Let’s Make A Deal! 5 Tactics for Becoming a Better Negotiator โ Part III
Many people think talented negotiators were born with innate skills. And although there is an element of truth to that, itโs also true that good negotiating skills can be learned. Negotiating skills can be improved through experience, which can be very expensive in an M&A context, through reading academic research on negotiation techniques and by learning best practices from negotiation experts.
For this 5-part series focused on improving negotiating skills, we interviewed 63 corporate executives to find out their perceptions of what skills make for a good negotiator and whether those perceptions match up with available research. Keep in mind that the conclusions we reached are what we consider best practices, not dogma. Every negotiation is unique, and the tactics outlined here will not apply to every business situation. But these best practices make for a good foundation.
PART III โ HOW AGGRESSIVE SHOULD YOUR OFFER BE?
Question: Youโve decided to proactively make the first offer. How aggressive should your offer be?
- Keep it simple. Tell them what you want and expect that youโre going to get it โ 2%
- Make an offer of 10% more than what you really want to allow for negotiations โ 2%
- Provide a rational figure based on objective criteria that is obviously higher than what you be willing to settle for โ 71%
- Make an offer that is super aggressive, but canโt quite be construed as crazy โ 25%
Our poll reflected that most people know itโs best not to propose what you want on the first go-round and that itโs probably not enough to ask for only 10% more than what you want.
Most of those polled, 71 percent, think that proposing a rational figure based on objective criteria is the negotiating technique that would most effectively get you what you want. It sounds rational. After all, itโs got the word โrationalโ in the answer. But itโs wrong. The correct answer, according to academic research, is โJust this side of crazy.โ โJust this side of crazyโ is your opportunity to set an anchor. You want to set a price that is high, but not so high that it appears crazy or would compel the buyer to walk away. So itโs a fine balance. Think back to the research you did on the buyerโs best alternative to a negotiated agreement and suggest a price that is close to what you believe is their absolute limit. Be aggressive, but donโt be so aggressive that you canโt offer justification for what youโre proposing.
