Why is learning how to negotiate effectively important?
• It displays leadership.
• You’ll make more money.
• You’ll save money.
• You’ll be able to influence others.
• It’ll build trust, rapport, and respect from others.
Bottom line—knowing how to negotiate effectively gets you what you want.
This is a beautiful form of art and it only makes sense to get good at it.
Your life is a series of negotiations.
• Buying a car
• Selecting a college major
• Your salary for your new job
• Hiring and firing people
• Continuing a relationship
• Agreeing to a movie with your significant other
The list goes on. Even the minutiae of life are negotiated. A majority of situations will require a negotiation with yourself.
Your ability to negotiate go hand-in-hand with your ability to make decisions. The better you get at negotiating, the better you’ll get at making decisions. Do these things right and you’re building a framework of a rich life.
If you’re in a foreign country, chances are most goods are negotiable. Locals will foam at the mouth because they know westerners will pay full price. And they’ll inflate the price knowing this. My mother has stopped me in the middle of a transaction knowing this. She successfully negotiated down the price 50%. Mama Singh is a killer. She’s passed down her killer negotiation skills to me. And I am now passing them on to you.
8 Insights on How to Negotiate Effectively
1. Listen to Learn
“You have diarrhea of the mouth. Ask the question and shut the fuck up, listen, and learn what the prospect has to say.” A sales manager at a previous job would always say this to people. And by “people,” I mean me.
And by “people,” I mean me.
Active listening is one of the most undervalued skills. Employers will look for people that are great communicators but rarely have I ever seen “great listener” in a posting.
Try this on for size: When someone is speaking, shut the fuck up, listen, and learn what they have to say. Don’t try to come up with a response while they’re speaking. In addition to their words, listen to their tone, pitch, and body language. This will tell you so much about what they’re saying. Are they nervous? Scared? Excited? Confident?
My manager had us put this acronym in front of us as a reminder.
Badass negotiators listen attentively so they can learn everything about the other party’s fears, goals, and aspirations.
2. Emotional intelligence
Emotional intelligence is the ability to discern the feelings of yourself and others. In the context of negotiating, having high emotional intelligence will allow you to harness emotions and use that energy to apply rational thought to solve a problem.
At the same time, knowing how to negotiate effectively requires your ability to play on people’s emotions. People tend to make decisions based on fear, ego, and greed. Simply put, people make decisions for two reasons:
1. To gain pleasure.
2. To avoid pain.
Be smart about feelings. The professional negotiator is always cool, calm, and collected. Even if everyone else is not. Paint stories that bring out the emotions in others—emotions that will result in them agreeing to the terms YOU bring up. Steve Jobs was really good at this.
Note: Negotiating isn’t an argument. It is a constructive conversation between parties striving to reach an agreement. Getting angry and frustrated are signs of weakness and unprofessionalism. Attacking the other party will only make them defensive and closed off to your argument. In addition, revealing your emotions will put the momentum on their side. They’ll end up using it against you.
3. Strive for Win-Win
“For me, relationships are very important. I can lose money, but I cannot lose a relationship. The test is, at the end of a conversation or a negotiation, both must smile.” —Sunil Mittal
Help people get what they want and you’ll get what you want.
The car salesman has a number to hit, and bills to pay. You want a good deal. Help him hit his number while getting yourself a killer deal on your car. Everyone wins and lives happily ever after.
“I’ve been your customer for a while now. You guys are helpful when I have questions, and I’ve never had any issues with your service. My monthly bill went up $20 recently. And I prefer not to cancel. What can you do to help me?”
The service rep kept a customer, and I lowered my bill back to the original contract.
Another undervalued skill is one’s ability to ask questions. Curiosity is one of the most important traits in people that know how to negotiate effectively. Let the others do all the talking. Let the others give you all the information. The more they talk, the less of a chance you have to fuck things up. Open-ended questions are the key to accomplishing this.
It is painful to ask hard questions, which is why no one does this—except negotiation ninjas.
• “Why is X important to you?”
• “Please clarify what you mean by. . . ”
• “How would you feel if. . . ?”
Being curious is a vital component to learning how to negotiate effectively. You have to be genuinely interested in people to get good at it.
Know what to say and how to say it. Command the English language, minimize stuttering unnecessary filler words like “uh, “um,” “like” and so on.
1. Take a moment to gather your thoughts before speaking.
2. Slow down!
You’re not Eminem. Give people a chance to digest what you’re saying. You’ll sound more confident when you speak in a slow and concise manner.
More Morgan Freeman and less Chris Tucker
Remove weak disclaimers from your vocabulary:
• “To be honest, . . . ”
• “I hate to ask, but. . . . ”
• “I’m sorry to say this, but. . . ”
• “Unfortunately. . .”
Be confident in your ask or statement.
Instead of saying, “I think. . .” Say, “I feel. . . ” People care about how you feel, and more importantly, how you make them feel.
The power of silence. Use pauses to emphasize points and questions.
If someone is undervaluing you or attempting to insult you with a half-ass deal then, give them your best response and shut up. It might be an extremely awkward moment but live with it in confidence. Don’t show them you’re freaking out on the inside. The power pause is your friend.
This is a great scene from the movie, Jobs. Jobs presents the opportunity then pauses for the other person to respond.
This is a sample response to a half-ass offer from a hiring manager—also learned from Ramit Sethi in his appearance on The Tim Ferriss Show.
“I am grateful and excited for this offer. I’m considered an investment for this company, and I realize it’s up to you to make a good investment in people here. For that reason, I have to ask for [X salary] based on the value I can bring, my overall experience, and the other offers I’ve received. I know I can provide a great return on your investment in me, which is why I believe I deserve a higher salary. What are you able to do to get me in the X range?”
Pause. Throw the ball in their court. Then make it rain.
Prepare, prepare, prepare. Preparation is the golden rule in learning how to negotiate effectively. Learn everything you can before the conversation. Know the other participant(s) and the topic of discussion. When you go into the sales call or salary negotiation, you’ll be ready for all the curveballs.
Be clear on what you want.
Know exactly what they want.
I’ve failed numerous times in the past because I wasn’t crystal clear on what I wanted.
Have a plan that achieves what you both want, and have alternatives on the fly in case Plan A doesn’t work.
8. Don’t Get Intimidated
Whether you have the upper hand or not, don’t let the other party push you around.
I used to be at a company that was the sole vendor of a major gaming company. Before the vendor agreement was enacted, the gaming company gave us lengthy and unnecessary legal documents to agree to. The legal terms were unfavorable to us. The gaming company knew it, we knew it, and our CEO was not having it. He knew they were using their big brand to push their terms. What amazed me was his willingness to walk away from a major deal. He was either arrogant, confident, or didn’t care. Either way, it worked.
The lesson I learned was to never let someone bully you—no matter how big and powerful they may perceive to be. When you are confident and can justify your value, you can walk away from a deal.
I used to get intimidated in business by the title of someone I was speaking to. It took a long time to realize these same people intimidating me have their own fears and insecurities. They might shield it in various ways—arrogance, timidness, or rudeness. You just have to peel back the layers.
Not all of us are making multi-million dollar deals over lunch. You don’t have to be an expert at this all the time. You have to be an expert at this when it matters most. When a situation occurs, these small pieces of advice will help you negotiate your way to what you want.
In the grand scheme of things, learning how to negotiate effectively is simple. You must understand people—what their fears, goals, and motivations are. Once you understand people, you’re halfway to getting the deal you want.
“A negotiator should observe everything. You must be part Sherlock Holmes, part Sigmund Freud.” – Victor Kiam
And always remember. . . never ever negotiate with terrorists.