Negotiation expert Joe Hernandez shares his top three negotiation strategies
For Joe Hernandez, making deals is less of an art and more of a science. “And if it’s a science,” he said, “it would stand to reason that there should be processes, tools and strategies that you can use over and over again to help you consistently get the best outcomes possible—and even make predictions about where you’re going to end up.”
As CEO of Lionshare Negotiations, Hernandez has been helping companies make better deals for nearly a decade. Through his work and research, he and his colleagues have identified three negotiation strategies to help companies, and individuals, get the results they want. “These three [strategies] are not well known,” Hernandez said, “[but] they’re incredibly powerful and effective.”
(1) Make the first offer. “I know that sounds counterintuitive,” Hernandez said, “but it allows you to anchor the negotiation and drive the outcome in your favor.” To explain his point, Hernandez highlighted an experiment where participants were told to write the last two digits of their social security number on the same piece of paper as their bid for an auction item. The results? The people with higher social security numbers made bids that were 300% higher. “And there’s experiment after experiment,” Hernandez said, “that shows how incredibly susceptible humans are to being anchored on a number they see and hear, so make the first offer and drive the outcome in your favor.”
(2) Have a concession strategy. Concessions—things that are granted in response to demands—are not often considered by novice negotiators. We don’t want to make concessions but this can be a big mistake. “The other party is going to ask you to make concessions so you need to be ready,” Hernandez said. The four key elements to a strong concession strategy are:
Give yourself room to make concessions. “If you don’t give them a concession,” Hernandez said, “they will not be satisfied with the outcome. They’ll feel like they haven’t extracted the value from you that they needed during the negotiation.”
Know your concessions ahead of time and put a value on them. This way you’re prepared when they ask you to make one. “And when you make the concession,” Hernandez said, “you know just how you’ve impacted the financials of the deal.”
When you make concessions, make them in small increments. This signals to the other party that you’re ready to negotiate, that you’re flexible, but that you don’t have a lot of wiggle room. Small, incremental concessions allow the other party to feel more satisfied in the end because they’ve had a series of small wins throughout the negotiation. “Alternatively,” Hernandez said, “if you give them some big concession during the negotiation, it tends to feel arbitrary, disingenuous, and they start to question: did you really overinflate your initial offer so much that you’re now gaming me?”
Always get something in return. Hernandez argues that this is one of the most powerful elements of the concession strategy. “It is so simple and easy and this can make a material impact on your deal right away,” he said. “Remember, when somebody’s asking you to make a concession, you’re giving up something of true financial value, so it’s only good business that you get something of true financial value in exchange.” He added that the best time to ask someone for something is right after you’ve given them something. “It’s called reciprocity,” he said.
(3) Present multiple offers. As humans, we like to have choices—not too many—but some. We don’t want to feel trapped or coerced into doing something, we want options, and the same is true for negotiations. “When you bring just one offer,” Hernandez said. “it gives the other party no choice, they feel stuck with your offer and if it’s not what they want, they’re going to fight back and this is going to cause some unnecessary conflict during the negotiation.” If you want to drive a collaborative negotiation from the get-go, you need to provide 2-3 offers that are equivalent in value to you. This allows you to be indifferent to whatever one the other party picks, and it also gives you clues about what’s more important to them. Additionally, Hernandez suggests you show the offers all at once so that the other party gets a sense of options and choice. Then, when the other party starts to lean toward one of the offers, you start to see what’s most important to them. “When you understand this,” Hernandez said, “you understand their agenda and can speed up the entire negotiation. This is called multiple-equivalent simultaneous offers and it’s one of the most powerful tools to use out in the field.”
Joe Hernandez is a Daniels Executive Education faculty member and graduate of the University of California-San Diego. He has an MBA from the Anderson School of Management at the University of New Mexico and is the CEO of Lionshare Negotiations. To learn more, view his webinar on negotiation strategies from the Executive Education Accelerate Webinar Series.