Negotiation skills are essential in the modern business world, but negotiating is not something that comes naturally to most people. As the workplace transforms digitally and becomes more automated, humans increasingly need to master soft skills like negotiation to specialise in more complex, collaborative work. For example, as artificial intelligence (AI) tools take care of simple customer service calls in a call centre, humans are expected to handle the more challenging customer issues. In response to digital transformation, customer service companies are focussing on upskilling their agents in key soft skills like negotiation.
It’s no wonder that negotiation is the 7th hottest soft skill in 2018 on Udemy, the global online learning marketplace with 80,000 online courses, 24+ million learners, and thousands of businesses.
Skillful negotiating relies on strong listening, yet the normal, untrained listener can only understand and retain about 50% of a conversation. People are also notably unreliable when it comes to assessing their own negotiation skills—research from Columbia Business School found that 56% of people who were rated as over-assertive by others rated themselves as appropriately assertive or even under-assertive. This helps explain why the majority of people—71%—opted not to negotiate for their current salary.
Yet there are numerous benefits to improving negotiation skills—it can boost sales and profits, lead to enhanced communication and collaboration, and help employees receive budget and resources for their teams.
Learning the basics of negotiation can pay off in a substantial way. I have one former student who saved $28,000 by negotiating on the price of a house. Simply by employing some basic negotiation techniques, she was able to bring the price down from $300,000 to $272,000 in a matter of minutes. Imagine how long it would take to save $28,000 if you were just putting away small amounts of money here and there. And exactly the same process would apply to any business deal, whether you are buying or selling—there can be thousands of dollars or pounds at stake.
One of my customers was buying a factory in India and he offered them $4 million and they immediately said “Done!” He discovered later that if he’d offered them TWO million they would have asked for four and he could have ended up on three—and saved a million. Or even better, if he had asked them how much they wanted for the factory, they would have asked for approximately one million, and HE would have been the one saying “Done!”
The lack of knowledge of how the negotiation process works holds many people back from participating. Imagine the impact this can have on your business. Most businesses make about 5–10% profit, so simply by negotiating a better price by 5%, it’s possible to double profit margins. I offer many strategies and techniques that can help employees improve their negotiation skills in my Udemy course, Successful Negotiation: Master Your Negotiating Skills. To equip your teams with the skills which they’ll need to be better negotiators, find out more about a Udemy for Business subscription for your team.
But in the meantime, here are 7 tips that can help your employees become better negotiators:
7 Tips for better negotiating
1. Learn how to listen for key information
One of the most important skills of negotiation is learning how to listen for key information, often before the official negotiating has begun. The more the negotiator
can learn about the other person, the better. For example, if a potential customer says they don’t have any other suppliers or their supplier is not very good, that’s very interesting information to have, because it gives the negotiator an advantage and puts them in a position of strength from the outset. Or if a prospective buyer says they haven’t found any other homes that they like, that puts the seller in a stronger position because they know the buyer isn’t considering other options. By learning to listen for this type of information, negotiators can quickly gain the upper hand or develop more confidence in their position.
2. Make a detailed plan of possible outcomes
Good negotiators don’t just go in and play it by ear. They do quite a lot of thinking beforehand about what the other person might say, what their weaknesses might be, and which tradeables they want to ask for and offer. Tradeables are things that one party wants or thinks the other party might be able to offer, or they’re things that are valuable to the other party but easy for the negotiator to offer.
For example, if I was offering a training course to a client company, it might cost a bit less if they booked several training sessions, or if they booked them further ahead, or if they mentioned me on their website, or paid for my transport and hotel. And if they wanted to add more people to the course, then I would want to bring the price up. It’s essential for negotiators to outline all these possible outcomes ahead of time so that they’re ready to handle them when they come up during the negotiation process.
3. Overcome the fear of walking away
Being assertive in a negotiation context means both being strong enough to walk away. This can be difficult, because we would all rather have the deal than not have it. In order to have the assertiveness to walk away, negotiators should always have a predetermined walk-away point that they won’t go above (or below if they’re selling). And even if the other person is suggesting a small point beyond that, like paying $995 for something when $1,000 is my walk-away point, it’s no deal! I would rather go home and not make anything than settle for something that’s $5 below my walk-away point. I know this seems strange, and petty, but it’s not about ego, it’s about strength. It’s crucial for negotiators to stick to their walk-away points because this helps them to become stronger in future negotiations. If you walk away one time then you know you can walk away next time if you have to, which gives you more strength next time.
