One can sense an air of uncertainty in the world financial markets wherever you go - for the first time - regardless of where you find yourself in the world.

Warren Buffet said that it is only when the tide goes out that one can see who is naked. In other words, it is easy to be thriving when the markets are booming; it is only in tough times that we can easily distinguish quality & commitment.

How can you use your negotiation skills, negotiation training or purchasing training to sidestep losses in the current economic situation?

Use 'Loss Framing'

We are more interested by avoiding loss than by achieving the very same gain. Kahneman & Tversky's Prospect Theory work describes how people will become risk seeking when trying to avoid a loss whilst they are more likely to be risk averse when seeking benefits. In the way that we negotiate, we can make the other side aware of the unique items that they stand to lose if they don't agree to our requests and otherwise gain if they do.

Create Alternatives

In times of difficulty it is vital to create alternatives so as to support our negotiation position. The ability to create options is vital in the context of negotiation and the strength of alternatives to securing a transaction is the key driver of our negotiation power.

We normally wait until we realise that we are not going to be able to do a transaction before we begin to think about other options. We risk entering into a less than ideal deal and if we have not explored all the options. Similarly, thinking about the alternatives available to the other side in the negotiation will give you a clear view of their relative position of strength in the negotiation. If they have strong alternatives available then they will be more aggressive and if they don't, they will tend to be more agreeable.

Use Reciprocation

Reciprocation is a key principle of powerful persuasion skills, because we are most likely to return to others the sort of behaviour that they exhibit towards us. In times of difficulty it is key that we perform in the interests of our counterparties if we would like them to act in our best interests. Use this principle to your advantage by acting first and using the principle of reciprocation. One note of caution and ensure that you record the obligation with your counterparty.

Move from price to value

Remove the focus off price and concentrate on the Total Cost of Ownership. For any service, product or solution that we buy or sell, there is always a trade off between value & price. If we only engage on the price, the best that we will do is to haggle and it is only when we study the entire lifecycle of the service, product or solution that we buy or sell, that we begin to uncover opportunities for negotiation. Before you state price in negotiation, examine your counterparty's long term strategic fit, capabilities, switching costs should they wish to change a business partner, financial steadiness and potential risks or negative consequences that may occur when the other side doesn't manage to reach agreement with you.

Don't forget that the magic in negotiation is found in the quality of your planning. In times of economic uncertainty it is key to commit enough time to planning your negotiations.