Every job in the insurance industry requires good negotiation skills. It remains a mystery to me that few in the insurance industry are formally trained in the art and nuances of negotiations. Each job has its unique nuances and language. There should be a specific training program for the sales staff, the underwriters, the safety professionals, the clams examiners the attorneys and the medical professionals.
Here are a few negotiations concepts to consider when sitting across the table from someone.
The three “Pillars” of negotiations
- Time
- Information
- Power
The four “Levers” of negotiations
- Cost
- lead time
- quality of service
- The basic demands for the product being procured
Negotiation levers can include all of the various facets of a contract. The four “C’s” of negotiations
- Common interest
- Conflicting interest
- Compromise
- Conditions
The “Core Concerns” of negotiations
- Appreciation
- Affiliation
- Autonomy
- Status
- Role
These core concerns have two uses:
- As a lens—to help diagnose a situation
- As a lever—to improve a situation
The “Stages” of negotiations
- Planning
- Negotiation
- Close
- Implement agreement
- Sustain
The “Technique” / “Styles” of negotiations
- Accommodating (I lose-you win). …
- Avoiding (I lose-you lose). …
- Collaborating (I win-you win). …
- Competing (I win-you lose). …
- Compromising (I lose/win some-you lose/win some). …
A successful negotiation often consists of one or more of these different negotiation styles. More than one can be used in any scenario.
What to do when negotiating
- Do your homework.
- Before starting negotiations, always do your research on the company and on the person who will be negotiating with you.
- Determine if the negotiations are with a “partner” a “customer” or an “opponent.”
- Determine the financial incentives of the person you are negotiating with.
- Determine all financial issues with the products and services both internally and with whom you will be negotiating.
- Is the person negotiating with you a “financial buyer” or “user” of the product or services?
- Know your product, services and the history of your company with your negotiations partner.
- First build rapport.
- Use words wisely while negotiating.
- Ask open-ended questions and be a good listener.
- Make the negotiation about them.
- Focus On Your Counterpart’s Emotions
- Make the first offer.
- Take control of the deal.
- Offer something of value
- Never take the first offer
- Know where you can compromise.
- Define Your Nonnegotiables
- Aim for a win-win (be nice).
- Have a plan B.
- Don’t take It personally
- Determine What You’re Worth
- Always Be Honest
- Embrace the ‘Pregnant Pause’
- Be comfortable saying ‘No’
- Let go of the outcome
- Understand “The Big Picture”
- Provide set terms instead of price ranges.
- Make sure that the final contract accurately reflects the negotiations understanding.
The “Value vs Price” rule in negotiations
If your company has exactly the same product then the only difference is price. Value and pricing comes from service, improved timeliness, geographic access or other factors.
The “Trust” rule in negotiations
Never Sell; Build Trust.
The “Golden” Rule in negotiations
Do unto others as you would have them do unto you.
The “Titanium” Rule in negotiations
Do the right thing.
Even if it results in loss of sales. What are you willing to ‘lay down’ for others that they might pick up in life and health and truth?
The “Diamond” rule in negotiations
Never lie.
The “70 / 30” rule in negotiations
Listen to 70 percent of the time, and talk only 30 percent of the time. Encourage the other negotiator to talk by asking lots of open-ended questions – questions that can’t be answered with a simple “yes” or “no.”
The “Insight” rule in negotiations
People are different. Not everyone wants to be treated and communicated with in the same way.
The “Behavior” rule for negotiations
Stay calm, cool, and collected. Be professional when you negotiate. Respect your own position, the position of the other parties, and the situation. Present yourself in a positive light, and expect respect from the other parties.
The “Fair Target” rule for negotiations
When comparing products or services is is “Fair” to accurately talk about the differences of competitors products, service or skills as compared to your own. (This requires research into the competitors products services and skills)
The “Reputation” rule in negotiations
Always make sure that the final contract accurately reflects the negotiation agreement.
The “Keys to Success” rule in negotiations
Be prepared, which means a lot more than knowing numbers and facts. Preparation means gathering and understanding the hard data. It also means having 360-degree awareness of the environment the people and the culture.
The “Diversity and Complexity” and The “Rolling Stones” rule in negotiation
Human diversity creates negotiations challenges. Develop a compassionate and empathic relationships with others. Understand their background is a challenging task when we take the time to consider the complexities and diversity of human nature. Though we may be aware of what we want, and may even be well attuned to what others want, we may not always know exactly or precisely what they need. By taking the time to understand the need of the customer or client, we can find effective ways to create a comfort zone. This can result in helping our customers useful, compassionate ways that allow for positive growth and successful negotiations.
We cannot always give people what they want, but that we usually can give them what they need.
The “Under Estimating” rule in negotiations
Never underestimate your opponent.
Never underestimate your own skills and ability.
Driving a “Hard Bargain” in negotiations
Negotiators with a primarily cooperative style are more successful than hard bargainers at reaching novel solutions that improve everyone’s outcomes. Negotiators who lean toward cooperation also tend to be more satisfied with the process and their results
The “Iron” Rule in negotiations
Do unto others before they do it to you.
This rule is not recommended in most circumstances.
The “Compromise Strategically.” rule in negotiations
Don’t make their problems your problem.
Be prepared to walk away.
No deal is usually better than a bad deal.
Understand why the other side wants it.
Sometimes it is better to strategically lose some points during the negotiation than to always “win” every point and every time.
The ‘Pricing” rule for negotiations
If you are losing money on each product you will not make it up with volume. Never sell your product for less than your cost of the product service or goods.
The “Never-Never” rules for negotiations
Do not swear. Do not tell inappropriate jokes. Do not say disparaging remarks about any ethnic group or religious group. Never speak disparagingly of others particularly of anyone in the company or organization which you are negotiating with, your co-workers, your prior customers, your senior leadership or even your competitors
The “Do not do” of negotiations
- Don’t make assumptions.
- Don’t let artificial timelines make you rush to a deal.
- Don’t take anything personally.
- Don’t accept a bad deal.
- Don’t over-negotiate.
- Don’t keep negotiating when you have a deal.
- Don’t let the other person be the first to make an offer.
- Don’t provide price ranges.
- Don’t offer products or services which you can not provide or on timelines which are not achievable.
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