The Implications Of Integrative Negotiation

Have you heard of the term integrative negotiation? Unless you’ve attended a Sales Negotiation Training Course you probably haven’t because it’s not a term used often but it’s a concept that can take your negotiating skills onto the next level.

The term ‘integrative’ comes from the counselling and therapy world. Integrative therapists take the view that there is no single approach that can treat each client in all situations. Rather, each person needs to be considered as a whole and counselling techniques must be tailored to their individual needs and personal circumstances.

The integrative approach also refers to the infusion of a person’s personality and needs – integrating the affective, behavioural, cognitive, and physiological systems that exist in each of us. This means when a counsellor is working with a client, they need to assimilate all the components of a person into the discussions.

This is an excellent process to follow when we are looking for a win-win position with our buyers or prospects. Integrative bargaining can be used strategically when in discussions with prospects, allowing the meeting to infuse the needs and wants of the buyer, as well as including your needs and wants as a supplier.

Let’s discuss what it is and how you can best utilise it in your negotiating meetings, especially if you need to get to a position during win-win bargaining.

Contents

• What is Integrative Negotiation?
• Steps in Integrative Negotiation
• Integrative Negotiation Examples
• Distributive vs Integrative Negotiation

 

What is Integrative Negotiation?

According to negotiation.com, integrative negotiation ‘often involves an agreement process that better integrates the aims and goals of all the involved negotiating parties through creative and collaborative problem solving. Relationship is usually more important, with more complex issues being negotiated.’

This entails an integrative approach that requires us to have a slightly different mindset to normal.

In a normal negotiation, you might find the buyer trying to gain an advantage through a lower price, or overall payment terms. The supplier may counteract with an offer of their own, highlighting features and benefits of the product or service, trying to justify value and build awareness of why the price is set as it is.

This then becomes a trade-off, with both parties setting out their stall and trying to get the other to move closer to their position.

Integrative bargaining identifies what might be called a ‘third position’.

As we saw earlier, win-win bargaining integrates the aims and goals of all the involved negotiating parties through creative and collaborative problem solving. Your position may well highlight the value that you will be bringing to the discussions through your services and product benefits. Their position may well be based on saving money through discounts and better payment terms.

On the face of it, one or both parties need to shift positions for any form of agreement to be made.

With integrative bargaining, we ascertain a creative third position, where both the needs and wants of both parties are brought together.

It differentiates between the position of both parties and the interests of both parties.

For example, your product may save the prospect more money for a longer time than their current solution. In that case, the up-front price may not be as important and as valuable as the cost-savings they will experience with your solution.

You can integrate the savings they will experience with the upfront price to show what the overall value will be for the prospect. This allows them to see how paying the price for your product is seen as a benefit over time. The short-term view of saving money now (and possibly missing the chance of purchasing the product) may interfere with the concept of cost saving over a longer period.

You can seek out this ‘third position’ whenever the positions of both parties are not compatible with progressing the discussions.

• Look for the reasons why the buyer wishes to take their position
• See if there can be any movement towards their position without conceding value
• Build another, more creative position, based on increasing the value of your long-term solution
• Determine a value-based position that will serve the benefits of both parties
• Come to a third-position agreement that agrees with both of your values

Adopting an integrative approach to your bargaining may well improve your chances of success, as you create a collaborative problem-solving approach and allow your buyer and you to seek a win-win negotiating position that deals with both parties’ interests.

Steps in Integrative Negotiation

Integrative negotiation is a process of finding a “win-win” solution to a problem or dispute. It is a type of negotiation that is used when both parties want to find a solution that is acceptable to both. The following are the steps involved in integrative negotiation:

1. Define the problem: The first step is to define the problem or issue that needs to be resolved. Both parties need to agree on what the problem is and why it needs to be resolved.
2. Connect with the interests of the other party: Once the problem is defined, each party needs to identify their own interests and the interests of the other party. It is important to understand what each party wants and needs from the negotiation.
3. Generate possible solutions: The next step is to generate possible solutions that would address the interests of both parties. It is important to come up with a variety of options so that there is room to negotiate.
4. Select the best solution: Once a variety of solutions have been generated, the parties need to select the one that they believe is the best option. This decision should be based on what is fair and what would work best for both parties.
5. Put it in writing: The last step is to formalize the agreement by putting it in writing. This will help to ensure that both parties understand the terms of the agreement and that there is a record of what was agreed upon. Both parties should sign the document to show that they agree to the terms. If either party changes their mind, they can void the agreement by breaking the terms that were agreed upon.

What we can see from the steps above is that there are a few key things to keep in mind when engaging in integrative negotiation.

First, it is important to be clear about what each party wants and needs. Second, both parties need to be willing to compromise to reach an agreement that is fair and beneficial for both sides. Finally, the agreement should be put in writing so that both parties understand the terms and there is a record of what was agreed upon.

By following these steps, you can increase the chances of a successful integrative negotiation. Remember, the goal is to find a win-win solution that leaves both parties satisfied. With proper planning and communication, it is possible to reach an agreement that is beneficial for all involved.

 

Integrative Negotiation Examples

To make things as clear as possible, here are some theoretical examples of integrative negotiation in action:

Example 1 – The Discount!

Alan is a business development manager working for an industrial supplies company. He is currently negotiating with a customer who is looking to purchase a small quantity of goods.

The customer is interested in getting a discount for the purchase, but Alan knows that his company’s policy is to never give discounts on orders of this size. Alan’s goal in this negotiation is to find a way to satisfy the customer without breaking company policy.

Using integrative negotiation tactics can help Alan to better understand the customer’s needs and find a way to satisfy them without breaking company policy.

