The 5 Most Valuable Lessons I Learned From the World’s Top Negotiators [Part 1 of 3]

‘Negotiation’ is usually boxed into the loosely linked group of “Sales and Marketing”. This often means that people have one of three reactions they hear the word ‘negotiation’ –

1. Love it, want it, get it around me;
2. Unfortunate chore that has to be done at times;
3. That thing that scumbags do when they’re not off kicking puppies in dark alleys.

Admittedly, I spent a good deal of my ‘career’ in category two. I never liked the confrontation in talking about money, and I avoided promotion reviews like dog shit on a footpath. When I started my first business, I’d make my client an offer (sometimes), and if I got anything but a direct “YES PLEASE”, I’d suggest that there’s “no rush” and to “give me a call” if they changed their mind.

In hindsight, that wasn’t a very successful business.

In fact not learning the basics of negotiation probably cost me far more than I could accurately measure. Better jobs, promotions, customers, partnership opportunities – personal relationships…

It wasn’t until I had my first mentor / business advisor that I understood what I was missing. Learning how to negotiate agreements using key principles of ‘mutual fairness’, ‘win/win/WINS’, and ‘creative dealmaking’ changed the way I did everything in my businesses. Pretty soon, my advisory board included world famous negotiators including the foremost thought leader on staff engagement and culture, a strategic business shark with a hollywood cult following, and a buyer psychology trailblazer who wrote the book on modern marketing.

(RELATED: Check out our Ultimate Guide to Handling Objections and learn how to elegantly turn customer objections into selling opportunities. Use these simple techniques to build trust in the first few words after you get the next objection. Download it here.)

Since then, I’ve learned a lot about negotiation and how to use it. So what are the most valuable lessons I learned from the world’s top negotiators?

Lesson #1: Every business leader must learn negotiation

Fair to say that my perspective on negotiation has changed dramatically. Our sales and negotiation workshops have dramatically improved our students’ businesses all over the world for over a decade. Why has my perspective changed? Because I’ve reframed the meaning of negotiation, and what it means to my business:

“Negotiation is a powerful tool to better serve my customers by helping them get what they want, what their customers need, subsequently and fairly growing the value of my own business resources.”

There are a couple of critical insights here that every business owner (or company leader, team manger etc) must understand:

Negotiation is a tool to serve people better. Often times the solution that you have IS in fact the best thing for the customer to have. If you cannot negotiate or create a deal which makes it easy for them to have your solution, you’re actually doing them a disservice.

Negotiation must be fair. Our brains are wired to reject unfairness (see study: “Monkeys Reject Unequal Pay”, 2003). If your customer feels that a deal that’s being offered is not fair, they will often not only reject it – but take strong offence to it. A reputation for being a fair dealmaker, will certainly make you a more effective leader and negotiator.

Negotiation must be win/win/WIN. Once you’ve learned the mechanics of negotiation, it’s easy for two people to get in a room and thrash out a deal that creates value. But the BEST negotiations are concluded when EVERYONE in the deal benefits significantly, if not equally. Unfortunately, this process often leaves out a key stakeholder who is affected – your customer’s customer. Who hasn’t heard about a situation when ‘senior management’ negotiate a deal that benefits all of ‘management’ but leaves more work for ‘front-line’ employees?

Learning to negotiate well benefits EVERYONE in the organisation.

Lesson #2: You should [almost] never negotiate your prices

-> People never buy because of price, they buy because of value.<-

Another way of saying this is that if the COST of having your solution is less than the cost of NOT having your solution – the customer buys every time.

ie.
Problem: Not understanding my tax deductions and opportunities
Cost: $20k – $40k in lost deductions

Solution: Work with ABC accountancy firm who is current with all reforms and consequences
Cost: $8k

Likely result -> buy.

The problem is when ABC firm seems to offer the same service as XYZ firm, but at $4k. So what options is the owner of ABC left with?

Solution 1: The owner of ABC discounts their rates to be competitive, but has to drop some of the extra benefits to do so. Now ABC no longer has any unique selling proposition (USP) and therefore not competitive in terms of customer experience. Alternatively, the discount comes straight from the profit line, which means now they are working for free or far less. They have also shown the customer that they are ‘flexible’ on price which will likely cost them again in the future, even if they do decide to work with ABC. Worst case, the customer actually feels that if the price was so easily adjusted, perhaps it was set unfairly in the first place – creating a monkey-like aversion to ever working with you in the future.