Market Meltdown: How To Use Your Negotiation Skills To Negotiate For Survival

One can sense 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 stated that it is only when the tide goes out that one can see who is naked. In other words, it is easy to be prosperous when the markets are booming; 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 present economic climate?

Use 'Loss Framing'

People are more interested by avoiding loss than by achieving 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 advantages. In the way that we negotiate, we can make our counterparties aware of the items that they stand to lose if they don't agree to our requests and otherwise acquire if they do.

Create Alternatives

In times of difficulty it is vital to look at other options so as to support our negotiation position. Creating options are key in the context of negotiation and the power of options to securing a deal is the key 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 other options. We risk entering into a less than ideal deal and if we have not studied all the alternatives. Similarly, thinking about the options 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 competitive and if they don't, they will tend to be more agreeable.

Use Reciprocation

Reciprocation is a key principle of powerful influencing skills, because we are prone to return to others the sort of behaviour that they exhibit towards us. In times of difficulty it is key that we act in the interests of our counterparties if we would like them to perform in our best interests. You can use this principle to your benefit by acting first and using the rule of reciprocation. Be careful and ensure that you register the indebtedness with your counterparty.

Move from price to value

Divert the focus off price and home in 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 focus on the price, the best that we will do is to haggle and it is only once we start to explore the total lifecycle of the service, product or solution that we trade, that we start to discover options for negotiation. Before you even 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 possible risks or negative consequences that may happen when the other side doesn't manage to reach 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 more important than ever to dedicate enough time to planning your negotiations.

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