Negotiation can be a tough process, and it is not likely that partners will easily give in to making concessions that they are not willing to make.
The negotiation technique referred here is the 'salami technique' which means that you should not expect to receive the whole salami at once; it is easier to get it slice by slice. Therefore, when you are not satisfied with the offer your partner makes, try to minimize the extent of time regarding this offer.
For instance, let's suppose that you are the manager of a niche products company, agricultural machines. Your provider is the only one that imports these parts that you need (at least for the moment he is the only one) and you don't really have another choice.
He offers a 10% discount if the payment is made within 30 days, yet you want a better offer, as you have been his important client for more than 2 years.
Therefore, asking 30% discount might determine a 'back off' reaction, and the impression that you want the whole salami now. Yet, you can negotiate slice by slice. Don't make the contract for a whole year, cut it in shorter periods, and renegotiate every time.
A contract for a year might have brought another 5% off, but let's say if you started with 13% (the initial 10% plus other 3% negotiated) and gradually increasing every 2 months, in a years time, this brings more than the initial 15% offered.
Yes of course, it requires more time, but the difference is notable. Because even if you only get 1% more every two months, the chances are that you'll buy for less the second half of the year. For instance, in 2 months time you can renegotiate an extra 2 or 3 percent and by the end of the year you might end up with an extra 10% off.
Psychologists demonstrated that the normal reaction when someone asks for what seems to be 'too much' all of a sudden, is that of blockage and back off.
That's why in business and negotiation, you need to be aware of the other's interests too, in an attempt to create a win-win situation. Especially for long-term relationships, you can't afford losing a partner by scaring him off with a request that is not realistic or profitable from his point of view.
This technique is also adopted with partners who don't know each other. In such conditions, a lower trust level is normal, and it has to be built step by step. Building a relationship takes time and because of this, the negotiation process might be slower. However, the salami slice technique has the following advantages:
- Reveals more about the personality of the partner and about the intensity of his expectations
- Listening carefully might reveal the weak points of the other's power structure
- People can honorably step back if the case during difficult situations
Therefore, the slice by slice method is an efficient one and its advantages are shown especially in long-term business relationships. It is very important that you see the other's perspective too.
For instance, as in the example given earlier, you should be realistic enough to see that for a concession from your partner, you have to come with a concession of your own. So when you ask for an extra 3% off, you should be prepared to also say that you'll purchase more, for instance, 5% more than the last order.
It is crucial to keep a sense of balance, trust, and win-win negotiation, especially when you talk about long-term contracts. Even if you might eventually press your partner―as in the case described earlier―which had no other choice but this supplier―keep in mind that it is still a matter of time!
You never know when a better offer might come along and if you don't have a satisfied partner, the chances are that you won't have him for long.
Reputation does count! Think about yourself, would you do business with someone that is known for his rapacity? You should be aware that you might just be the next 'victim'. Therefore, keep an honest balance, offer something in return and why not, take the salami!