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Negotiating as if implementation matters is quite different from just “doing deals” for the sake of reaching agreements. It means doing some things that go against common wisdom. These things include the six steps below.
1. Recognize that the real purpose of the negotiation is not to sign a deal, but to accomplish something
Often this means working backwards from what it is you are hoping to accomplish, to determine what it is you really need your counterpart to help you do. Understanding what you and they need to do differently after the deal is signed will help inform how you should negotiate.
2. Make sure that stakeholders (yours and theirs) are aligned so that implementation can proceed smoothly
Typically, this requires consulting more, rather than less, broadly speaking. When implementation matters, you need to involve more stakeholders, on your side and theirs, than might be strictly necessary to reach agreement. Leaving the implementers out of the negotiation makes it more likely that they will be unwilling or unable to live up to commitments made on their behalf.
3. Recognize that the way you deal with each other during the negotiation will impact how you work together during implementation
Whether we like it or not, the negotiation is the first, best example we have of what it is like to work together. We can use that opportunity to create a useful history of collaboration and problem solving, or we can waste it by posturing, withholding information, springing surprises, coercing, and damaging trust.
4. Confront the hard issues instead of repressing or minimizing them to get the deal signed
It is easy to bury your head in the sand and avoid raising difficult topics during the negotiation. After all, you don’t want to give offense, and besides, those problems “might not happen.” But ignoring risk doesn’t make it less risky. Addressing it jointly, however, gives us more opportunities to prevent potential problems or to mitigate their impact.
5. Make sure your counterparts understand what they are agreeing to, and can actually deliver, rather than treating any ambiguity or potential difficulty in performing as “their problem”
Some negotiators measure success by the number of commitments they can extract from their counterparts. But commitments they can’t deliver on are hardly worth the paper they are written on. Relying on enforcing penalties in the contract later doesn’t get you a successful event when you need it.
6. Pay attention to the transition from the negotiating table to execution
The deal is not done when it’s signed. Use what you learned at the table to propel you and your team right to successful execution. A fast lap in a relay race is useless if you drop the baton instead of handing it off smoothly. If there needs to be hand-off to others who have to take what was negotiated and act on it, don’t leave it to chance. Make sure the hand-off happens, that both sides are involved, and that it covers not only the words but the intent of the agreement.
The best practices to follow are:
1. Information is power—so get it! Many sales professionals enter negotiations with arguments intended to persuade their customers of the value of their product or service. Unknowingly, they're giving up power from the first time they open their mouths. Negotiation power goes to those who listen and learn.
Crucial intelligence to obtain and retain includes your customers' fundamental needs and interests and strategies they have previously used. Consider the power of knowing your customer regularly walks out of negotiations … but comes back to the table 90 percent of the time.
2. Maximize your leverage. How much do you and your customer really need the deal? What are your and your customer's alternatives (or plan Bs) if you don't close? What can you do to strengthen your leverage? Finding the answers to all of these questions can be the key to success.
3. Employ "fair" objective criteria. The quest for fairness is a key element in many negotiations. And fairness often boils down to relatively objective and independent standards, such as market value, precedent, costs/profits or expert opinion. If both sides can agree on a fair standard, your deal likely will close.
4. Design an offer-concession strategy. To avoid leaving valuable items on the table gratuitously, design the right offer-concession strategy. You can't do this without understanding the patterns and psychological dynamics impacting concession behavior.
A crucial sales element here involves making sure your customer walks away feeling like they got a good deal. So don't just start at one price on big deals and refuse to move. Instead, start higher and provide a discount. You have to make them feel special.
5. Control the agenda. Effectively controlling the process is one of the most challenging elements in striking a great deal. Understanding when and how to use deadlines and the psychological tendencies underlying them will give you a leg up in your negotiations.
Do you feel that someone is continually taking advantage of you? Do you seem to have to fight your corner aggressively, or ally with others, to win the resources you need? Or do you struggle to get what you want from people whose help you need, but over whom you have little direct authority? If so, you may need to brush up your win-win negotiation skills.
