BATNA, is not a dirty word!

I knew my BATNA when negotiating on buying a brand new car yesterday.

First off all, if there is anything in you life that you should understand, the meaning of BATNA is a must. It will help you in almost every aspect of your life, being business or personal.

OK let’s cover off on what "BATNA" actually is.

Just over two decades ago, what is arguably regarded as a reference work when it comes to Negotiating; a book called "Getting to Yes" was co-written by Roger Fisher and William Ury.

In this 1981 bestseller, "Getting to Yes" they coined the term BATNA; it stands for "Best ALTERNATIVE TO a negotiated agreement."

Now if I was to say to you; when was the last time that you negotiated for something I would almost bet that you would either have to stop for a moment or two to think back on a situation either several months/years prior and in saying this, it would most probably be something that you deemed very important. i.e. A major purchase, just like my car negotiation yesterday.

Well truth be known we negotiate more times in a month then what we actually consciously know.

Think about this as an example, you’re in your car, ideally you would like to park at the store car park where you're picking something up, but there are no car spaces free. So you double park for a moment and get out of your car and look around; you see a security officer and approach him. First you think of your options, either double park or perhaps park in the loading zone. You ask if you can double park there for a moment while you run in to get your box instead of parking around the corner and walking back to your car.

To this he says sorry, he cannot let you double park and potentially inconvenience any of the other customers. You then ask if you can quickly leave your car in the shopping centre loading zone "Best ALTERNATIVE” and get your box from the store. Because you went to the trouble of explaining your problem the guy then gives you 5 minutes to leave your car in the loading zone. A better alternative to parking around the corner from the store.

For that matter we may even negotiate with our loved ones.

Case in point: A few weeks prior I had to pick our kids up from after school care; in addition, I also had to stop at the shops, get some food for dinner and also fit a trip into the pool shop so they could test the chlorine level in the water. Only issue with doing all of this was that the pool shop was in the opposite direction and would have taken some time to complete.

After considering the above, I figured that the two quickest things for me to do “due to proximity” "Best ALTERNATIVE” was for me to pick the kids up and on the way back home get the pool water tested. All this hinged on me calling my wife and her saying yes to getting the food after me explaining my rational; plus, the fact that I would happily do the two tasks if she could do a single one. Because I understood my BATNA and framed my request, I got a yes.

Now back to the car yard yesterday.

I went in looking for a new car, either a 2 x 4 or 4 x 4 version twin cab pick-up. In addition, I asked the salesman to quote me on three additional accessories for the car. He then asked me about a trade-in. At that point I said that I was interested in trading one of my current cars that still had some money owing on it. I told him that depending on the final changeover amount to be financed it would either be a deal or not.

Straight away he went into that new car salesman mode. He wrote all of my details down and costed the car up in the following way.

The RRP of the car is X.

The RRP of the towbar is X.

The RRP of the boot liner is X.

The RRP for the Metallic paint is X.

And the RRP of the soft canopy is X

All up the cost of the new car on road is XXXXX.

As for your trade-in we can give you $22K.

He then said, is it a deal?

Putting aside the very low value that he offered on the trade in, well below market value, I said to him.

So before we talk changeover amount and finance, you’re asking me if it’s a deal on the car and the three accessories at full RRP, no discount? Would you buy a car and accessories all at full RRP and accept less than a market/reasonable value on your car as a trade-in?

At that point I was in power in the negotiation, I knew what my BATNA was and I had a fair idea of what he was aiming for. To be honest although the car was part of a national promotion with1% interest, I knew before even walking into the dealership that other yards had the same offer with around close to a thousand dollars off the RRP of the car.

In addition, I would have expected, based on past purchases, to at least see a discount on some, if not all of the accessories to hook me into talking finance.

Summing all of this up, I knew that if I went in hard during the negotiation I could have got the same discounted RRP by showing that I had done my homework on the competition. I also knew that I could have got discounts on the accessories. I knew that the interest rate was a low 1%; so all in all the negotiation was going to hinge on a revised trade-in value reducing the changeover amount.

Because the salesman confided to me that he was relatively new to the yard when I started negotiating again, I then knew that I was not in a position to negotiate with a person that could be effective in a favourable outcome.

Rounding off a long story, I ultimately said thank you for his time and walked out of the yard.

My ultimate BATNA was to simply walk away from the negotiation. Because at the end of the day if you are in a position to walk away in a negotiation without any loss when faced with less than a desirable outcome it’s perfectly acceptable to do so.

My final word, prior to any negotiation think about your BATNA; “Best ALTERNATIVE TO a negotiated agreement." It will put you in a position of power by allowing you to walk into a negotiation with a clear understanding of not only what you want, but also what you may be willing to compromise on and ultimately accept as a counter offer.

Wayne~

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