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Avoid the BATNA-based negotiation mindset

Are you a "BATNA"-based negotiator?

If you try to figure out the Best Alternative To a Negotiated Agreement (BATNA), then you prepare to be average and leave a lot of money on the table.

How does that happen?

Very subtly because you feel comfortable during the process.

Here's what I have learned from the TNC World Negotiation Competition 2024.

Why a negotiation competition?

Because in real negotiations you never see the hand of the other side.

You are unaware of how much you leave on the table.

No reasonable and rational person would tell you after you get a deal: "If you asked, I'd give you more."

In a competition, you can debrief and see the other side's cards.

Here's the problem.

Let's say you are given a range in which you can make an agreement.

Your BATNA is $1.4M - the minimum you can sell your product.

But what you really want to get is $2M, but you don't know if they'll pay that much.

You'll subconsciously tell yourself: "As long as I make a deal above the low number, I'm making a bonus money!"

And from this moment you'll be reluctant to reject offers lower than what you desire - the high number.

You'll "meet in the middle," and you'll feel good about it.

It's a "win-win," right?

Not really!

When you compare the outcomes between you and the other side, you'll understand that making a deal was not enough.

In competition with experienced negotiators, if you "meet in the middle" or worse, you'll find yourself at the bottom of the list.

Cutting your top line is not a win-win.

It's a lose-win.

It robs you of your profits and also makes you lazy.

You won't be able to develop a stance of, "I want your business, but I don't need it."

It will keep your mindset in the realm of "I can solve all the problems with discounts."

That's what BATNA does to your business.

What's the difference between $1.4M and 2M?

It's $600,000!

Trading over half a million dollars for the possibility of a deal is an unreasonably high price.

What could your company do with this money?

A lot of things:

Upgrade equipment
Invest in new technology
Start a new product line
Retain top employees
Hire best people
Improve marketing
Increase sales commissions

All of it comes from the top line!

But if you compromise, you pay a high bonus to the buyer's procurement team instead of paying your people.

Here's a true story about an actual transaction in a real business.

A company was selling a piece of equipment.

The deal was $2 million.

The company account executives made an offer and got an email from the buyer:

"Your price is too high. It's a non-starter."

They got a "NO," and what do you think they started to do next?

They knew the competitor's price was $1.4M,

So they started looking into ways to cut the price to "meet in the middle."

Luckily, they consulted with a negotiation coach.

After a carefully crafted response, they found the real pain of the buyer.

It appeared that the competitor's quality didn't allow non-interrupted equipment work.

And each maintenance day costs the buyer tens of thousands of dollars in revenue.

The seller's response contained only 2 questions.

One interrogative and another verb-led:

1. If we're the most expensive, what keeps you talking to us?

2. Could you reject our offer?

The deal was closed at the originally proposed price.

The phrase "your price is too high" is not a decision.

It's just a preference or opinion.

So, don't react to opinions.

Ask for decisions.

If you cut your price, you'll lose your competitive edge.

Besides, it's practically impossible to discount your offer without hurting the value of your products.

It may create a doubt that your services are not the best.

So, you may want to revise your belief about "win-win."

It's difficult to define what that means for the other side.

Think of it as a trick that people use to draw concessions.

Be on alert when somebody says that.

What's real for you in any negotiation is:

1. Your right to ask for what you want - the desired price of your product or service.

2. Your opponent's right to say NO and ask for what they want.

Don't take away their right to say NO.

Ask them to use their right.

Let them say NO to you.

It's the only way to see where you stand.

When you hear NO, it's not the end of the negotiation but the start.

Key Takeaways:

Relying on BATNA can make you settle for less, leaving significant value on the table and hurting long-term profitability.
Don't react to opinions like "your price is too high." Instead, ask strategic questions to uncover the real motivations behind objections.
Avoid "win-win" traps. A "win-win" mindset often leads to unnecessary concessions. Focus on maintaining your value and encouraging the other side to say NO to your offer.

Want to see what to do when you hear a NO? Join my weekly office hours.

https://www.businessrelationshipscoach.com/practice

It's not a sales call but a Q&A session where I answer every question you ask about negotiation and influence.

No pitching, just paying forward.

- Vlad, your Business Relationships Coach