The Science Behind Successful Business Negotiations
One’s ability to negotiate effectively can be the key differentiator between success and failure in a company. When put into a grand entrepreneurial scale, your bargaining skills at the local flea market or strip mall can result in an advantageous position for your brand. Negotiating, however, is not an innate talent everyone is born with nor is it something that can be honed overnight. By understanding the science behind successful business negotiations and adapting the resulting tactics based from it, a business can grow more rapidly and compete more effectively within its niche.
Right Frame of Mind
In most cases of negotiation, people go into it with the wrong frame of mind. They think of the standoff as a win/lose situation rather than a win/win. If you frame it as a win/lose, then you automatically imply a 50 percent probability of losing.
If you perceive it as a win/win situation, on the other hand, then you eliminate any chances of losing for both parties involved. This frame of mind is what’s known as the Framing Effect, which indicates that an individual reacts to a particular choice depending on how it is pictured – either a win or a loss. Do this with every business dealing you go into, from mergers and acquisitions to bulk pricing for commodities you’ll need.
Appearance is Everything
Just like how the peacock intimidates its predators with a show of its colorful feathers spread out, a business must also look fiercer and more capable than it truly is. If you are looking to improve your negotiation skills, the first stop should be your wardrobe. Earning more capital allows you to lease more space or buy more income-generating assets. Consequently, expanding your workplace and increasing your brand’s prominence through its asset inventory allows you to earn more profit and gain further inventor interest.
This technique can increase your close rate from 25 to 40 percent. This is a powerful technique you should bring with you when dealing with customers at the front-end of your business.
Negotiate Utilizing Certainty
For instance, if you are trying to bring on board a new IT supervisor, prospects will be attempting to negotiate for a higher salary than what you probably are prepared to shell out for the said position. Rather than going into a numbers war with your prospects, use the Prospect Theory. Tell them outright what you offer, such as job stability for at least one year.
This guarantee comes with a no-questions-asked clause and affords complete job stability with the requirement that the prospect accept the salary there and then. This tactic minds the fact of how humans make choices, particularly when the choices constitute some level of risk.
If you have a workforce of good negotiators who do not take “No” for an answer, your business will have more opportunities for growth. Negotiations training courses, especially among the higher-ups who handle heavy deals like possible mergers and acquisitions, can be invaluable. 9 out of 10 experts anticipate M&A activity to remain strong or increase.
Preparing your company with this type of dealings will help tilt the favor to your brand. Training sessions are designed to emulate negotiations, which is important for shaking off the awkwardness that most first-timers and inexperienced negotiators have.
The science behind effective business negotiations advocates changing your psychological mindset, mainly eliminating the fear of losing, and building up the confidence you need by working on the right things at the right time. The four tactics above are only as good as the person or the company using it. Without the proper elements driving it from behind, these tactics will have no impact to your business.