Effective negotiation helps you to resolve situations where what you want conflicts with what someone else wants. The aim of win-win negotiation is to find a solution that is acceptable to both parties, and leaves both parties feeling that they've won, in some way, after the event.
There are different styles of negotiation, depending on circumstances.
Where you do not expect to deal with people ever again and you do not need their goodwill, then it may be appropriate to "play hardball", seeking to win a negotiation while the other person loses out. Many people go through this when they buy or sell a house – this is why house-buying can be such a confrontational and unpleasant experience.
Similarly, where there is a great deal at stake in a negotiation, then it may be appropriate to prepare in detail and legitimate "gamesmanship" to gain advantage. Anyone who has been involved with large sales negotiations will be familiar with this.
Neither of these approaches is usually much good for resolving disputes with people with whom you have an ongoing relationship: If one person plays hardball, then this disadvantages the other person – this may, quite fairly, lead to reprisal later. Similarly, using tricks and manipulation during a negotiation can undermine trust and damage teamwork. While a manipulative person may not get caught out if negotiation is infrequent, this is not the case when people work together routinely. Here, honesty and openness are almost always the best policies.
Preparing for a Successful NegotiationDepending on the scale of the disagreement, some preparation may be appropriate for conducting a successful negotiation.
For small disagreements, excessive preparation can be counter-productive because it takes time that is better used elsewhere. It can also be seen as manipulative because, just as it strengthens your position, it can weaken the other person's.
However, if you need to resolve a major disagreement, then make sure you prepare thoroughly. Using our free worksheet, think through the following points before you start negotiating:
For a negotiation to be 'win-win', both parties should feel positive about the negotiation once it's over. This helps people keep good working relationships afterwards. This governs the style of the negotiation – histrionics and displays of emotion are clearly inappropriate because they undermine the rational basis of the negotiation and because they bring a manipulative aspect to them.
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Despite this, emotion can be an important subject of discussion because people's emotional needs must fairly be met. If emotion is not discussed where it needs to be, then the agreement reached can be unsatisfactory and temporary. Be as detached as possible when discussing your own emotions – perhaps discuss them as if they belong to someone else.
Negotiating SuccessfullyThe negotiation itself is a careful exploration of your position and the other person's position, with the goal of finding a mutually acceptable compromise that gives you both as much of what you want as possible. People's positions are rarely as fundamentally opposed as they may initially appear – the other person may have very different goals from the ones you expect!
In an ideal situation, you will find that the other person wants what you are prepared to trade, and that you are prepared to give what the other person wants.
If this is not the case and one person must give way, then it is fair for this person to try to negotiate some form of compensation for doing so – the scale of this compensation will often depend on the many of the factors we discussed above. Ultimately, both sides should feel comfortable with the final solution if the agreement is to be considered win-win.
Only consider win-lose negotiation if you don't need to have an ongoing relationship with the other party as, having lost, they are unlikely to want to work with you again. Equally, you should expect that if they need to fulfill some part of a deal in which you have "won," they may be uncooperative and legalistic about the way they do this.
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THE SIX NEGOTIATING TIPS
With those points in mind, let's take a look at six tips for improving your negotiating skills.
1 Understand the other party's needs and objectives. Because you are trying to find a solution acceptable to both parties, you need to understand the other person's needs and objectives. How can you ever meet a patient's expectations if you never knew what they were from the start? How many times did you think that you did a great job with great results only to find that the patient comes back unhappy?
After further questioning, you learn that the procedure you performed did not address what the patient really wanted corrected and that he or she was more concerned about something else. How could you have misunderstood what the patient's expectations were?
On completion of the consultation and negotiation process, a summary of the event must take place and be put in writing to avoid any misunderstanding on anyone's part. After all, you treat hundreds of patients each week, and you can't remember what you said to every patient. Concentrate on the patient's needs and expectations before, not after.
Vendors must understand your needs and objectives. You need supplies, equipment, and services to operate your business, and to maintain profitability, you need to keep your costs in line. Your needs include the daily supplies you use for patients, capital equipment to perform procedures, and services in your office (housekeeping, maintenance contracts, biomedical, and rent). Don't be afraid to negotiate for all of these things. Remember, excessive costs significantly reduce profitability.
