BATNA negotiation technique: what are we talking about?
Business opportunities take time to be completed and often negotiation is required before closing the sale. The catch is that your trading performance depends on your ability to close the sale .
If you didn't prepare well for the negotiation, you could make some bad decisions. You will focus on the desire to conclude without thinking about the negative consequences of a risky negotiation.
The Batna technique is there to help you manage a reasoned negotiation to achieve your goals.
BATNA, “ Best Alternative to a Negociated Agreement ” in English, is a technique which aims to anticipate a negotiation in order to better control it.
BATNA is therefore, as its name suggests, your best fallback solution during a negotiation. Let's say you don't agree with your prospect on your offer during a business negotiation. You are therefore in an unfavorable situation. Your MEASURE is your back-up plan , your escape route, the compromise you agree to make to close the sale.
The questions BATNA forces you to answer upstream of the negotiation are: How far are you ready to go in this negotiation? What would be an acceptable solution if the initial proposal failed?
The solution that you will be able to imagine beforehand must allow you to start off as a winner in the negotiations. You must always do this search for BATNA because we are human and in the event of non-preparation the negotiation process can take a very unfavorable turn without our realizing it. When it comes to negotiation, spontaneity is not your ally, remember that.
BATNA: Origin and objective
We owe the concept of BATNA to Roger Fisher and William Ury . Both worked on the theoretical and practical sharing around the principles of negotiation situation within the Harvard Negotiation Project .
Getting to YES , translated into French in 1982 by How to Success a Negotiation, is the work in which the concept of BATNA is formalized.
In this book, the authors also give all the basic principles of negotiation (obstacles, preliminary preparation phase, etc.).
To talk about the objectives of the BATNA method , Roger Fisher and William Ury recall that:
If we negotiate, it is to obtain a result superior to what one could expect without negotiation.
The BATNA technique aims to guarantee your ability to achieve this result. Identifying your MEASURE well allows you to protect yourself during a negotiation and to have an objective view of the situation. Thanks to it you will not accept a flawed agreement and you will withdraw at the right time from the negotiation. Likewise, if you don't know your BATNA, you can also refuse an offer even though it is more interesting than your fallback solution. It would be a shame…
According to the authors, Fisher and Ury, “Developing your MEASUREMENT not only lets you know what the acceptable minimum is but also probably pushes that minimum up . "
You worked long weeks on a commercial offer . The project is important for your business and for your client. You are at the end of your sales process and during your discussion with the prospect he wants to negotiate.
The catch is that this exchange is always emotionally charged, as a salesperson you want to sell at all costs. Having formalized your fallback solution upstream allows you to keep a cool head and gives you stronger negotiating power, in particular because it allows you to present the alternative in its best light.
You offered complete account-based marketing support from strategy to implementation (training, tool, monitoring, etc.). The investment for your client is several tens of thousands of euros and your offer is perfectly calibrated to meet its challenge: Increase its conversion rate. At the end of the sales process, you call your prospect who hesitates and begins to tell you that the support is interesting but that the price is very high.
ATTENTION THIS IS THE MOMENT OF ALL DANGERS
The wrong way to go would be to react without preparation and to offer a price reduction (Aie aie aie…) or a degradation of the service. We are talking about a complex sale with a high-level tailor-made service.
- If you decrease the price without consideration, you lose margin and degrade real and perceived value.
- If you remove aspects of your offer so that the price is also lower, you demonstrate that your offer included optional or unnecessary aspects.
A good preparation would have probably enabled you to end up with a much more interesting BATNA.
- Your prospect is actually worried about the cash load this purchase represents. Usually you charge 50% as a deposit then 50% when the tool is deployed for example.
- Your MEASURE could be to say, “Ok I understand and this is what I propose to you, we will support you and produce all of the support within the stipulated deadlines but you will only pay for each step when they are executed. ”
The prospect has the desired support, within the desired timeframe. You have, in fine, the turnover and the expected margin. The compromise was made on the terms of payment.
Sometimes the situation is more complex, everything will depend on the quality of your sales process and the adequacy between your solution and the real needs of the customer. Keep in mind that you have to anticipate in order to reign better!
How to develop your BATNA?
Questions to ask yourself to determine your MEASURE
Concretely, how do you go to a client meeting with the right cards in hand?
Roger Fisher and William Ury propose a four-step methodology to define your MEASURE:
- Step 1: List all the possible alternatives in the event of a tense negotiation situation. What would happen without any agreement? (examples: you lose your main customer, you don't have a European supplier, you will have to find a new one ...)
- Step 2: Evaluate All These Alternatives : Review each of these alternatives and measure the cost to you. Are you aware of your client's objections to each of these alternatives? What could you say to him? Do you know your client's other options?
- Step 3: define the MEASURE . Of all the possibilities raised, which one do you think is the most interesting? If ever a negotiation goes badly, this is the path you will have to follow. You will lead the end of the negotiation by pursuing this goal.
Determine your "reservation value"
When you have your MEASURE in mind, you must calculate your "reservation value", ie the maximum threshold that you are ready to accept.
So, if the customer's offer to you is less than that, you should decline the offer.
Unlike your MEASURE, the “reservation value” is encrypted data. This may correspond to your minimum breakeven point when you sell a product, for example.
Warning ! Establishing your "reservation value" does not mean that you will necessarily negotiate the price. Remember that this is rarely the root of the problem and it is not your only bargaining chip.
Know your prospect's BATNA well
You will understand, in order not to come to the use of your BATNA, it can also be interesting to know the BATNA of your prospect.
Getting to know this allows you to identify your " Zone of Possible Agreement " (ZOPA) or zone of possible agreement in French. This is the right compromise for the seller AND the buyer. It is the cross between your two “reservation value”. So, from that, prepare a relevant offer and be inflexible not to cross your BATNA.
If you have been able to establish a climate of trust throughout the sales process, it is much easier to position yourself . You and your prospect will be able to communicate transparently.
To do this, ask yourself:
- Can you identify your prospect's economic brakes? Are you aware of the company's annual public reports?
- Do you have someone of weight in the business who can educate you like a prescriber? (see on this subject: MEDDIC, the 6 keys to successful complex sales )
- Have you identified other references in your prospect's field that could help you tailor the best possible deal?
- Do you know if your proposal is subject to competitive bidding?
- What solutions were used by your prospect in the past? What were their weak points?
- How could your prospect make you fold? What arguments will he mobilize during the negotiation phase?
To conclude, remember that negotiating is above all knowing how to listen in order to better understand the origin of the disagreement. The best negotiators know how to make concessions and offer win-win solutions. Finally, in negotiation, you must also be ready to lose in order to win, do not try to sell at all costs and know how to stop in time.