Winning a negotiation is simpler than most people think. While becoming a master negotiator takes a lot of practice, being good at negotiating comes down to understanding a few very basic principals.
In this episode we walk through three common negotiation scenarios, starting with a salary negotiation, to illustrate how you can be better positioned to win when entering a similar discussion.
A successful negotiation begins before the meeting ever takes place. Your goal is to be as prepared as possible, so that you can be armed with credible information that can be used as needed throughout the discussion. Once you’re at the table, your only job should be to learn as much as possible about the other side. Our assumptions about other people’s wants and needs are often incorrect. By learning the other party’s priorities you can anticipate what they might be willing to agree to.
The last piece to consider is your walk away point, which relates to your ultimate leverage in the conversation. A negotiation is simply an agreement between two parties to enter into a discussion that can lead to an outcome that both sides are satisfied with. If you have other options when entering into a negotiation, those alternatives give you more leverage since you’re more likely to walk away from the discussion if a favorable outcome isn’t reached.
If you’re interested in learning more about the art of negotiating, Getting To Yes by Roger Fisher and William Ury is an excellent place to start.
1:30 Today’s episode is about what we do almost every day, negotiate.
2:00 Many of us don’t even know that we’re being negotiated against, and as a result we never get what we want
3:00 Since we grew up as twins, we were naturally competitive and had to constantly negotiate
3:38 Even when we argued over who would be a certain Power Ranger or who gets the top bunk
4:30 We learned as kids that if we wanted something, we wouldn’t be able to get it by brute force alone.
4:40 If you yell, beg, scream, no one wants to help you get what you want
5:40 Some people who are forceful seem to win, but usually that comes at the expense of the relationship you have with someone
6:50 Negotiations seem scary because it has been built up in our heads as a big deal, but it’s actually simple and comes down to understanding the other side as much as possible and coming to an agreement
7:51 The first negotiation scenario we’ll talk about is a salary negotiation
8:18 First of all, being willing to ask for more is step one. No one will rescind a job offer because you asked for more.
8:52 Come prepared understanding what the market rates are so that when you’re pushing for a number you can back it up with data
9:33 Vadim didn’t expect an early conversation with a company to turn into salary negotiation, but it did. The CEO asked how much he wants.
9:54 Typically a rule of thumb is to get the other side to throw out the first number. That is helpful but not always necessary.
10:24 The person he was negotiating against, the CEO, kept asking what he wanted. Refused to give a number or a range.
10:56 In this scenario it helped Vadim to throw the first number out. This is called bracketing.
11:05 He was making less than 6 figures, and the range for this job was 100-150k based on his research.
11:14 You need to know what your target is at least so that you know when you’ll be willing to walk away
12:05 Vadim said the jobs he’s interviewing for are in the range of $140k-150 and that he had a few late stage conversations at the $150k range. It was high, but informed.
12:35 The guy ended up meeting him more than half way
13:04 Vadim created leverage for himself by having other options therefore he was willing to walk away
14:00 Vadim also won that negotiation because throughout the conversation he gathered a bunch of information about the other company including the fact that they’ve been looking to fill the role for a few months.
14:06 The next scenario is about buying or selling a car or a motorcycle
14:20 If you don’t know anything about cars then bring someone who might know something so that a sales person can’t talk circles around you about features/specs to use to tack on costs to the vehicle
15:00 You want to have an information advantage
15:15 Having options is one important thing. That means you have done your research, and you know what you want, so sales people can’t pressure you and push other cars on you
15:48 Number two: if you know what you want then you can shop around and have options from other sellers and dealers with similar cars, similar age and mileage.
16:19 Another tactic Sergei used, when he bought a motorcycle is that he knew exactly how much people were buying that bike for and knew the range that people were selling it for.
17:00 When Sergei met the seller he brought $1,800 in cash even though it was listed at $2,300. He knew what it was worth in the market so he had the information, but he was able to force the sale by having the money right there to push the seller to make the transaction happen today.
17:15 He forced a time bound decision by being able to walk away, and by finding out that the seller’s wife wanted him to get rid of it anyway.
18:14 The biggest takeaway is that as Sergei was able to understand more about the seller and his motivations, he was able to push for the sale. He was cash tight and was motivated to sell.
18:44 One year later Sergei sold it for $2,100, so he made money on it.
19:28 Any negotiation starts as a discussion so that you can understand the other side’s motivation
19:45 The other story Sergei want to tell you about is how he got out of a speeding ticket
20:16 It’s difficult to get out of a speeding ticket unless you have a very good reason. Pleading and yelling doesn’t work.
20:50 In this scenario it was about looking at the person’s motivations and trying to think of what they would want to avoid.
21:14 In this case Sergei was driving he was passing a police officer who then pulled him over. He was upset because he had to pass the officer and speed to get in front of him before another car came.
21:46 He told the hearing officer that there was another car coming, and he had to make a decision to pass this van on the side of the road (the police car). Basically saying that he was speeding because the cop was taking up too much of the road.
22:28 Sergei made the point that the road was very narrow and for the cop to pull him over he had to have been taking up a lot of the road. They ended up getting rid of the ticket
23:00 Getting pulled over is a good example of when you have very little leverage. In that situation you have to be nice first and foremost