Pricing is not the same for every practice. Differences may be due to factors such as vendor selection, demographics, quantity purchases, special deals and promotions, cash versus credit card payment, financing terms, and delivery and fuel surcharges. Many of these factors can be negotiated and absorbed by the vendor, because most vendors work off of a commission. Don't be afraid to ask for what you want. The worst that a vendor can say is no. More vendors need you than you need them.
Also understand patients' and vendors' perspectives on how the negotiation process is progressing. You may be totally unaware of the fears and or concerns of the other party. On the patient's side, the concerns might be pain or finances. You possibly could solve both issues at the same time if you know what they are ahead of time, and knowing takes due diligence and planning, which I will touch on later.
You are able to address pain issues with various levels of medication, and on the financial side, you may be able to offer various levels of discounts or financing.
Similarly, vendors must be able to meet your expectations. You also have fears and objections. Your fears may consist of cost, revenue generation, and maintenance. A vendor may be able to assist with some very aggressive or even free financing, additional maintenance at discounted or no extra cost, and extensive marketing to help you generate enough revenue to afford the product(s).
2 Don't be afraid to ask questions or to insist on answers. Once the negotiation process is over, it's too late to ask for what you may have been able to negotiate before the sale. Your patients have no trouble letting you know that they can't afford certain procedures and that they want a better deal, so why can't you? Remember, the worst that anyone can say is no.
What should you ask for? A few common items that can be negotiated before each and every sale or purchase:
Don't rely solely on the salesperson's word. How many times have you listened to the salesperson only to find out that the efficacy of the product or machine was not as he or she had promised you? Do your due diligence and ask other physicians and providers about their experiences with the product or services about which you are negotiating.
Once you make the purchase, it is extremely difficult to go back and ask for concessions. The best concessions are made at the beginning of the transaction, not after the purchase.
3 Prepare/compare. Preparation, also known as due diligence, requires a lot of energy and commitment. To paraphrase an old cliche, the three most important things about a negotiation are preparation, preparation, and preparation.
Proper preparation certainly allows you to understand whether the process is worth pursuing. You might find out that you need to conclude the process quickly because of rights of exclusivity, demographics, upgraded versions, or discontinued models.
Today's patients and vendors are more educated than ever before due to the availability of information from the Web. You can obtain many varying opinions (positive and negative) by conducting online research, but at least you have the information and can make your own decisions based on it.
Chances are, the patient already knows something about the treatment he or she is inquiring about, so having an ill-trained staff makes an inquiring patient uneasy. Those in your practice should be the experts about treatment options. Proper training is a major factor in a solid negotiation; those in your practice can seem like the experts they are when you all say the same thing to a patient.
When dealing with a vendor, having information in advance helps you sort out the unnecessary dialogue that usually takes place. Did the vendor prepare dialogue for you, or is he or she just repeating what every other physician is told? Your office is unique, and, therefore, demands individualized attention.
If the vendor doesn't understand your business and fails to meet your expectations in the preliminary sales process, then you certainly have an advantage going forward. Remember, the vendor needs you more than you need the vendor. This holds true because so many brands of supplies and equipment exist to satisfy your needs.
You aren't foolish enough to think that your patients haven't been to other physicians' offices or don't know your competitors' pricing. Knowing more information about your competition allows you to negotiate better. Similarly, knowing more about supplies and equipment makes you much more powerful in negotiating with vendors. It also puts the vendors in a different mind frame because they may believe that they have to be more aggressive to solidify a deal.
4 Understand authority levels and limitations. Have you ever discussed a myriad of options during a consult for an elective procedure and thought that you had explained something sufficiently for a decision to be made? At the end of your consultation, you ask for a decision only to learn that the patient has to check with another party (husband/wife/mother/sister, etc.). Why didn't you know this up front? Did you ask before the conclusion of the consult? Did you even ask when the patient was considering having the procedure performed or how many previous consults he or she has had? It helps you to know where you stand if you know the level of authority of the person with whom you are negotiating has in the process.
