Leo Lu: Expert Article

THE ART OF NEGOTIATION AND PERSUASION

    At its core, the word 'negotiation' simply means the act of reaching an agreement where both sides feel that they have won. As a buyer and seller of high-end goods, I am constantly going back and forth with people, negotiating down to the last cent. It happens more often than you might think, even outside of financial transactions. Whether you're discussing a salary, haggling at a market, or deciding what to watch with family, negotiation is part of daily life.  The key to winning a negotiation is to focus on five key factors: understanding your worth, actively listening, emphasizing mutual benefits, using storytelling, and always negotiating more.

Understand Your Worth

To understand your worth, you need to know what value you hold in your product or your offering. If you are planning to sell a product, make sure you know roughly what the item is worth to ensure that you are not overcharging or selling yourself short. If you are buying a product, you need to know what the item is worth because you do not want to spend hard earned money for no reason. If the negotiations is simply persuading your brother what you want to eat, you need to understand and inform the other party why your opinion matters.

Understanding worth helps you leverage situations effectively. If you know the other party values something less than you do, you can negotiate better. Conversely, if they value it more, be prepared to walk away if it doesn’t serve you.

Actively Listening

Active listening is crucial in negotiations. Often, the other party reveals their needs and weaknesses before negotiations even start. For instance, if a seller mentions they’re unhappy with an item, it’s a clue that they might be willing to sell it for less. Pay attention to their words; it can save you money. They also might negotiate themselves down in some instances. For example, they might say, "I want $450, but my best is $400." By listening to everything that the other party has to say, you can automatically save yourself at least $50, if not more. 

Asking questions is an essential way to gaining more intel using active listening. According to the Harvard Business Review in the article titled The Most Effective Negotiation Tactic, According to AI, extensive AI research breaking down communications during negotiations revealed that open-ended questions prompted much more informative responses that were twice as long as asking non-question statements or closed-ended questions. The depth of asking open-ended questions and allowing the other party to speak gives you a better opportunity to understand the other's position, allowing you to create more effective proposals. 

According to the article written by the Program on Negotiation Staff by the Harvard Law School titled Solutions for Avoiding Intercultural Barriers at the Negotiation Table, "Listen carefully during talks. If you are unsatisfied with the answers you receive, reframe your question and try again." The best negotiators that I've met all excel at listening. This crucial skill helps you identify opportunities and better understand the other party's position. 

Emphasizing Mutual Benefits

In any negotiation, it’s important that both parties feel satisfied. As the Program on Negotiation Staff by the Harvard Law School writes in the article titled The Advantages of Bias at the Negotiation Table, "Korobkin and Guthrie suggest that when trying to reach a negotiated agreement, you should frame the negotiation in terms of potential gains for the other party, or even a win-win situation benefitting both parties." Stressing fairness is crucial to avoid making them feel cheated. Using phrasing like, "If my offer is too low, I understand," shows you’re not desperate or pleading for the deal and that you value their needs as well.

The Program on Negotiation Staff by the Harvard Law School also writes in the article titled Business Negotiation Skills: Fairness at the Negotiation Table, "in negotiations, you should strive to bring fairness considerations to the surface, so that everyone will understand one another's needs and wants." If someone must sell for less than they want, you should understand their side and see that it is difficult with them to part with their belongings and lose money on it. To ease this, you can show them comparisons to similar items or explain that your offer is in line with market rates with what you saw online. 

Making sure the other party is in agreement and happy with the deal is essential to a long-lasting relationship. 

Utilizing Storytelling

Negotiations is all about telling the other person what they want to hear. By utilizing storytelling, you are painting a picture for the other party to agree with you. Building rapport is one way to do this. By sharing relevant personal information about your relationship with the product, you can humanize the negotiation for them and build trust. A way to do this is by starting off the negotiation with, "I am selling this product because it's a little small on me" or "I want this product because it's a gift for my brother." Creating a sense of familiarity and openness with the other party can help them feel more emotionally involved in this deal, rather than simply talking dollars and cents. They can feel more inclined to give you a better deal or pay a bit more just to help you out. 

However, be cautious not to overdo it. Sharing too much personal information, like financial struggles being the reason you are selling your item, may come off as desperation. Balance is key in using stories to strengthen your case.

Always Negotiate More

If I had to give one tip for you to remember from this, it would be to ALWAYS negotiate more. You never want to abide to the seller's first price. As the buyer, you start the negotiation with the leverage. When breaking down the basic idea of a transaction, the seller can never sell the product unless a buyer (you) wants to pay the price. For that reason, understand that you have a bit of leverage when starting off the transaction.

You want to get the best price in every negotiation, and the seller is almost never going to give you their best price starting off. You need to know that offering less can be annoying to the seller, however you are simply looking to get the best price and offer in your best interest. If the seller is offended, go up on the offer or simply pass on the deal. 

This can also be utilized if you are the seller. Come into the deal knowing your worth, start a bit higher than your bottom price, and work your way down. Chances are, if your buyer is inexperienced, they might pay more than your bottom price and both of you walk away happy.

By applying these five strategies, you can improve your negotiation skills, whether in monetary matters or everyday situations. These tips aim to help you save money and achieve better outcomes. Use them in your next negotiation, and you might be surprised at the results!

Works Cited

Staff, PON. “Business Negotiation Skills: Fairness at the Negotiation Table.” PON, 2 Nov. 2020, www.pon.harvard.edu/daily/business-negotiations/what%E2%80%99s-fair-in-negotiation/.

   Staff, PON. “Solutions for Avoiding Intercultural Barriers at the Negotiation Table.” PON, 3 May 2024, www.pon.harvard.edu/daily/business-negotiations/solutions-for-avoiding-intercultural-barriers/.

Staff, PON. “The Advantages of Bias at the Negotiation Table.” PON, 21 Nov. 2022, www.pon.harvard.edu/daily/business-negotiations/using-bias-to-your-advantage/.

Stasi, Matteo Di, et al. “The Most Effective Negotiation Tactic, According to Ai.” Harvard Business Review, 17 Sept. 2024, hbr.org/2024/09/the-most-effective-negotiation-tactic-according-to-ai.