BATNA: The negotiation technique for successful agreements

Find out everything about BATNA in just 3 questions

What does BATNA mean?

No, BATNA is definitely not Batman and Krishna’s secret love child. In fact, it stands for “Best Alternative to a Negotiated Agreement”. The BATNA method was popularized in the early 80s by its inventors, Roger Fisher and William Ury, who taught the art of negotiating at Harvard University. It helps anticipate a reasonable last resort fallback solution, in case negotiations don’t go as planned. The fallback should allow you to reach a favorable agreement. So BATNA is the last position that the seller is willing to accept to conclude a satisfactory agreement.

How to prepare your BATNA?

To understand how to prepare your best fallback solution, look at the following image.

• Both buyer and seller have a reserve price. This can be either minimum or maximum, depending on their position in the negotiation, beyond which, one of the parties will withdraw to avoid signing an unsatisfactory agreement.
• There is a bargaining range for both buyer and seller. It consists of all of the prices that fall within the reserve price and the ideal price. For each of the parties, the negotiation must take place within these two limits. 
• Between the two windows lies the Zone of Possible Agreement (ZOPA), where each party puts forward its arguments, terms and concessions. This is what you must aim for before playing out your BATNA, the alternative that includes the solutions that you are ready to consider to finalize a purchase without being at a disadvantage.

To prepare your BATNA, follow these easy steps:

• Determine your ideal price and your reserve price;
• Estimate your client or lead’s ideal price and reserve price;
• Anticipate each party’s terms and concessions by taking into consideration all possible scenarios.

In short, it’s vital to draw up your BATNA before a negotiation, so you optimize your chances of success.

Who is the BATNA meant for?

The only way to conduct successful sales talks is to have a solid base to fall back on when it comes to the critical point in a business agreement. That means having multiple business proposals ready before the meeting, along with the approval of your team! The BATNA is meant for any team dealing with a client or sales lead.

Good reasons why you should use the BATNA template as a team

An awareness and confidence builder

The aim of the BATNA is to help realize when the business agreement stops being beneficial for the seller. When drawing up your BATNA, examine all the gray areas relating to this particular client as a team, so you will avoid getting caught off guard during the sales talks. This prior preparation will offer you reference points during the negotiation, and knowing where you stand during the meeting will facilitate your decision-making process.  

Planning out your BATNA as a team will increase your confidence. You will come across as more assertive during the sales negotiation, and will spare yourself two setbacks:

• An inconclusive meeting due to lack of confidence;
• Wrong decisions taken on the spur of the moment during the agreement. 

Remember: it’s always better not to sign an agreement than to sign one that is unsatisfactory, and may even turn out to be a disaster in the long run!

Make use of the power of visual management and collective intelligence

With Klaxoon’s Board, the digital interactive whiteboard, enjoy a communication space that can be easily accessed by all your team members, wherever they may be. Even when working remotely, the integrated video conferencing feature allows you to engage in real-time exchanges. And with Board’s specially designed BATNA template, all the conditions are met to effectively set up your future negotiations!

The template allows you to discuss the best solution, i.e. your best price and your reserve price, as a team. With Question, Klaxoon’s tool for feedback and efficient decision making, you can easily receive immediate comments from your team, and choose the best options.

By feeding in your ideas, terms and possible concessions, you can see your BATNA being charted out right before your eyes in a few clicks. This way, you can second guess the arguments that your client is going to use and plan yours so you are ready for whatever comes up.

How do you use the BATNA template?

1. Determine your selling price settlement range

Using your collective intelligence, define the best selling price to be achieved during the negotiation. First, each person individually suggests the price that they consider ideal and explains their point of view to the rest of the group. Then, the members of the group “like” the most convincing proposal, using the “like” button. In the case of a drawing, launch a Question so the decision can be taken during a vote.

Do the same to determine your minimum acceptable selling price or reserve price.

2. Guess your client’s or lead’s purchasing price settlement range

Put yourself in the buyer’s shoes and proceed as before to estimate:

• Their ideal purchasing price;
• Their maximum acceptable price.

In addition to this process, you can use the SONCASE method to identify as a team your sales lead or client’s buying motives. This prior preparation will help you estimate as accurately as possible the purchasing price settlement range and anticipate their arguments.

3. Second guess your client or lead’s negotiating arguments and prepare your counterarguments

By determining your minimum acceptable selling price and the client’s or lead’s maximum acceptable purchasing price, you have identified the limits of the Zone Of Possible Agreement (ZOPA) or “bargaining range”.

Within this range, imagine all the solutions where both negotiating parties might find a common ground. First, think of the demands that your client or lead is likely to put forward. Every member of the team can add their ideas to the dedicated space.

Once all the ideas are set out, everyone “likes” the suggestion that they consider most relevant. Then, do the same with the concessions that you might find acceptable and highlight the best ones, again using the “like” button. This will help increase your negotiating power!

Finally, list the terms that you might want to put forward. And think of the concessions your client or prospect could make.

4. Prepare an outcome for negotiation in case no agreement can be reached

Once outside the ZOPA, the seller and buyer come into conflict and cannot find a common ground. Despite a well-prepared negotiation, a meeting may not always result in an agreement. So think of an amicable outcome, in view of possible future cooperation.

Decide on the best option as a team, using the multiple-choice Poll Question.  

Now you have all the cards up your sleeve for a successful negotiation, from your ideal price to your best fallback solution!