Avoiding Common Pitfalls in Negotiation, Ep #464

In this episode, I sit down with Chris Krause, a seasoned supply chain executive with more than 30 years of experience in procurement, change management, and organizational restructuring. We get under the skin of negotiation strategy and tactics—exploring everything from the difference between planning and action to the essential role of data, preparation, and goal alignment in high-stakes deals.

Chris shares his proven rule of thumb for negotiation preparation, his top tactics for gaining leverage, and invaluable advice on handling aggressive negotiation moves. He also tells an illuminating real-world story, highlighting the importance of transparency, open communication, and mutual respect—even when negotiations get tough. 

Outline of This Episode

• [03:23] Chris's top three negotiation tactics.
• [05:25] Focus on goal alignment before pitching to understand client needs.
• [07:31] Complex negotiations require goal alignment and multiple rounds to achieve the best outcome.
• [09:58] Win-win scenarios in negotiations ensure long-term relationships and prevent future conflict.
• [12:19] Keeping communications and dialogue open.

Distinguishing Strategy from Tactics

Understanding the foundation of successful negotiation begins with clarity on terms. Chris Krause highlights a crucial distinction: strategy is your overarching plan, crafted before the negotiation starts, while tactics are the actions employed during the negotiation itself.

Strategy is about setting your objectives, outlining concessions, and knowing your limits. It includes data gathering, goal setting, and scenario planning.

Tactics come into play at the negotiation table—your body language, the way you present your case, and how you respond to offers. Whether negotiating face-to-face, walking side by side, or even over casual conversation, tactics are the tools used to achieve the strategic goals you've set.

The Power of Data and Preparation

Before any high-stakes meeting, Chris's go-to strategy is to amass as much data as possible—not just about his own position, but about the other party as well. This includes:

• Market studies: Understanding where the product or service sits within the broader landscape.
• Internal cost/benefit analysis: Knowing your bottom line and what you can afford.
• Budget cycles (on both sides): Are you or your partner under financial pressure? Has there been a recent company shakeup or market shift?

Armed with this knowledge, negotiators move from a position of power, specifically, the power that comes from knowledge. Chris advocates a "five to one" rule: for each hour of negotiation, spend at least five hours preparing. This encompasses scenario planning, identifying must-haves vs. nice-to-haves, and determining both concessions and firm asks. In his words, "Planning, preparation, and positioning" are the three Ps of negotiation excellence.

Top Tactics to Gain Leverage

Chris shared his three favorite tactics for gaining leverage in challenging deals:

• Cost Analysis: Establish a baseline of what the product or service should cost, based on robust data.
• Competitive Market Analysis: Ensure you understand current market pricing so you can position your offer competitively.
• Partner Analysis: Dive into your counterpart's fiscal health—knowing if they are under pressure to close deals or expand markets can open the door for favorable terms.

He refers to this comprehensive approach as his "trifecta" for negotiation success.

The Secret Sauce in Complex Sales

One of the most valuable strategies in complex negotiations is what Chris calls "goal alignment." Rather than rushing into a pitch, engage first in an open conversation to establish what both sides need to achieve. Are they solving a quality issue? Chasing cost savings? Seeking a new technology?

Especially for salespeople, Chris warns against focusing solely on your own objectives. Self-centered pitches quickly turn off experienced negotiators. Instead, understanding and aligning with the buyer's business priorities sets the stage for trust and long-term partnership.

Countering Aggressive Tactics and Building Trust

High-stakes negotiations sometimes involve aggressive tactics—last-minute demands, take-it-or-leave-it offers, o