When you are negotiating with vendors, this is a must. You don't have extra time to spend in your office when you need to be treating patients. Salespeople are only given a certain level of authority for discounting, financing, additional offerings, etc., and if you find this out early in the process, you can eliminate a lot of wasted time by "cutting to the chase" and insisting on speaking with someone who may have the ultimate authority to negotiate to your satisfaction.
As noted previously, salespeople often are paid by commission and/or bonuses on the gross sales that they create, and anything taken from that top line severely affects their compensation. On the other hand, only a certain level of negotiations may be allowed at the highest level, so understand the limitations there as well.
According to Chester Karrass, PhD, an author and negotiations expert, it doesn't matter whether the other side understands your position as long as he or she has agreed with it. When negotiating with someone without authority, be sure that person not only agrees with your position but also understands the rationale behind it well enough to convince someone else of its merits.
It also is critical to know your bottom line before entering into negotiations, Karrass says. That way, you'll know when it's time to stop. I've seen lots of people continue negotiating beyond what they needed to do, and as a result, end up with nothing. Knowing your bottom line also prevents you from agreeing to something that is unacceptable.
Establish a fall-back plan. Know your best alternative if you face an unsuccessful negotiation. Without a fall-back position, you are left with no alternative but to negotiate until a deal is reached, even if that agreement is unacceptable.
5 Insist on putting everything in writing. The worst thing that can happen is that the deal changes after you've arrived at a verbal agreement. A negotiator may make promises that he or she can't carry out. You never know whether these issues will come up until it happens, and then it's too late. These types of issues can permanently destroy future relationships with a salesperson personally and also with the company he or she represents.
Let's see how such a situation might play out in your practice. Have you ever quoted a price to a patient for a specific elective procedure and the patient relates a totally different scenario or treatment plan than the one that you reviewed? The treatment and the fee associated with it isn't even close to the one that you quoted. Putting the quote in writing, with a copy to the patient and a copy in the patient's chart, would minimize the chances for ill feelings among the parties involved.
The confusion isn't necessarily any one person's fault. Remember the old saying, "What I said is not what you heard?" The identical words were spoken and heard by everyone, yet the interpretation may not have been identical.
The movie studio owner Samuel Goldwyn once said, "An oral agreement isn't worth the paper it's written on." When parties fail to live up to an agreement, written proof of the negotiators' intent is critical. First, it enables you to avoid "he said, she said" bickering and helps those in charge of resolving the dispute know what was intended. Written agreements also are helpful if the original negotiators change jobs or aren't around anymore. In addition, getting written proposals from competitive vendors plays an extremely important part in the negotiating process. You always can use another proposal to your advantage if more than one vendor offers the identical product or service for a significant difference in price. This is called "keeping the other person honest."
6 Don't be afraid to walk away from the deal. When a patient is unwilling to accept the best deal that you can offer for an elective procedure, you have to consider walking away from the negotiation. The patient may have unrealistic expectations about the level of service that you can provide.
Of course, you must meet any obligation you have to provide care, but beyond that obligation you are entitled to make a profit for the fruits of your labor, and the patient may be too difficult to manage for the minimal profit that you would be able to receive. Don't allow yourself to become bitter about accepting a deal that was not to your satisfaction. Remember, it's OK to walk away and spend your energy elsewhere.
This thinking works the same way when it comes time to negotiate on supplies, services, and equipment. Remember that you have a business to run and must be able to maintain certain margins by recouping your return on investment. If the deal is not beneficial to you, or if you believe the vendor does not have your best interest at heart, it's OK to walk away.
Every negotiation is different. The key is to let your conscience, and your gut, be your guides. You usually are right when you listen to yourself. At the same time, don't be afraid to seek the advice of others in your industry who may have previous experience with certain vendors and patients.
Also, it is perfectly within your rights to seek the advice of a consultant who can negotiate the best deal for you. Let the consultant know what steps you already have taken and where you stand in the existing process. He or she will be able to eliminate some of the confusion and move in the right direction a little quicker.
Negotiation too often is becoming a world of "us against them," but it can be a rewarding experience when all parties leave the table feeling as if they have won. That's the ultimate, and successful, negotiation.
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