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When Deals Fall Apart: Unraveling the Secret to Why Negotiations Fail

— When Deals Fall Apart: Unraveling the Secret to Why Negotiations Fail

Failures in negotiation may mean different things to different people. 

It could refer to failing to reach an agreement. It could also mean making a deal that doesn’t live up to its potential or desired outcome. For instance, if you make a deal that you later regret or one that’s too weak to last, these could be considered failures.

But why do these negotiation failures happen in business?

We’ll give you some reasons why negotiations tend to fail, how you can combat that, and who can help you gain the ultimate negotiation skills to prevent failure from becoming an option.

Why Do Negotiations Fail?

A good negotiator comes into a situation with the intent of reaching a deal, regardless of what they are negotiating for. You wouldn’t be negotiating with the other party if there wasn’t desire on both sides to come to an agreement. So why do some negotiations fail? We’ll give you the short answer, and then go into more detail for the long answer.

The Short Answer

The simplistic answer for why many negotiations feel is that the set price doesn’t work But there’s really much more to it than that. In larger, complex deals with many moving parts, price is just one element.

The Long Answer

What’s important to understand is when you get to the negotiation phase of the deal, for all intents and purposes, the sale is done. The only question is making a deal that both sides are happy with.

If an agreement isn’t reached and a deal doesn’t happen, it’s not because there wasn’t enough desire on your part. It’s because both sides failed to reach common ground.

This is something that a lot of people confuse. When they hit a roadblock in negotiation, their first instinct is to think that they haven’t done a good enough job selling their solution to the customer, and that’s why they’re getting pushback.

In truth, more often than not, you’ve already made them sure of what they need. They wouldn’t be negotiating if you hadn’t already convinced them of that.

First and foremost, deals fail because people don’t realize why they’re failing. They tend to go back into “salesman mode” and really dig in to try to convince the other party why they need this solution.

But the other party doesn’t care why you think they need this. They’re already aware of this information. What you aren’t doing is solving the real reason why you’ve reached an impasse in the negotiation. The problem is that you didn’t ask the right questions to discover what the real challenges are and why you’re getting hung up.

Negotiations may fail when we don’t have the proper perspective of the other party. Perhaps we haven’t put ourselves in their shoes to understand their thought processes and the challenges they’re facing. You need to find out how you can essentially “scratch their itch.”

You can boil all the reasons down to being myopic and narrow-focused, meaning we only see the deal from our point of view. If you try to gain perspective and look at it from the other side, you have a lot more to work with. 

If you don’t look at things from the perspective of the other side, you’ll always be rowing upstream. 

3 Reasons Why Negotiations Fail

So, we’ve discussed in detail the general reason why negotiations fail. Now let’s take a closer look at some of the specific things that may occur on one or both sides of the discussion that lead to an unsuccessful negotiation.

And if you need help honing your negotiation skills, contact The Maker Group. We’re a team of commercial negotiators with experience negotiating complex, high-value deals in the world of business.

We understand the challenges you face and we’ll teach you the practical methodology and real-world behavior techniques that can help you lead negotiations and make the best deals for your organization. We’ll explain our exclusive Maker Framework process to help take the guesswork out of preparing for any negotiation.

#1: Rigidity

Having a very rigid view of what you want out of a negotiation can ultimately lead to its failure. Although you probably should have a set standard for when you’ll walk away from a plan to compromise, you should not let it affect the other pieces of the puzzle. This will likely not work out to your benefit.

Some of the ways you may display rigidity during negotiations include:

  • Coming in with preconceived notions
  • Refusing to be flexible or compromise
  • Refusing to match the pace of the other team

If you enter negotiations with an idea of what you want while also having an open mind, you are more likely to be successful in the end.

#2: Lack of Trust

Some level of trust is an essential element in negotiations. If the two sides don’t both show trust and respect to one another, communication begins to break down, which can lead to a stalemate or abandonment of any further discussions.

Trust and mutual respect help foster engagement that gets results. When they are absent, both parties may be:

  • Constantly on guard
  • Wary of false claims; and
  • Afraid of hidden intentions

This lack of trust usually means both parties become unwilling to collaborate and may waste time arguing over points that don’t support the big picture. When this sort of attitude takes over, negotiations are often bound to fail.

