When negotiations break down, it’s not always based on a simple discovery that one party can’t afford or offer what the other wants. A negotiation requires a give and take, and miscommunication or lack of communication can cause mistrust or end one party’s interest in working with another. Understanding common causes of negotiation failures and how to prevent them will help you close more deals and get the best terms possible for your business.
Lack of Planning
Negotiating requires more than simply telling someone what you want. There are a variety of strategies involved, including determining your bottom-line offer, setting an opening offer, demonstrating good faith, creating bargaining chips you can offer during the negotiation and demonstrating value that you offer. Prepare your negotiation strategy by trying to determine what is in the best interest of the party you’ll be negotiating with and what he will likely want. Ask someone at your company to play the role of the person you’ll be negotiating with and have her make the arguments your customer or supplier will make and rehearse your answers to those arguments. Create a plan that starts by making an offer that is the best deal you feel you can negotiate that is fair to both parties. List clues that might tell you when to make counter offers and when to end the negotiation.
Refusal to Bargain
If you build no leeway into your negotiation, you might give the impression you aren’t interested in working with the person with whom you’re negotiating. This creates an adversarial relationship, rather than a working partnership. Refusing to consider your partner’s positions or needs sends a signal you don’t care about his business or don’t care to learn and understand his needs, which won’t lead to a strong working relationship. This is why it’s helpful to start with an offer than is more than what you must have, so you can demonstrate you are willing to consider your customer’s or supplier’s needs. Asking for things you don’t really need or even want allows you to offer to “give up” these items, known as bargaining chips, to demonstrate that you are willing to be flexible and help your partner get a good deal.
If both negotiators don’t receive a benefit from a transaction, someone loses. A negotiation that creates a winner and a loser often results in the negotiation breaking down or ending. If you can’t lower your prices, offer better credit terms, shorter delivery or some other benefit that lets your partner get a win out of the negotiation. If your negotiating partner was willing to pay your price or accept your terms without discussion, there would be no need for negotiation, because your partner didn’t need to “win” anything. The fact that your partner is negotiating means he doesn’t feel he can win meeting your current demands. Explain to your partner your needs and what you need to “win” to encourage him to help you get fairness in the deal. A simple, “If I give you this, what will you give me in return?,” is often all you need to make someone on the other side of the table offer someting they need to help you win, and can do so without losing.
Communication occurs in a variety of ways, including more than the simple delivery of a message. Tone of voice, eye contact, body language, sending a low-level representative to negotiate with you or using email instead of a written letter all communicate different levels of sincerity, trustworthiness and intent. Lack of information is another stumbling block to negotiations. Even if you think negotiations will go well based on past history, communicate all of the benefits you offer before each session, including any new benefits you can offer, to ensure your negotiating partner knows the value of what you’re offering. Follow up after you send emails or letters to ensure all parties have received important information before a negotiation starts.