One of the most common acronyms in negotiation is BATNA – Best Alternative to Negotiated Agreement. Most trained negotiators take the time to understand and build up their own BATNA prior to a negotiation, believing that's what will help them get a better deal. But they’re wrong - that's barely half the story.
Knowing your BATNA is critical, but only to define the value below which there’s no point making a deal. A strong BATNA may benefit you psychologically, but to benefit commercially, it’s your counterpart’s BATNA you should be looking at. What’s their best alternative to doing a deal with you? More often than not it’s weaker than you think.
Plan A is always to close the deal just ahead of their BATNA, but getting a deeper understanding opens two other options:
Differentiate:
If you’re clear on their BATNA, you can emphasise parts of your proposal that the alternative doesn’t provide. You need to listen to the deal-maker’s priorities, understand which of them can play towards your proposition and anchor the negotiation heavily to those areas. You may be able to pitch well below their BATNA and still get the deal.
Long game:
A client recently walked away, very politely, from a competitive negotiation even though he could have done the deal. He was convinced he knew his counterpart’s BATNA, and that it was unsustainable. He knew the risk because he knew his own BATNA, but he based his strategy purely on his counterpart’s. His counterpart went ahead, signed up with another party and was subsequently let down badly. Within three months my client was back at the table building a more profitable, sustainable deal.
DIFFERENTIATE: When you’re confident that their alternative has shortcomings in areas that are genuinely important to them
LONG GAME: When you can afford to lose the deal and are confident their alternative is much weaker than they think.