Closing the Deal
It takes practice to know when a negotiation is coming to an end and what you need to do to seal the deal. After bargaining back and forth, you will reach a point where you know that you can present a package that will satisfy the needs of the other party. This is the time to conclude the deal. Here are some tips to raise your awareness of when you have reached this point and what you can do to bring the negotiation to a successful conclusion.
Don’t be in a rush to conclude. Your relative power position will shift if the other party perceives that you are too eager to conclude. Wait until all the demands are on the table and you have locked in the other party. You will know it is time to conclude when you have presented all of the information and you know that it is possible for the other party to make a decision. When you know the appropriate time has arrived, you must choose your method of closing the deal.
Summarize the demands of the other party. You can choose between giving the other party everything he demands, or you can test the boundaries by giving him some, but not all, of what he wants. Summarize and point out the risks involved in delaying things. If the other party trusts you, he will perceive the risks as genuine. This is where you show the strength of your bargaining position.
Submit new alternatives. If you can’t manage to lock in the other party, or if new demands emerge, you should continue negotiations. Try submitting new alternatives. Modify your offer or rearrange the concessions you have made. Structured differently, you package might look more attractive and the new concessions might be more valuable than the old ones.
If these methods fail, include a threat in your summary. The “Take It or Leave It” stance should be used only after you have tried to reach a conclusion by other means. It can be difficult to determine how to use this tactic in a convincing manner. You can use it only once in the course of a negotiation and be taken seriously. If you use this approach, the dynamic of the negotiation will change and from that moment forward will be governed by the power positioning of the parties. You should only use this tactic if you are ready to carry out the threat, walk away from the table, and break off negotiations if you are met with a “Leave It” response.
Wait for the other party to make a move. Another tactic is to allow the negotiation to become stymied and wait for the other party to make a move. If the other party has submitted an offer, your next move might be to tie him to it by demanding an option, i.e. you have the right, but not the obligation to take advantage of the offer. The other party is then under an obligation to stick by his offer for as long as the option remains open.
Once a conclusion has been reached, all that is needed to finalize the transaction is the formal signing of the agreement. Knowing when and how to execute the conclusion will enable you to successfully advance to the next phase of the negotiation.
Portions of this post are excerpted from Keld Jensen’s upcoming eBook Power Bargaining: Adding Value to Commercial Negotiations (Acanthus Publishing 2010) available soon.