How to use the BATNA trading technique?

The BATNA Method: What Are We Talking About?

Business opportunities take time to come to fruition, and often, a negotiation is necessary before closing the sale. The pitfall is that your sales performance depends on your ability to close the sale. If you are poorly prepared for the negotiation, you could make bad decisions. You'll focus on the desire to close without thinking about the negative consequences of a haphazard negotiation. The BATNA technique is there to help you manage a reasoned negotiation to achieve your objectives.

BATNA: Acronym Meaning and Definition

BATNA, "Best Alternative to a Negotiated Agreement," is a technique aimed at anticipating a negotiation to better control it.  

BATNA is, as its name indicates, your best fallback solution during a negotiation. Let's say you disagree with your prospect on your offer during a sales negotiation. You are therefore in an unfavorable situation. Your BATNA is your backup plan, your escape route, the compromise you are willing to make to close the sale.  

The questions BATNA forces you to answer upstream of the negotiation are: How far are you willing to go in this negotiation? What would be an acceptable solution if the initial proposal fails? The solution you are able to imagine beforehand must still allow you to emerge victorious from the negotiation. You should always conduct this BATNA research because we are human, and in case of unpreparedness, the negotiation process can take a very unfavorable turn without us realizing it. In negotiation, spontaneity is not your ally; remember that.  

BATNA: Origin and Objective of Reasoned Negotiation

We owe the concept of BATNA to Roger Fisher and William Ury. Both worked on the theoretical and practical sharing of negotiation situation principles within the Harvard Negotiation Project. Getting to YES, published in 1982, is the work in which the BATNA concept is formalized. In this book, the authors also provide all the basic principles of negotiation (obstacles, preliminary preparation phase, etc.).  

Regarding the objectives of the BATNA method, Roger Fisher and William Ury remind us that:  

"If we negotiate, it is to obtain a result superior to what we could expect without negotiation."  

The BATNA technique aims to guarantee your ability to achieve this result. Properly identifying your BATNA allows you to protect yourself during a negotiation and have an objective view of the situation. Thanks to it, you won't accept a shaky agreement, and you'll withdraw at the right time from the negotiation. Similarly, if you don't know your BATNA, you might also refuse an offer when it is actually more appealing than your fallback solution. That would be a shame...  

According to the authors, Fisher and Ury, "developing your BATNA not only allows you to know what the acceptable minimum is but also probably to raise that minimum."  

BATNA Examples

You've worked for long weeks on a commercial offer. The project is important for your company and your client. You are at the end of your sales process, and during your exchange with the prospect, they want to negotiate. The trap is that this exchange is always emotionally charged; as a salesperson, you want to sell at all costs. Having formalized your fallback solution beforehand allows you to keep a clear head and gives you stronger negotiating power, especially because it enables you to present the alternative in its best light.  

BATNA negotiation example:  

You've proposed a complete account-based marketing support package from strategy to implementation (training, tools, follow-up, etc.). The investment for your client is several tens of thousands of euros, and your offer is perfectly tailored to address their challenge: increasing their conversion rate. At the end of the sales process, you call your prospect, who hesitates and starts telling you that the support is interesting, but the price is very high.  

WARNING: THIS IS THE MOMENT OF ALL DANGERS  

The wrong way to proceed would be to react without preparation and offer a price reduction (ouch, ouch, ouch...) or a degradation of the service. We are talking here about a complex sale with a high-level, customized service.  

• If you reduce the price without compensation, you lose margin and degrade both the real and perceived value.  

• If you remove aspects of your offer to lower the price, you demonstrate that your offer included optional or even useless aspects.  

Good preparation would have likely allowed you to arrive at a much more interesting BATNA. Your prospect is actually worried about the cash flow burden this purchase represents. Usually, you invoice 50% as a down payment, then 50% upon tool deployment, for example. Your BATNA could be to say, "Okay, I understand, and here's what I propose: we will support you and deliver the entire engagement within the planned deadlines, but you will only pay for each stage upon its execution." The prospect gets the desired support within the desired timeframe. You ultimately get the expected revenue and margin. The compromise was made on the payment terms.  

Sometimes the situation is more complex; everything will depend on the quality of your sales process and the alignment between your solution and the client's actual need. Keep in mind that you need to anticipate to better rule!  

How to Develop Your BATNA

Questions to Ask Yourself to Determine Your BATNA

Concretely, how do you go into a client meeting with the right cards in hand? Roger Fisher and William Ury propose a four-step methodology to define your BATNA:  

• Step 1: List all possible alternatives in the event of a tense negotiation situation. What would happen without any agreement? (Examples: you lose your main client, you don't have a European supplier, so you'll have to find a new one...).  

• Step 2: Evaluate all these alternatives. Review each of these alternatives and measure the cost they entail for you. Are you aware of your client's objections to each of these alternatives? What could you say in response? Do you know your client's other options?  

• Step 3: Define the BATNA. Among all the possibilities raised, which one is the most interesting in your opinion? If a negotiation goes wrong, this is the path you will need to follow. You will conclude the negotiation by pursuing this objective.  

Determine Your "Reservation Value"

Once you have your BATNA in mind, you need to calculate your "reservation value," which is the maximum threshold you are willing to accept. Thus, if the client's proposal is below that point, you should refuse the offer. Unlike your BATNA, the "reservation value" is a quantifiable figure. This can correspond to your minimum profitability threshold when selling a product, for example.  

Caution! Establishing your "reservation value" does not mean you will necessarily negotiate on price. Remember that price is rarely the root of the problem, and it's not your only negotiation leverage.  

Knowing Your Prospect's BATNA

As you will have understood, to avoid having to use your own BATNA, it can also be beneficial to know your prospect's BATNA. Learning this allows you to uncover your "Zone of Possible Agreement" (ZOPA). This is the right compromise for both the seller AND the buyer. It's the intersection of your two "reservation values." Thus, from this, prepare a relevant offer and be firm so as not to cross your BATNA. If you have managed to establish a climate of trust throughout the sales process, it is much simpler to position yourself. You and your prospect can exchange in full transparency.  

To do this, ask yourself:

• Can you identify your prospect's economic constraints? Are you aware of the company's annual public reports?  

• Do you have an influential person within the company who can inform you, like a prescriber? (See on this topic: MEDDIC, the 6 keys to successful complex sales).  

• Have you identified other references in your prospect's field that could help you tailor the best possible offer?  

• Do you know if your proposal is subject to a call for tenders?  

• What solutions were used by your prospect in the past? What were their weaknesses?  

• How could your prospect make you concede? What arguments will they use during the negotiation phase?  

To conclude, remember that negotiating is first and foremost about listening to better understand the origin of the disagreement. The best negotiators know how to make concessions and propose win-win solutions. Finally, in negotiation, you also have to be ready to lose to be able to win; don't seek the sale at all costs, and know when to stop.