Become A Master Negotiator

Summary: Asking questions to reveal any hidden motives behind a counterpart’s rejection of a deal point.

To be an effective negotiator, you have to learn to Uncover the Real Reason behind a counterpart’s resistance.

Example.

Jack is refinancing a home. His mortgage broker itemizes all the charges associated with securing a loan. Jack asks if the fee for the appraisal for the house can be waived since he had an appraisal done six months earlier and would like to use that appraisal. The mortgage broker says that getting an appraisal is standard company policy and her boss would never approve of waiving the appraisal or the fee. To find out if there is another reason the broker does not want to waive the fee, Jack could ask to speak directly to the broker’s boss. If the explanation the broker has given is not exactly accurate, the broker will probably make a concession. Better yet, if she does let Jack talk to her boss, he may succeed in gaining something he would not have gained if he had not used this tactic.

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Summary: Putting conditions on an agreement in order to protect oneself.

The Safeguard is employed when a relationship is new or you have little or no trust in it. The tactic is designed to protect you in the event that your counterpart does not live up to his negotiated deal point.

Example

A retailer or distributor offers to buy 50,000 units from a manufacturer for $1 per unit. The normal price for anything less than 50,000 units is $1.25 per unit. The manufacturer agrees to the $1 price but places a Safeguard into the contract that reads, “In the event that the distributor does not purchase 50,000 units by the end of the year, she will be back-billed 25 cents per unit.” Or the manufacturer stipulates that if the distributor has not ordered 50,000 units by the end of the year, the price effective in the new year will be $1.25 per unit. Both of these examples provide Safeguards to the manufacturer.

Counter

There are three effective counters the distributor could employ: (1) She could just Say “No” and Stick to Her Guns; (2) she could argue that her corporation has a policy that does not allow any type of back-billing; or (3) if she is interested in building a long-term relationship, she could negotiate a “tiered” price, agreeing to pay, for example, $1.35 per unit for orders up to 20,000, $1.15 per unit for additional units up to 40,000, and $1 per unit on any purchase over 40,000. Although shark-like negotiators might debate the wisdom of this last counter, being friendly and flexible helps build relationships. People are much more willing to help create a win-win outcome with a counterpart they like and trust.

Have you used or encountered this tactic in your negotiations? If so, how’d it go?

Summary: Leaving the most difficult issue for the very end of the negotiation.

With this tactic, Isolating Agreement is taken to the extreme and the single most difficult issue is left for last. One example of an issue that is often the last to be negotiated is indemnification. When major corporations with deep pockets (e.g., utilities) negotiate contracts, they want to be indemnified, to avoid liability and prevent a lawsuit if any of their contractors’ products or services fail.

Example

A utility wishes to purchase a transformer from a manufacturer. Everything is negotiated, including the price and delivery dates. The last thing to be negotiated is the indemnification clause, and that is where the negotiation falls apart. The manufacturer insists that its legal department will not approve the indemnification clause as it is written, and the utility says it cannot purchase the equipment without the indemnification.

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Summary: Discussing the issues that can be easily agreed on before addressing the difficult issues.

In complex negotiations, there are usually many deal points that need to be discussed and negotiated. Issues such as price, delivery schedules, service agreements, warranty, who will actually perform the work, training, and how add-ons or additional work will be handled are all examples of negotiable issues that need to be determined. If both parties are close to agreement on these issues, it may be best to discuss them first in the negotiation.

Example

When unions and management teams negotiate, they almost always negotiate the easiest points up front, and then save the economic issues for the very last. This serves two purposes. First, it speeds up the negotiation by getting resolution to the issues on which both parties agree. Second, it helps build the relationship between counterparts by allowing them to reach agreement on the easier issues.

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