Secrets of Power Negotiating – by Roger Dawson. Zig Ziglar would say “you can have everything in life you want, if you will just help other people get what they want.” He also said “the most important persuasion tool you have in your entire arsenal is integrity.” Everything that follows should only be used to help people get what they want.
Always ask for more than you expect to get. Why? Because you just might get it, and it gives the other side some negotiating room. It also raises the perceived value of what you’re offering and makes the other side feel that they won – which is the most important thing they should feel at the end of the negotiation. When you ask for more, your price should be your MPP – maximum plausible position (the most you can ask while maintaining the other side’s belief in the plausibility of your position).
Make them give the first offer, then bracket. Once they make an offer, your counter proposal should be an equal distance on the other side of your objective as their original proposal. For example, if a car dealer is asking $20,000 and you want to buy it for $18,000, make a counter offer of $16,000 so you can meet somewhere near $18,000.
Never say yes to the first offer. It automatically triggers two thoughts: “I could have done better.” and “Something must be wrong.” If you jump on a offer too quickly, the other person will tuck it away in the back of his mind, thinking, “the next time I deal with this person, I’ll be a tougher negotiator. I won’t leave any money on the table next time.” Also, if an offer should have been rejected, you’ll think “something must be wrong” and immediately start asking yourself why the offer was accepted.
Flinch in reaction to their proposal. You should appear visibly surprised / shocked by the other side’s offer. They might not expect to get what they are asking for, but if you do not show surprise, the other side will assume it’s a possibility. A concession often follows a flinch because the other side sees you as a tougher negotiator. Even if you’re not face-to-face with the other person, you should still gasp in shock and surprise. Telephone flinches can be very effective also.
Use “feel, felt, found” to avoid confrontation. If the other side is confrontational, use the “feel, felt, found” formula instead of arguing. Respond with, “I understand exactly how you FEEL about that. Many other people have FELT exactly the same way as you do right now. But you know what we have always FOUND?
“I understand exactly how you feel about that. Many other people have felt exactly the same way as you do when they first hear the price. When they take a closer look at what we offer, however, they have always found that we offer the best value in the marketplace.”
“I understand how you could have heard that because I’ve heard it, too. I think that rumor may have started a few years ago when we relocated our warehouse, but now major companies such as General Motors and General Electric trust us with their inventories, and we never have a problem.”
Be a reluctant buyer / seller. Always play the reluctant seller, and look out for the the reluctant buyer. Playing this gambit is a great way to squeeze the other side’s negotiating range before the negotiation even starts. The other side will typically give away half of his or her negotiating range just because you use this.
“I can see how perfect this boat would be for you and how much fun you’d have with it, but I really don’t think I could ever bear to part with it. However, just to be fair to you, what is the very best price you would offer me?”
Use the Vice Technique. Respond to a proposal or counter-proposal by saying “You’ll have to do better than that.” The technique should be followed by silence. Inexperienced negotiators will give away a significant portion of their negotiating range when they are confronted with the vise technique. If it’s used on you, respond with the Counter Gambit, “Exactly how much better than that do I have to do?” This will pin the other person down to a specific amount.
Use a Higher Authority. Leave your ego at home when you’re negotiating, never let the other side know you have the authority to make a decision, you should always defer to a higher authority. Ideally, your “higher authority” is vague entity and not an individual, so the other side can’t ask to speak with that person directly. Even if you own your own company, you can still use this by saying you need time to check with “your people” at your organization. If the other side uses the higher authority gambit on you, attempt to get him to admit that he could approve your proposal if it meets all of his needs. If that fails, go through the three Counter Gambits: Appeal to his ego, get his commitment that he’ll recommend to his higher authority, and go to a qualified “subject to” close.
“Let me be sure I understand. If this proposal meets all of your needs, is there any reason why you wouldn’t give me a decision today?”
“They always take your recommendation, don’t they? OR “You’ll recommend it to them – won’t you?”
Beware of the diminishing value of services. The value of a material object may go up one time, but the value of services always appears to go down. Never make concessions now and trust that the other side will make it up to you later. Always negotiate the value of the concession or your fee before you do the work.
The set-aside gambit. Never confuse an impasse with a deadlock. True deadlocks are very rare, so you’ve probably reached only an impasse. Try to restart momentum by resolving minor issues first, but don’t narrow the negotiation down to only one issue. Try handling an impasse with the set-aside gambit.
“Let’s just set that aside for a moment and talk about some of the other issues, may we?”
If a buyer says to you,”We are willing to talk to you, but you must have a prototype ready by the first of the month or let’s not waste time talking.” You can respond by saying, “I understand how important that is to you, but let’s set it aside for a minute and talk about other issues.”
Never offer to split the difference. Never let the other side make you think splitting the difference is the fair thing to do. You don’t have to split down the middle, and you should never offer to split the difference yourself, but encourage the other person to offer to split the difference. By getting the other side to offer to split the difference, you put them in a position of suggesting the compromise. Then you can reluctantly agree to their proposal, making them feel that they won.
