Negotiations in a Down Economy: Using an Agenda to Defend Your Price
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Facing slumping sales and lost deals in a down economy, many sellers wary of losing a deal immediately turn to reducing price. This is the opposite of what you need to happen. It’s during times such as these that it becomes critical to negotiate more effectively on the value you provide, instead of instinctively reducing the price in order to close the sale.
Rather than letting a buyer push the negotiation straight to price (or some other term that’s particularly valuable to the seller, like delivery timing) an experienced negotiator should try to take control of the negotiation process. Having this kind of process control lets a negotiator postpone detailed discussions of price or other sensitive items until after they have a chance to emphasize the total value they offer.
Taking process control can be easy, under the right circumstances. A negotiator with a strong personality can often direct the course of negotiation naturally by taking control of the conversation. But in other circumstances this is difficult or even counterproductive, as counterparts see it as inappropriate or too aggressive. A buyer who thinks they’re being talked down to or talked over is more likely to become defensive and stop listening than they are to simply follow the seller’s lead.
Agendas are an effective and underutilized strategies for taking control of the negotiation process smoothly. An agenda directs the flow of discussion—if you propose and set the agenda, you control the negotiation process. However, an agenda is only effective if all the parties are willing to follow it. The two primary questions are how to make it more likely that your counterpart will adopt your agenda, and how to structure to get the most advantage out of it.
It’s important to include all the issues that any party will want to discuss. This includes difficult or contentious subjects—omitting them from the agenda won’t actually prevent them from coming up anyway. Obviously leaving a price discussion off the agenda won’t stop it from coming up. Instead, someone who wants to have a conversation that’s not on your agenda won’t forget their priorities just because you didn’t schedule them. They’re more likely to push straight on through to what they care about,gambling ignoring your agenda. But if the agenda contains a clear space for the discussion they want to have, a careful negotiator can use it to control when and how that discussion arises. It lets the seller create space for discussing their value propositions by saying something as simple as, “I have price on the agenda as issue number three—may we spend a few minutes covering topics one and two first?”
Getting someone to buy in to your agenda is pointless if it isn’t structured to aid the negotiation. Generally it should start with areas of agreement. Every time a negotiator says “yes” it creates a feeling of accomplishment and, more importantly, ownership over that agreement. This means that later, when you get to appoint of disagreement, the other side will be more reluctant to walk away, because it would mean giving up something they’ve already achieved. Even seemingly inconsequential agreements can have this effect. A careful seller can use it to keep a reluctant counterparty at the table for a difficult conversation about price, instead of starting with the sticking point and driving the prospect away.
Taking process control in this way requires careful attention to the counterparty. An effective negotiator must understand the counterparty’s interests in order to know what issues need to be included on the agenda and which will generate an easy “yes.” This is easiest for sellers who have a preexisting relationship with their counterparty. But in any event a negotiator must listen carefully to the other party and utilize whatever market intelligence is available to prepare an appropriate agenda.
A down economy raises the stakes on sellers’ negotiations, making it even more important to use tools like process control to make those negotiations more effective. Careful sellers should adjust their strategies to emphasize this control in order to defend their prices and make the most of the opportunities they have.