One can sense a great deal of uncertainty in the world financial markets wherever you go - for the first time - regardless of where you find yourself in the world.

Warren Buffet said that it is only when the tide goes out that you can see who is wearing no swimsuit. In other words, it is easy to be successful when the economy is booming; it is only in tough times that we can clearly discern quality & commitment.

How can you use your negotiation skills, negotiation training or purchasing training to avoid losses in the current economic situation?

Use 'Loss Framing'

We are more interested by evading loss than by achieving the very same gain. Kahneman & Tversky's Prospect Theory work describes how individuals will become risk seeking in an attempt to avoid a loss whilst they are more likely to be risk averse when seeking rewards. In the way that we negotiate, we can make the other side aware of the unique items that they stand to lose if they don't agree to our requests and otherwise gain if they do.

Create Alternatives

In times of difficulty it is very important to look at other options so as to support our negotiation position. Creating options are important in the context of negotiation and the strength of alternatives to securing a transaction is the key driver of our negotiation power.

Usually we wait until we recognise that we are not going to be able to do a transaction before we start thinking about alternatives. We risk entering into unfavourable transaction and if we have not investigated all the options. Similarly, thinking about the options available to your counterparty in the negotiation will give you a clear view of their relative position of strength in the negotiation. If they have good alternatives available then they will be more aggressive and if they don't, they will tend to be more accommodating.

Use Reciprocation

Reciprocation is one of the key principles of powerful influencing skills, because we are most likely to return to others the sort of behaviour that they demonstrate towards us. In times of difficulty it is key that we act in the interests of the other side if we would like them to act in ours. You can use this principle to your advantage by acting first and using the principle of reciprocation. Be careful and ensure that you register the obligation with the other side.

Move from price to value

It is important to take the focus off price and home in on the Total Cost of Ownership. For any service, product or solution that we buy or sell, there is always a trade off between value & price. If we only engage on the price, the best that we will do is to haggle and it is only once we start to investigate the entire lifecycle of the service, product or solution that we buy or sell, that we begin to discover opportunities for negotiation. Before you even state price in negotiation, evaluate your counterparty's long term strategic fit, expertise, switching costs should they wish to change a business partner, financial stability and potential risks or negative consequences that may occur when your counterparty doesn't manage to reach agreement with you.

Remember that the magic in negotiation is found in the quality of your planning. In times of economic uncertainty it is key to dedicate enough time to planning your negotiations.

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