Business Negotiation Strategies – Part 1

For many of us, the cost of doing business is rising every day. The key is getting class A service and products on your small business budget. Everyone’s a negotiator in some way; whether it’s with your ESP over the cost of service or with your kids over eating their green beans.  

Negotiations don’t always have to be about “winning” your position.  By moving away from positional based bargaining to a merit based negotiation, you’ll be able to expand the pie and position yourself to negotiate a favorable deal for both sides.  Keeping these negotiating ideas in mind, your dreams of that world class service (or a kid eating their vegetables), can come true!

Positional Bargaining

Even if you didn’t know the name of it, we’re all familiar with positional bargaining.  I only want to pay $100 per month for a service that is listed at $500 per month. A back and forth ensues, either resulting in an agreement at some middle price mark, or often times, not finding any middle ground, thus severing the relationship.  Positional bargaining may be what we know, but it’s not the most effective negotiation strategy. Ultimately, you (the buyer) and the service provider (the seller) want to find an agreement that works for both parties. A foundation of trust is crucial to all successful business relationships and that can be tough to achieve when one party is trying to win over their position.

A central problem with Positional Bargaining is it depends on a successful taking, and then giving up a sequence of positions.  Getting to Yes covers the downfalls of Positional Bargaining in great depth, but ultimately, it boils down to:

Arguing over positions produces subpar agreements

Arguing over positions is not effective

Arguing over positions can poison relationships at their inception

Arguing over positions often leaves one side in a weak position

Arguing over positions is inefficient

If you haven’t read Getting to Yes by Roger Fisher and William L. Urly, do it soon!

Merit Negotiating

The benefit of merit based negotiation strategies is you’re focusing on the substance of what you seek, not your position.  I want the ability to send up to 500,000 emails with my 50K subscriber list, automation, purchase behavior triggering, API integration and an A/B testing feature.  Here, we’re focused on the substance of what I’m looking for from an Email Service Provider. Of course we all have a budget, but with merit based negotiating you’re focusing on the substance of what you want, which will get you to the price you can afford.

Expanding the Pie

The key to negotiating your deal is to find areas you can expand the pie.  Expanding the pie refers to a process of re-examining what’s on the table to find ways to add or remove elements to find a middle ground where one side may gain but not at the other sides disadvantage.  

Using the prior example on contracting a new ESP, I’m looking for the ability to send up to 500,000 emails with my 50K subscriber list, automation, purchase behavior triggering, API integration with a sandbox account and an A/B testing feature.   I get quotes from $300 up to $3,000 from various ESPs. The one I like runs $1,000 but it costs extra for API integration, running $1400 out the door. It also includes integration to Salesforce, a dedicated account rep, dynamic content, social media integration and a host of other features I don’t need.  

Let’s say I’m looking to spend $800 per month.  Rather than offering $800 for a service valued at $1,400, I have a better chance of coming to an agreement if I can expand the pie for the ESP.  I offer $800 but with no access to Salesforce or a dedicated account rep. The offer may not be accepted, but it will start a conversation on the merits of the service package without devaluing their service.  I’m more likely to find a middle ground where we can come to a deal.

Next time you’re in the market for a new product or service, remember the benefits of merit negotiating and find ways to expand the pie, to get the deal you want!  Stay tuned for future articles on negotiating Web Design services, Digital marketing services and other niche practices.

 

About the Author:

Kristine Dobson has spent the last 15+ years consulting with digital marketers on their email, content and social marketing strategies.  She is also a third year law student and was a runner up at the 2018 CA State Bar Negotiation Competition.