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Understanding the balance of power in negotiation

 

Negotiation can sometimes be required as a critical part of the selling process in order to gain a profitable and successful result. Many believe selling and negotiation are one of the same, but in fact they are very different. You do not always need to negotiate when selling in a product or service. Selling is presenting an idea that matches a problem or need with a solution, helping someone to see how you can help. But that is not negotiating. Negotiating happens after all the selling has been completed, but some areas may not be agreed upon, such as the commercial deal. Negotiating may also involve an element of bartering, wrangling, haggling, hard bargaining, dealing, concession trading and defending your position, and that is not selling.

Where does the ‘balance of power’ sit

When moving into negotiation, it is important to recognise where the ‘balance of power’ sits within the negotiation and within the relationship of buyer and seller. Don’t assume the buyer has the all the power because they are the one to decide if they say yes or not. Sales people often have the power, because they are selling in something that the buyer really wants. Remember their role is to push to a negotiation to get a better deal. They might be happy with the initial proposition but want to see if they can get more out of it.

So, what can tip the scales on ‘balance of power’? The main ones tend to be:

  1. Scale – the larger the business, the more likely they have more power. They can afford to walk away from the deal. This sometimes is the supplier rather than the buyer. However, the buyer, may have a large distribution network, and therefore the power sits with them as the seller needs the coverage.
  2. Experience – The more negotiations someone has been in, they tend to know all the angles and the steps to negotiate effectively.

What tips the ‘balance of power’ continued

3. Insight – If one of the parties has an insight into a need to a situation, this can be a major advantage, for example, understanding a buyers or sellers targets can really aid in understanding the importance of the sell.

4. Time – Buyers often open a meeting with ‘I’ve only got 10 minutes’ this is to put pressure on the seller and feel that they need to present quickly. As a seller, don’t be pulled into this balance of power tactic. Suggest another time to meet when they have more time, you will be surprised at how often the buyer suddenly can find another 30 minutes!

5. Criticality – Basically boils down to how important it is to the buyer or seller to get the deal. If it is business (or individual) critical, compromises may be made in order to get the deal. The trick is not to show how critical it may be to you or your business.

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Recognise when it shifts and adapt

Recognising the balance of power is important to negotiation. It can also shift throughout a meeting. Balance of power is also just one element of the art of negotiation. There are many more factors such as understanding how to identify and manage buyer tactics; recognising different negotiating styles, know when and how to walk away and how to maintain control and successfully close the deal. One thing is for sure though, before you begin to negotiate, ensure that you have finished selling – which means making sure you’ve packed in every piece of value you could muster. Otherwise you will just end up building your sales castle on a foundation of sand.

 

So, if you would like to know more about how to negotiate effectively, please get in touch at info@bitesizebusinessacademy.com. Our book onto one of our Negotiation programmes