What if you have a stalemate? Tactics to break a stalemate include:
- Changing the people on the negotiating team. Remove a member who may have frustrated the other side. A skilled negotiator won’t take offense at being asked to leave because he may have already played a valuable role as a Bad Guy. Now it’s time to alternate the pressure on the other side by making the concession of removing him from your team.
- Change the venue by suggesting that you continue the discussion over lunch or dinner.
- Explore a change in finances, such as extended credit, a reduced deposit with the order, or restructured payments. Any of these may be enough to change the dynamics and move you out of the stalemate. Remember that the other side may be reluctant to raise these issues for fear of appearing to be in poor financial condition.
- Discuss methods of sharing the risk with the other side. Taking on a commitment that may turn sour might concern them. Try suggesting that one year from now, you’ll take back any unused inventory that is in good condition for a 20-percent restocking fee. Perhaps a weasel clause in the contract that applies should the market change will assuage their fears.
- Try changing the ambiance in the negotiating room. If the negotiations have been low-key with an emphasis on win-win, try becoming more competitive. If the negotiations have been hard driving, try switching to more of a win-win mode.
Demand trade-offs. When the other side asks you for a small concession, always ask for something in return. Say, “If I can do that for you, what can you do for me?” You may just get something in return. Moreover, it elevates the value of the concession so you can use it as a trade-off later. Most importantly, it stops the grinding process, so make the final concession a big one.
Look out for good cop, bad cop. The other side will use play good cop, bad cop more than you might believe. Watch out for it whenever you’re dealing with two or more people. The other side uses it because it’s an effective way of exerting pressure without creating confrontation. Counter it by simply identifying it. It’s such a well-known tactic that when you catch them using it, they’ll get embarrassed and back off. If you recognize them doing it, tell them.
“I’m sure you’re here to play bad guy, but let’s not take that approach. I’m as eager to find a solution to this situation as you are, so why don’t we all take a win-win approach? Fair enough?”
Use and watch out for nibbling. With a well-timed, bit-by-bit nibble, you can get things at the end of a negotiation that you couldn’t have gotten earlier. It works because the other person’s mind reverses itself after it has made a decision. He may have been fighting the thought of buying from you at the start of the negotiation, but once he’s made a decision you can nibble for a bigger order, upgraded product, or additional services. Being willing to make that additional effort is what separates great salespeople from merely good salespeople. To stop the other side from nibbling on you, show him (in writing) the cost of any additional features, services, or extended terms – and don’t reveal you have the authority to make any concessions. Also, making nibblers feel cheap (in a good-natured way) stops them in their tracks.
“Mr. Jones, could we take one more look at that extended warranty? What you may be overlooking is the preventative maintenance factor. If you know that repair work won’t cost you a penny, you’ll call us much sooner than you would if you had to pay for it. The sooner you have repairs made, the longer the equipment will last. Yes, it’s a good deal for us, but it’s an even better deal for you.” You have a good chance of Mr. Jones saying, “Well, all right, if you think it’s that important, I’ll go ahead.”
Learn to taper concessions. The way that you make concessions can create a pattern of expectations in the other side’s mind. Never make equal-sized concessions, because the other side will keep on pushing. And don’t make your last concession a big one, because it creates hostility if he thinks you’re no longer willing to work with him. Similarly, never concede your entire negotiating range just because the other side calls for your “last and final” proposal, or claims that he doesn’t like to negotiate. When you taper your concessions skillfully, the other side feels he’s getting the best possible deal.
Withdrawing an offer. The withdrawing an offer gambit is risky, so use it only when the other side is grinding away on you. You can do it by backing off your last price concession, or by withdrawing the offer completely. If the other side uses it on you, don’t be afraid to counter by insisting that he resolve his internal problem first, so that you can then resume the real negotiation. If the other side takes the offer off the table, escalate your demands in return. Tell him that you’re glad he wants to reopen the negotiations because your side has been having second thoughts also. To avoid direct confrontation, make your bad guy a vague higher authority while you continue to position yourself as on his side.
Positioning for easy acceptance. If the other side is proud of his ability to negotiate, his need to win may stop you from reaching an agreement. If so, try making a small concession just at the last moment, before the he requests it. Because timing is more important than the size of the concession, the concession can be ridiculously small and still be effective. If the other side agrees and then reopens to nibble on price, tell him that his suggestion does not offend you, but that your board of directors will never renegotiate a deal once it has been made, and they will force you to walk away. Or tell him that although you cannot budge on the price, you might be able to offer him something of value in another area. When you’re done negotiating, congratulate the other side. However poorly you think the other side may have done, congratulate him and make him feel he won.
“Wow. Did you do a fantastic job negotiating with me. I realize I didn’t get as good a deal as I could have, but frankly, it was worth it because I learned so much about negotiating. You were brilliant.”