Want favorable outcomes for your next deal? Use the BATNA technique to improve your contract negotiation skills!

You’re in negotiations with a new client. You’ve drawn up a contract and walked her through the terminologies and responsibilities of each party. Usually, at this stage in the process, you’ve already agreed on a deal, at least in theory. She’s ready to sign. You’re ready to sign. a few lingering questions.

But this particular client is a natural bargainer. She knows how to haggle with salespeople, and now you’re in a struggle to protect your interests. What contract negotiation skills do you need in this type of situation? How do you assert a commanding position, but also know when to walk away?

Solution: know your BATNA.

This strategy comes from Roger Fisher and William Ury’s influential book, Getting to Yes. They explain the importance of identifying your “Best Alternative to a Negotiated Agreement”, or BATNA.

In other words, what will you do if you cannot reach a deal with a client? What are your alternatives, and which offer the greatest value?

contract negotiation skills

A closer look: How a BATNA improves your contract negotiation skills

Let’s say you’re a mortgage broker. You and your client (borrower) have come up with an appropriate loan to submit to lenders for approval. You know that the banks look for loans that will serve their interests, so negotiations are imminent.

lead-managerlead-managerWant to follow up with your leads and find more negotiations on the table? Schedule a free demo of our sales follow-up software and see how it works!

A BATNA, in this situation, serves as a valuable alternative to the lender’s proposal. It gives you leverage at the table. To quote from Getting to YES, “The relative negotiating power of two parties depends primarily upon how attractive to each is the option of not reaching an agreement.”

How attractive is your alternative? If the bank knows your other option is more valuable than their offer, they will need to beat it.

contract negotiation skills

3 steps to creating a BATNA for any business negotiation

Cementing the best alternative to an agreement takes more than mere logic or strategy. Get creative with your assets. Think outside the box. It takes work to develop alternatives that are attractive and hold up against unfavorable negotiations.

However, the more powerful your alternative, the more influence you hold at the table. Your contract negotiation skills largely focus on making it easier to walk away—that kind of power forces change.

1. Create a list of actions you might take if you don’t reach an agreement.

What will you do if the deal doesn’t go through? Look for another client? Make changes to your contract? Come up with every conceivable alternative you can imagine. Get creative with your list of options.

2. Develop the most promising actions into practical alternatives.

Again, if you’re a mortgage broker, maybe your alternatives are to contact more lenders with different (or the same) loan proposal. Develop these alternatives so that you can act on them immediately and everything is in place.

3. Pick one alternative that seems the most valuable.

Now you’re at the point when your alternative is most effective. If it becomes an “ace in the hole” for you, make the other side aware of it. Use your BATNA as leverage to re-negotiate. If you’re more willing to walk away from a deal than the other person, you’ve effectively taken control of the outcome.

contract negotiation skills

Level up contract negotiation skills by knowing your prospect’s BANTA

Developing an alternative that makes it easy for you to walk away from a deal also gives you leverage on the negotiation outcomes. However, you’re only one side of the table. The person sitting across from you also has alternatives, and the more you know, the better you can bargain.

There are a few different strategies to go by once you brainstorm and figure out the other side’s BATNA. The value of that option, and whether or not the person is aware of its value, will dictate how you tackle the subject.

Here are a few different situations and strategies:

  • They overestimate their alternatives, so you lower their expectations for outcomes.
  • They don’t seem to know their BATNA, so you propose one (which, once again, lowers expectations).
  • Their BATNA is so attractive that you must build up your own so that it seems less in comparison to yours.
  • You both have strong alternatives, which creates a stalemate because you both can walk away happily, so you don’t settle on a deal. At least for now.
  • Take the necessary steps to develop alternatives and understand the options for the other party. If you can walk away from a negotiation happily because you have a great alternative, your position of power will increase, and your contract negotiation skills will improve.

lead-managerlead-managerWant to follow up with your leads and find more negotiations on the table? Schedule a free demo of our sales follow-up software and see how it works!

How do you negotiate favorable deals in your business? Share your insight with our community!