.
Do your homework. Keep doing your homework even after negotiations start. Observe your counterpart. Ask questions when appropriate, or even just to show interest. Some adversarial negotiators may deliberately deceive you, and unless you test and check out the information they give you, you will become their victim. Because they often appear to be fair, you must force yourself to test and check.
Time, power and information are interrelated elements — information is power and time is power. Your skill level will determine how you use these elements. How skillful you are at the negotiating table is a key factor in how you fare. Negotiation skills are the how.
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