Another example of being more assertive, and overcoming fear, is having the nerve to open with a number that feels outrageously high or low. Will you be laughed at? Yes, probably, but does that matter? And will you lose the deal? No, because you can move from the starting position to a finishing points that is acceptable to both parties.
I recommend thinking of negotiation as a game to facilitate making these assertive moves. If I’m going in to buy a car, for example, I know the salesperson thinks it’s a game. So I think to myself, “This person is laughing at me because they can’t believe that I’m paying such a high price.” This helps me when I’m making that first – low – offer. It works the other way as well, imagining that the person is laughing at what a low price I’m offering when I sell something, so I feel better about quoting a higher starting price..
4. Understand the other person’s position
I mentioned earlier that it’s important to listen carefully for key information. As well as picking up useful information and signals, this makes negotiators stronger because it helps them focus on the other person’s position rather than their own. By learning more about the other person, the negotiator can gain a position of strength.
Negotiating is all about how strong you feel, and we tend to focus on our OWN weaknesses rather than those of the other person, since those are the ones we know. For example, when selling a house, we know we have had it on the market and have had no potential buyers—we feel weak. And when we’re buying we know that we have looked at lots of houses and this is the only one we like—we feel weak this way round, too. But imagine if you could focus on the other person, rather than yourself, you could suspect that they have weaknesses and then you could fish for those.
For example if I visit a customer to discuss a possible training course that I could run for them, I push my own weaknesses out of my mind (“I need the work, I’d love to get this customer, I have quoted them quite a high price, there are lots of other people who could do the work”) by thinking about THEIR potential weaknesses (“We are in a hurry, the previous person was more expensive than Chris, Chris is the easy option because we know him and he did a good job last time, we’ve got lots of budget left”). Now I feel much more confident and I’m going to do much better holding to my position.
5. Know your alternatives
When negotiators only have a single option, they won’t have as much bargaining or walk-away power. That’s why it’s essential to have a few alternatives available. I always recommend that negotiators shop around for a few options. Even if someone thinks they’ve found their dream house, for example, I recommend continuing to shop around so that they have a few alternative options in mind when they come to the negotiating table. And even if the negotiator is a favourite supplier or customer, I recommend having a few more so they don’t get dependent.
6. Use the “If you… then I” wording at the bargaining stage
A good negotiation involves concession-making on both sides of the table. Consider what each person is giving up and gaining. I recommend doing this by using the phrase, “If you… then I.” If someone wanted to pay less for one of my training courses, for example, I might say, “If you book two, then I can come down on price.” Or “If you don’t mind me starting at half-past nine instead of nine o’clock, then I can come down a bit.”
There are a few reasons for employing this technique: First, it means that the negotiator is always getting something back. They may even gain on the trade! Second, it means that the other party will be reluctant to continue asking for a discount since they know that they’re going to have to offer something else in exchange. And finally, it makes the negotiator seem more honest. If they simply agree to a lower price without making any trades, it leads the other party to wonder why they were charging so much in the first place. By only agreeing to make trades, the negotiator demonstrates that their original price is actually reasonable for the value of what they’re offering.
7. Move in small steps
One of the biggest mistakes I see when I run negotiating training sessions and ask people to do role-plays is that they come down too much in one jump. If the person’s starting price is $4,800, and some pressure is applied to them, they will generally make a first downward move to $4,000. It’s important to come down in small increments, so they should go from $4,800 to $4,700, for example. When the negotiator employs this technique, they’re signalling that they’re only willing to come down a small amount and the other party is going to have to really struggle to get even that. And, as we’ve established in the previous step, they’re also going to have to give something in exchange. This may very well lead to the other person giving up and paying a higher price because it’s not worth it to them to go through all this trouble!
People are easily intimidated by negotiation and they may feel like they’d rather not do it at all. But I’d like to reiterate that we’re always negotiating—people are always using these techniques on you, on your salespeople, and on those who are making purchases on behalf of your company. So opting out isn’t really an option. Learning how to be a better negotiator means you won’t have to pay the price for the alternative.
About Udemy for Business:
Udemy for Business is a learning platform that helps companies stay competitive in today’s rapidly changing workplace by offering fresh, relevant on-demand learning content, curated from the Udemy marketplace. Our mission is to help employees do whatever comes next—whether that’s the next project to do, skill to learn, or role to master. We’d love to partner with you on your employee development needs. Get in touch with us at email@example.com