TLDR; Negotiation is an incredibly useful tool for anyone in any industry, so we recommend investing time now for learning the craft. Here are a few things to consider.
- Understand what is on the table
- Get a measurement of priorities
- Make them fight for it
I was incredibly lucky to learn to negotiate at a young age. My Mom spent a good chunk of her life working as the point person in negotiations with unions in some pretty famous cases for the State of California. Though I’m sure it wasn’t my Mom’s intention to teach her adolescent daughter to negotiate, but it’s hard not to pick up a few tactics after spending so much time around someone who spent her career negotiating.
Early in my career I developed my negotiation skills further by taking a negotiation course with Terry Hird (now retired), a professor who taught and practiced negotiations for over 20 years. Terry specialized in negotiations with multinationals, banks and trade unions.
Negotiating is a skill anyone can develop and something I highly recommend everyone take the time to learn. It is a life skill that will help communicate more effectively and understand others’ priorities better, both personally and professionally. Negotiations can be stressful when emotions get involved or when there is the perception that there is a lot at stake, but if you’re able to remove the concepts of fairness, loss, and the attachment to a specific outcome, negotiations can be incredibly fun.
When learning to negotiate I suggest trying various tactics in low stake conversations at home or with friends. You’ll get a feel for the structure of a negotiation, find your style and begin to realize you’re in a lot more negotiations than you think.
In general, my favorite technique for negotiating is Logrolling. Logrolling is the technique of negotiating multiple items at once to understand priorities and leveraging those priorities to ideally “expand the pie” for a “win-win”. In most cases, priorities for each party are different, so rather than simply agreeing on the basics and letting the rest go, it is more effective to spend time mapping the potential items up for negotiation to find opportunities for give and take. Below are three tips I find helpful when utilizing logrolling in a negotiation.
Tip 1: Understand what is on the table
Verbally outline areas up for discussion
Logrolling often provides parties with a broader perspective of what is possible or acceptable in the outcome of a deal. Money is typically the first place I see founders go, but it’s only one item on a much broader list of terms, many of which could be more valuable than the amount spent on the product. The technique of logrolling is based on knowing both your own priorities and learning your counterpart’s to land on an outcome of perceived success for all parties.
For a business negotiation, we outline several of the areas up for negotiation in our proposal article . There are all types of terms that can be moved, scaled back, pushed forward, etc. The magnitude of options makes it imperative that you know exactly what you’re working with and what you’re working for. Also, know your BATNA (best alternative to a negotiated agreement) so you know when to walk away.
Tip 2: Get a measure of priorities
- What are their priorities?
- What will they give on, what are non-negotiable?
- What will it take to win?
When negotiating, always make sure you’re negotiating with the decision maker. If you don’t, you’ll find yourself in a multilevel negotiation, losing a little (or a lot) at each stage. It is to your benefit to meet the decision maker in person or on a zoom since 70% of communication is non-verbal. Why would you negotiate anything without 70% of the information?
I often speak to founders and salespeople who simply send over a proposal without attempting to first discuss it with the prospect. This is pure laziness. We recommend that you instead verbally outline the proposal before putting anything on paper. We’ve all experienced seemingly obligatory “ghosting” by a client after a proposal was sent without being discussed, this is because you didn’t understand priorities. It is close to impossible to figure out a give and take let alone get an understanding of multiple priorities and how they rank in an email. Priorities need to be talked through.
Logrolling allows you to get everything out on the table to understand a potential customer’s priorities and where tradeoffs can be made to come up with the best deal possible for all involved.
Tip 3: Make them fight for what they want
Desperation is not attractive in any situation
Have you ever dated someone who was a little too eager, or interviewed for a company that seemed great, but came across as desperate during the interview?
When you fold too quickly or give in without discussion, what else is your counterpart supposed to assume? How you value your product throughout the negotiation process is also how your customer will value your product. I’m not saying make it painful, I’m using ‘fight’ as a metaphor, but you do want to make sure there is a ‘give and take’ and that you are valuing yourself and the benefits your product offers in a negotiation. Even when it seems like there isn’t a lot on the table, there are always things of value your can add like:
- Serving as a reference in private, like an investor call
- Doing a thought leadership piece (different from a case study)
- Serving on your customer advisory board
- Being a formal advisor
- Introducing you to conference organizers for a talk
- Delaying certain requirements that cost you time or money
A general framework I use for a negotiation that seems to have a lot of non-negotiables is to think through the things that are not covered under an NDA, and that PR and legal teams are not going to balk at. These are usually terms that can be given by your negotiation counterpart. They may not be included in the contract, but you can get them agreed to in an email.
Negotiation touches all parts of your life and is an incredibly valuable skill. When you take the time to understand what is up for negotiation and determine what is important to you and your counterpart(s), you can utilize that information to expand the value of an agreement so that everyone wins!