Many people in business have, in one sense or another, learned negotiation tactics. Some of it may have come by training, but probably much of it by real life experience. A key issue, important to understand in negotiation, is the manner of opening.
The opening offer.
Negotiation is defined as “reaching an agreement or compromise by discussion.” Discussion, conversation, talking. Verbal dialogue is a necessary part of a face to face negotiation; it’s how we arrive at conclusions. Letters and email are the “discussion” of distant negotiations. Either way, there has to be a back and forth interplay of communications for a negotiation to take place. And the important thing, for the smart negotiator, is knowing when and how to start.
In the art of negotiation, the opening offer is half of the battle, if it could be so called. Why? Well, it is because in the opening offer, several major elements are addressed, and these will affect the entire development of the negotiation from that point on. The elements are:
- The perceptions of value
- The expectations of the opposing side
- The direction of the ensuing discussion
For one, each parties’ perception of value bears heavily on how the negotiation will proceed. This is because in order to negotiate affectively, you must know the other side’s perception of value, or how they view the product or service in question. An opening offer yells this information, loud and clear.
The opening offer also tells the one party what the other party is expecting. Is he expecting to get everything for nothing, or is she hoping to make a fair deal?
Finally, the opening offer dictates the direction of the negotiations to follow. If the offer is ridiculously low, the negotiating will go up… or it will go nowhere. Likewise, if the offer is outrageously high, the deal will settle immediately or possibly make the seller start to question what more the buyer is looking to get.
For example, if I am considering buying a car from you, and you say to me, “How much is it worth to you?”, my answer will tell you how I view the car, at least initially. If I tell you I’ll buy it for $5000, and in your mind it is worth $10,000, then you know right away I have a low view of the worth of your car. On the other hand, if I say I’ll buy it for $15,000, and you believe it is worth $10,000, you know I have an inflated view of the value of your car (and you’ll run to get me the keys).
My offer of $5000 tells you I have a minimal, expressed perception of the value of your car (whether I would really pay twice as much is beside the point). This also tells you I have expectations of getting it cheap, paying less than it is really worth. It also tells you which direction the negotiation will be heading, if going anywhere at all. One thing is for certain in your mind: you will not be negotiating the price of your car “down” from my low offer.
Now if you think about it, my opening offer has put you in a secure position of strength. Remember the old adage “Knowledge is power”? Well, here it is again. What you know will give you advantage in any negotiation. Learning to keep silent is one of the hardest, but most effective, negotiation tactics in existence.
We humans have a tough time not revealing our minds. We want to be heard. We want to make sure our opinions count. Be that as it may, the real secret of strength in negotiation is LEARNING TO KEEP SILENT until the appropriate time comes to speak. If you can learn this truth and make it your modus operandi in your business and personal dealings, you will have gained a definite advantage over those who can’t control what they say.
So when you go to the table to begin your negotiations in a business or personal deal, force yourself not to reveal your secrets. You do this by waiting for an offer from the other person. Once she has stated her price, whether she is low or high doesn’t matter. You are now armed with the knowledge that you need: her perception of value, her expectations, and whether the price will go up, down, or nowhere.
The one who guards his mouth preserves his life; the one who opens wide his lips come to ruin. Proverbs 13:3
He who gives an answer before he hears, it is folly and shame to him. Proverbs 18:13