For instance, he could ask the customer why they are looking for a discount and what type of discount they would be willing to accept. He could also offer to provide the customer with additional information about the product to justify the full price.

If the customer is adamant about receiving a discount, Alan could try to negotiate a compromise, such as offering free shipping or a longer payment period. Alternatively, he could try to sell the customer on the idea of purchasing a larger quantity of goods, at which point he could discount the order.

Example 2 – Being Flexible

Beth works in sales for a solar energy company. One of her current customers is a small business owner who is interested in solar panels for his store. Beth has given the customer several quotes, but he always comes back and asks for a lower price.

The issue here is that the customer is not being realistic about what he can afford. Beth could try to explain the cost of the product and why she thinks the quoted price is fair. If that doesn’t work, she could offer a payment plan or a discount for purchasing multiple panels.

This is an example of integrative negotiation used on a smaller scale. Beth and the customer both want a fair deal, but they also have different goals. Beth wants to make a sale, while the customer wants to get the best possible price.

The best-case scenario would be if Beth and the customer could come to an agreement that meets both of their needs. The easiest way to reach this kind of agreement would be to use integrative negotiation to find out exactly what the customer needs and what their budget is. Once Beth knows this, she can make a fair offer that meets both of their needs.

If the customer is unwilling to budge on price, Beth could try another tactic. She could offer a payment plan or a discount for purchasing multiple panels. This would allow the customer to get the solar panels at a lower price, while still making some profit for Beth.

Ultimately, the goal is to find a win-win solution that meets both Beth’s and the customer’s needs. By using integrative negotiation, Beth can ensure that everyone walks away from the deal satisfied.

 

Distributive vs Integrative Negotiation

Now that we’re familiar with the concept of integrative negotiation, let’s compare it to distributive negotiation.

In distributive negotiation, the focus is on negotiating the best possible terms for oneself, without regard for the other party’s interests. This type of negotiation is often used in situations where there is a fixed amount of resources to be divided between the parties, and each party is trying to get the largest share possible.

In contrast, integrative negotiation focuses on finding a solution that is mutually beneficial for both parties. This type of negotiation is often used in situations where the parties are trying to create something new or come up with a solution to a problem.

Both distributive and integrative negotiation have their own strengths and weaknesses, and which one you use will depend on the specific situation you are in.

For example, distributive negotiation is often used in cases where there is a limited number of resources to be divided between the parties. This is because each party is trying to get the largest share possible, and so they are likely to be more competitive.

On the other hand, integrative negotiation is more suitable for situations where the parties are trying to create something new together, such as a new business venture. This is because this type of negotiation focuses on finding a solution that is mutually beneficial for both parties, rather than each party trying to get the most for themselves.

What are the Implications of using Integrative Sales Negotiations?

Using integrative negotiation in sales negotiations implies that the salesperson is trying to find a solution that will be beneficial for both parties involved. This means that the salesperson should focus on creating value for both parties, rather than just trying to get the best possible deal for themselves.

Some of the benefits of using integrative negotiation in sales negotiations include:

• Increased trust between the parties – When both parties are focused on finding a solution that is beneficial for both sides, it can help to create trust between them. This can make it more likely that they will be able to come to an agreement and that they will be satisfied with the outcome.
• Improved relationships – When sales negotiations are focused on creating a win-win situation, it can help to improve the relationship between the parties. This can make it more likely that they will be able to work together in the future and that they will be more likely to trust each other.
• A more collaborative atmosphere – Rather than each party trying to get the best possible deal for themselves, they are working together to find a solution that works for both. This can help to create a more collaborative atmosphere, which can be beneficial for both parties.
• More creative solutions – When both parties are focused on finding a solution that works for both, they may be more likely to come up with creative solutions that neither of them would have thought of on their own.
• Greater satisfaction for both parties involved – When both parties feel like they have gotten a fair deal, they are likely to be more satisfied with the outcome. This can lead to a stronger relationship overall.

Some of the challenges of using integrative negotiation in sales negotiations include:

• Increased trust between the parties – When both parties are focused on finding a solution that is beneficial for both sides, it can help to create trust between them. This can make it more likely that they will be able to come to an agreement and that they will be satisfied with the outcome.
• Improved relationships – When sales negotiations are focused on creating a win-win situation, it can help to improve the relationship between the parties. This can make it more likely that they will be able to work together in the future and that they will be more likely to trust each other.
• A more collaborative atmosphere – Rather than each party trying to get the best possible deal for themselves, they are working together to find a solution that works for both. This can help to create a more collaborative atmosphere, which can be beneficial for both parties.
• More creative solutions – When both parties are focused on finding a solution that works for both, they may be more likely to come up with creative solutions that neither of them would have thought of on their own.
• Greater satisfaction for both parties involved – When both parties feel like they have gotten a fair deal, they are likely to be more satisfied with the outcome. This can lead to a stronger relationship overall.

Creating a Win-Win Situation

Overall, integrative negotiation is a beneficial approach to sales negotiations. It can create more trust and collaboration between the parties, and often leads to more creative solutions that are beneficial for both sides.

However, it is important to be aware of the challenges that can arise when using this approach, and to be prepared to navigate them successfully.

Want to learn more? Please check out our Sales Training Courses and Sales Coaching solutions. We also offer Sales Competency Assessments which will inform you how effective you are in terms of your negotiation skills.

Make sure to check out, our full portfolio of Sales Training that we offer to gain better knowledge and skills in the workplace.

Thanks

Sean

Sean McPheat
Managing Director
MTD Sales Training