A strong concessions strategy can be the key to unlocking additional value in a negotiation.
How can this be? If we consider concessions only as the things we give up to close the deal, we’ll undoubtedly be perplexed by that first statement.
In reality, though, concessions are a tool. When strategically implemented, they can reinforce relationships, facilitate a more positive negotiation environment, and, yes, reward both parties with additional value.
It’s all about knowing the ins and outs of effective concessions negotiations and proper planning.
At RED BEAR, we leverage a tested negotiation methodology where concessions act as a strategic resource. When your team enters a negotiation with the confidence our training brings, they not only know how to concede according to plan, but they’ll also value the kind of win-win outcomes that keep clients coming back.
Let’s explore the role concessions play in negotiation in actionable steps and uncover why planning is one of the most crucial elements that define success.
What Are Concessions in a Negotiation?
First, let’s define what concession means.
In short, a concession is something you give up or compromise on during a negotiation. But, instead of seeing this as negative, skilled negotiators treat concessions as a strategic move that gets both parties closer to an agreement.
Here are a few examples of concessions you might come across during negotiations:
- Price reductions or discounts
- Extended payment terms
- Additional services or features
- Changes in delivery schedules or timelines
- Flexibility on contract terms
Concessions act as signs of flexibility and willingness to compromise. This is critical to reaching an agreement — as we’ll learn later.
Moreover, offering concessions at key moments can build goodwill and foster a collaborative atmosphere, which, in turn, can help build long-term relationships with clients. However, not all concessions drive these types of results.
It’s all about when and what you concede, which only comes from strategic planning.
“Offering concessions at key moments can build goodwill and foster a collaborative atmosphere, which, in turn, can help build long-term relationships with clients.”
The Strategic Importance of Planned Concessions
Planning is an essential element of negotiations as a whole. And it’s particularly important for concessions.
Why? There are several key reasons. Planning concessions:
- Maximizes Value: A well-thought-out concessions plan ensures you're not giving away more than necessary and helps you get something valuable in return for each concession.
- Maintains Leverage: By strategically timing and sequencing concessions, you retain control over the negotiation and avoid appearing desperate or eager to please.
- Enhances Perceived Value: Making concessions gradually and reluctantly can increase the perceived value of your offer in the eyes of the other party.
When you plan out a concessions strategy ahead of time, your team can enter negotiations with confidence. They’ll understand the steps they need to take to both close the deal and further strengthen the relationship with the client.
Novice negotiators often enter these discussions with no plan. They see concessions not as a strategic resource but as a result of inadequate performance.
Without a plan, these negotiations start with a misaligned position, offering random concessions that signal weakness. This leads to missed opportunities. Without a plan, they might concede on points that have little value to the other side while failing to leverage their own valuable concessions.
In the end, this will only serve to erode trust.
That’s why planning is so important. In fact, planning is a key attribute of success, with 90% of surveyed executives saying it was necessary to carry out business operations. Whether it’s for concessions or other elements of a negotiation, planning is not something you want to overlook.
Developing Your Concession Strategy
So, how can your team go from having no established systems for concessions to being trained, prepared, and ready to negotiate? It all hinges on an effective strategy. Here are some actionable steps you and your team can take to ensure you’re prepared.
Step 1: Assess Your Position
Start with a reasonable assessment of your current position. Think long and hard about your must-haves and nice-to-haves. Try to define areas where you have some flexibility, which can give your side some room to negotiate further in the process.
You’ll also want to determine your bottom line: the walkaway point. This is where you’ve exhausted your options and have to turn away from the deal.
Step 2: Analyze the Other Party
Knowledge of the other party is critical. Here, research and preparation become your secret weapons. Gather information about the other party's needs, priorities, and potential constraints. When you learn to manage information skillfully, you gain the ability to use information as another strategic resource — that’s why it's one of the Principles of Successful Negotiation.
This information can inform your own strategy and help your side anticipate possible concessions from the other party.
Step 3: Plan Your Concession Sequence
To plan your concession sequence, first consider your opening position. What will you offer first if you decide to offer anything at all? This can set the stage for the rest of the negotiation. List all your potential concessions in order of importance, from least valuable to most for your company.
Be sure to identify non-negotiables. That is to say, points you are unwilling or unable to concede. Why are these negotiables off the table? Ask yourself this question to better understand your own side’s needs.
Step 4: Prepare Justifications
Objections, whether internal or external, are a part of negotiation — so be prepared.
Develop clear and logical reasons for each concession you might make. This helps maintain credibility and avoid appearing arbitrary. Practice articulating your justifications in a confident and persuasive manner.
The Five Concession Patterns
Did you know that most concessions negotiations follow specific patterns? This is something we at RED BEAR have discovered over years of training sales and procurement professionals in the art of negotiation.
In fact, there are five concession patterns that come up time and again. Most of these patterns lead to lackluster results.
For example, “The Wrecking Ball” approach is one rooted in a desire to make no concessions at all. The opening position is all you focus on, often at the expense of reciprocity and collaboration with the other party. You may get what you want, but the relationship with the client will be at risk.
Here at RED BEAR, we strongly consider what we call “The Martini” pattern.
This pattern involves holding firm initially, then making progressively smaller concessions as the negotiation progresses. It conveys a message of seriousness and limited flexibility.
Negotiators hold firm at the start, testing the other party’s resolve and avoiding early concessions. Then, as the discussion unfolds, they make concessions strategically, only conceding when necessary to keep the negotiation moving forward.
Unlike “The Wrecking Ball,” this pattern builds reciprocity while relaying strength. The result is usually a win-win outcome, with both parties leaving satisfied.
5 Best Practices for Making Concessions
To help you make the most out of your concessions negotiations, here are five best practices to keep in mind:
- Start Small: Test the waters with incremental concessions; avoid large early concessions that weaken your position.
- Concede Slowly and Reluctantly: Show the value of each concession and avoid seeming overly eager, which can undermine your initial offer.
- Reciprocity is Key: Always seek something in return for every concession you make to maintain leverage and balance.
- Think Beyond Price: Explore creative, non-monetary concessions that add value without sacrificing profit margins.
- Track Everything: Keep meticulous records of all concessions for future reference and to avoid misunderstandings.
Master Concession Negotiations with RED BEAR
Concessions are an essential part of any good negotiation. Skilled negotiators understand their value and use concessions as a strategic resource to push the discussion forward and build reciprocity with the other party.
Remember, it’s not just about what you give up; it’s about the how and the when.
An effective strategy will balance your own needs with a desire to address the needs of the other party as well. This happens when the Competitive and Collaborative dimensions of a negotiation are in balance. Here, creative solutions meet the moment to unblock stubborn impasses with win-win solutions.
That’s exactly why our training gets results. Here at RED BEAR, we focus on a negotiation methodology that helps your team understand the value of concessions and learn to break roadblocks with creative solutions. In fact, for every dollar invested into a RED BEAR workshop, our clients receive, on average, $54.
Don’t wait to hone your negotiation edge. Get in touch with RED BEAR today.