#3: Lack of Preparation

When you go into negotiations without being prepared — for instance, not being aware of the negotiation landscape or any potential snares you might fall into — you’re more likely to fail.

You can compare it to going to the grocery store without being aware of what’s already in your kitchen. You may end up with a lot of things you don’t need and still be missing many of your staples. You need to have a plan going in.

As a negotiator, you should already know things like:

  • What precedents exist for this situation
  • What alternatives there are to your plan
  • What the results may be of possible outcomes

Preparing in advance may help you anticipate any curveballs that may come your way and already have a solution or answer ready. It will give you more confidence overall and help you present yourself in a better light.

What Might a Failed Negotiation Look Like? 

If you just downright cannot reach an agreement with the other party, then it’s obvious that negotiations have failed. But what about other, more subtle signs that your agreement isn’t working?

Here are some things to look for in that regard.

Lack of Response

Picture a scenario where one party is negotiating with another. A proposal was sent weeks ago with no response. 

Every time one side tries to make contact with the other, phone calls go unanswered or emails are met with short replies. The negotiation process seems to be in a stalemate.

To have any chance of making a deal, you’d have to figure out what about this scenario is causing the other side to withdraw. Whatever you’re offering, they’re obviously not interested. 

Making a Deal One Party Later Regrets

Sometimes one party will make a deal they later realize they’re not happy with. Perhaps they feel forced to negotiate and begrudgingly accept. Or they may have buyer’s/seller’s remorse. Maybe they figure out that they’ve left value on the table.

Whatever the reason, you may leave the negotiation thinking you knocked it out of the park. But if you lack the understanding of how the other side actually feels about the deal — essentially, that they hate it — you will have a nightmare of a partner throughout the terms of the contract. And that’s if they don’t renege on the deal entirely.

Even if that doesn’t happen, during the execution phase of the contract they probably won’t be motivated to work with you to bring the deal to life. If the other side is dragging their feet and making things miserable, your negotiation has essentially failed.

Just because you signed a contract, that doesn’t mean you’ll realize all the potential value within it.

Negotiating a Deal That Is Too Weak To Last Long-Term

If your negotiations seem to be smooth sailing and you quickly reach an agreement, but then it falls apart during the execution phase, then that can be considered a failure.

Some of the reasons for this may be that the deal wasn’t given enough structure during negotiations or neither side was comfortable with conflict and just gave in to the other. Contracts that are made under these circumstances are often too weak to sustain themselves.

What To Do When Negotiations Seem To Be Failing

If you are in negotiations and can tell that things aren’t headed toward a satisfactory conclusion, what can you do to turn the ship around?

Here are some of our suggestions.

Ask the Right Questions

Good negotiations are all about seeing things from the other party’s point of view. Try to get inside their heads and see the deal from their perspective.

What might be the other side’s internal roadblocks to selling this deal to their organization? Figuring this out will help keep you from feeling like you’re beating your head against a wall.

Determine How To Reformulate the Proposal 

What can you do to make your proposal more appealing to the other party?

For example, you’re making a deal with someone and you’re pretty sure the price is fair, but they aren’t biting. Perhaps you do a little digging and find out they’ve been burned by bad service in the past, so that area is a little touchy for them. In this case, service levels are top priority and price is probably a secondary factor within the contract.

Not realizing how critical this component is to them, you may have proposed Silver Level service when they’d really prefer Platinum Level. Once you discover how important that is to their acceptance of the deal, you can reformulate the proposal.

The price may have to go up a bit to do this, but since that isn’t the most critical component to them, now they’re back on board.

If you can figure out how to address the other side’s most critical pain point while still getting what you need out of it, your negotiations are more likely to be successful.

The Maker Group: Let Our Experienced Commercial Negotiation Consultants Guide You to Success 

Contracts are made to be signed, filed, and put away, but the deal itself lives in the execution of the people who bring it to life. You can agree to anything on paper, but actually making it happen is a different story.

The Maker Group can teach you how to negotiate effectively every time. By delivering world-class negotiation and training services, we can help your team maximize their potential in any situation.

Contact us to learn more about our consulting and workshops. We’d be happy to answer all your questions or even set up a free consultation.

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