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Negotiations: Focusing on what you Need

Jun 1 • Morry Morgan Articles, Sales and Negotiations • 3678 Views • 1 Comment on Negotiations: Focusing on what you Need

Orange by Gabriel Hess @ Flickr

YOU’VE PROBABLY HEARD THIS NEGOTIATION STORY. Two children are arguing over an orange. They are smart kids and soon realise that they each must make a concession in order to reach an agreement. One of them, it is decided, will cut the orange while the other will choose their pieces. They believe that this will be the best way to ensure fairness. So, the orange is cut, the pieces are divided and the children walk away, oblivious to each other’s real needs. You see, one child only wanted the juice for a drink, while the other wanted the rind to make a cake. Had they been focused on their needs, then both could have been satisfied completely, and no concessions would have been necessary. This example might be fictitious, but situations like this are played out daily, in both big and small negotiations.

Had they been focused on their needs, then both could have been satisfied completely, and no concessions would have been necessary.

Let’s look at a real-life example. Two years ago I was training at a Swiss manufacturing company. The issue of negotiating a sales transaction entered the discussion and one of the trainees, an experienced sales manager, stated that price was the most important factor in his company’s industry.
“Is your product the cheapest on the market?” I inquired.
“No!” announced the sales manager, visibly proud. “We are one of the most expensive.”
“So, your market-share is decreasing?” I inquired, knowing perfectly well that his company was growing from strength-to-strength.
“Not at all. We are growing by 20% each year,” he continued, before realising his contradiction.
If your product is the most expensive, and yet you are growing in market share, how is price the most important factor in a negotiation?

He is not alone in thinking this way. Of the trainees that attend my Negotiation Skills seminar most come to the course with this supposition; that price, not needs, is the most important factor. If you are still not convinced, consider your mobile phone. Is it the cheapest phone on the market? Or, did you buy it because it is ‘sexy’, ‘cool’, ‘slim’, ‘functional’, or ‘reliable. These five words may have touched on one of your needs, and if so, I’m certain that you paid a little more to have this need met.

Needs vs Position

The opposite of a ‘needs negotiation’ is a ‘position negotiation’. For the most part, position negotiations focus on price and numbers and are ideal for one-time, low-value transactions, such as buying items from a market where haggling is the accepted ‘game’.

Needs underlie positions, so addressing the needs of your opponent is the first key to unlocking yourself from the trap of positional bargaining.

Needs underlie positions, so addressing the needs of your opponent is the first key to unlocking yourself from the trap of positional bargaining. While there is only one way to satisfy a position, there are many ways to satisfy a need – the more an agreement satisfies the parties’ needs, the better the deal.

How do you uncover your opponent’s needs? The simplest way is to ask open questions. These are questions that start with ‘What’, ‘Why’, ‘When’, ‘Who’, ‘Where’, ‘Which’, and ‘How’. Open questions ensure that a ‘yes’ or ‘no’ answer cannot be given and opens up the discussion, which helps uncover needs. For example, when you are told that $3,000 is the largest increase in salary that your manager can issue, then an open question response would be, “Why is $3000 the highest amount?” , “What can be done to increase this amount?” or even, “How could we work together to find more budget?”.

“Can I have more?”, would be met by a clear and final “no”.

Opening Up

Now let’s imagine that you are an HR Manager. Next, let’s identify a negotiation that you are likely to undertake in any given year. Negotiating the amount to spend on recruitment advertising seems a good example. However, bear in mind that your need is not specifically a dollar, pound, euro or yuan amount, but rather meeting the staff shortage created by your company’s growth and natural attrition rate. We can assume, that it is your GM’s ‘need’ to growth the business, by increasing your company’s revenue, maintaining market-share and building brand reputation.

So there you are; standing outside your GM’s office. After knocking and being invited in, your boss asks you what you want. Do you say, “Mr. Smith, I need more money to advertise our job vacancies”. Or, do you say: “Mr. Smith, we are not reaching our full potential due to staffing shortages. I propose increasing our recruitment spending.” The answer is obvious! Firstly, you have not discounted alternatives to an increase in spending, and secondly, you have not demanded money from your GM. This negotiation is primed and ready for healthy discussion because you have started by focusing on needs not positions.

Finding their needs
But, how do you uncover needs if your opponent is not willing to provide the information so easily?  They might, for example, be a customer or even a vendor. In this case, knowing as much about your opponent as possible will enable you to reduce the price, or charge more, because you can focus on their needs – remember the mobile phone example? Here’s how I uncover information, which can directly indicate needs:

I quiz receptionists. Receptionists, you see, are extremely knowledgeable. They see everyone walking in and out – staff, vendors and customers – and often they are eager to talk to someone, even me!
“Hi, I’m here to see Ms. Wang, your HR Manager”, I casually say handing her my business card.
“Ok, Mr. Morgan”, she says looking down. “Please have a seat. Ms Wang will be with you shortly.”
“Thank you. Oh, by the way, you are very professional”, I add giving her a big honest smile.
“Oh, thank you,” she says, slightly blushing.
“Do you attend classes here at XYZ company?” I continue, as I remain standing. Regardless of how she answers, I can collect valuable information. For example, if she has had training, I can ask her what she thought of it, who was the company, how could it be improved, or any of a myriad of the ‘6 wives and 1 husband’ questions. Of course, if she says that she has never received training, then I can ask her who receives the training budget, what kind of training she and her colleagues would like and much more. As long as the HR manager takes her time to arrive, I can answer at least a half dozen important questions.

Receptionists are great sources, but almost anyone can give you valuable tidbits. A year earlier, I was visiting a manufacturer in the car industry, and was met at the reception by an engineer. She was the ‘class monitor’ and would be responsible for arranging the schedule of the course.  However, she was not the decision maker, and I had been informed previously that a number of other vendors were being considered.

The walk took about two minutes, and by the time I was shaking hands with the decision maker I had already uncovered that we were the “only company” that was being considered.

As we walked from the reception, to the meeting room, I casually asked her what training she had attended in the past. That simple question was enough for her to open up. The walk took about two minutes, and by the time I was shaking hands with the decision maker I had already uncovered that we were the “only company” that was being considered. According to the class monitor, the other vendors did not impress her boss. Armed with this information, the need to discount became irrelevant.

Now imagine that you, as an HR Manager, were able to uncover the same amount of information about your vendors. Think of the discounts that would be more forthcoming, if you were aware of a vendor’s cash-flow, slow business period or their need to be seen servicing a Fortune 500 company, such as yours. There would be no need to worry about the common negotiation ‘tennis match’ that is part of a positional negotiation, and ultimately, both parties would be satisfied.

That’s how needs negotiations, are a true win-win situation. After all, focusing on needs allows you to both drink your orange juice and eat your cake!

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One Response to Negotiations: Focusing on what you Need

  1. Tim says:

    Needs are very important. Too many salespeople throw facts and figures at the customer, instead of listening and uncovering the customer’s true reasons behind the purchase. Great article.

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