The Art of Making Concessions
We should be trying to create a win/win outcome in every negotiation in order to insure a strong and lasting business relationship. While concessions are an essential element in any negotiation, they can be a threat to maintaining your credibility. The following suggestions will help you improve your results when concessions are necessary.
- Make a list of value items.
Prior to the negotiation, identify and list the important items/issues for the other party but which have little value to you. Likewise, make a list of items/services that you want in return (these may be both valuable or small concessions for the other party). Use these items when concessions are brought up. Be prepared!
- Never respond immediately to a request for a concession.
Take your time. A pause will add uncertainty to the other party, it will add value to the concession if you do make it and you will have more time to think about a comparable concession to request. All of this raises your credibility.
- Never make a concession without asking for one in return.
As previously mentioned, making unilateral concessions is a big mistake. It sends the wrong message and you lose an opportunity to improve your position. Always ask for something of equal or greater value in return. If you are asked for a concession, you can simply respond, “The only way I could do that is if you could do something for me. I’d need you to ____________. How do you feel about that?”
- Beware of “insignificant” concessions.
Small, “insignificant” concessions can add if up if the other party constantly asks for more. Always read their entire proposal before agreeing to a “small” concession. This gives you more power/credibility and provides chances to ask for more concessions from their side. If this becomes an issue, call them on it: “In addition to that, are there other items that you’re interested in?” This forces the other party to reveal all of their wishes at once so that they don’tcontinue to peck away at you with more requests.
- Try to design a system for making concessions.
When necessary, such as negotiating with someone who wants to play hardball, set the tone and the ground rules up front so there is no miscommunication. An easy approach would be to say, “You give me a concession, and I’ll give you one.” This is an honored technique that’s been used cross-culturally for thousands of years and can be used today with anyone in almost any negotiation.
- Never say never.
By saying “no” or “we can’t do that,” you limit your own options. Instead, consider saying to the other party, “Hmmm…that may be difficult for us. Can you think of any possible alternatives you may want to consider?” or, “It’s a possibility if you can do ________ for us.” To use this approach effectively, you must know your list of value items well.
- Don’t ask for unreasonable concessions.
You want to reach a final agreement by finding mutually agreeable items for both sides. Therefore, don’t ask for concessions you don’t believe you will get. Also, be prudent with any offer because the other party may accept it.
- Know your business’ needs and bottom line.
Never give something away or work for a concession if it doesn’t make sense for your business.
- The “value” of price.
Price is seldom the real issue. The conviction that a person has that he is receiving overall value in the deal is usually the true issue. Consequently, a good deal results from the belief that the person is receiving a good deal.
- Make sure the other party walks away feeling like a winner.
If the other negotiator can go back to their company and say, “This is what I won for us from the deal,” he will feel like he succeeded. Successful negotiators with a win/win philosophy can make this look easy.