Become A Master Negotiator

Summary: Using the power of the relationship with the counterpart to get concessions.

Once in a while you may want to remind your counterpart of your long-term relationship or provide some specific details about your circumstances that your counterpart may not be aware of.

Example

A bank sends a corporate customer a monthly loan statement. The statement contains a $50 charge for a loan payment that was received five days late. The accountant for the corporate customer calls the loan officer at the bank and states, “I have a problem and I need your help. For whatever reason, you received our loan payment five days late. Considering our ten-year relationship, I’m hoping you can make a one-time exception and waive the late charge.”

Counter

If the bank’s goal is to build a long-term relationship with the customer, our recommendation would be to grant the one-time waiver. Adding a Safeguard might be wise. The bank could send the customer a letter granting the one-time waiver, but specifying that if the problem recurs, a $50 late charge will be imposed.

If the bank’s only goal is collecting the $50 late payment, two counters would be effective. First, the loan officer could tell the customer that the late fees are Standard Practice or Policy for the bank and, as such, are nonnegotiable. Second, the loan officer could use Good Guy/Bad Guy, offering to ask her manager for permission to waive the fee, and then coming back and saying that her manager refused.

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

Summary: Imposing a time limit for making a decision.

At any time during a negotiation, either party may Set a Time Limit on agreeing to a particular deal point. But remember, you don’t have to accept any limits your counterpart sets. In fact, it’s a good idea to question all of your counterpart’s limits. On the other hand, it’s also a good idea to go into a negotiation with your own limits in mind.

Example

You make an offer on a house. The seller counters with a price that’s two thousand dollars higher, and gives you just twenty-four hours to make a decision.

Counter

First, you could counter with the tactic of Asking an Open-Ended Question, and inquire why the seller is imposing this time limit. Second, using the tactic of That’s Not Good Enough, you could tell the seller that the time limit is unacceptable–just make sure you’re prepared to walk away. A third option would be Moving the Deadline: tell the seller you can’t respond within twenty-four hours, but will reply in forty-eight hours. This tactic would give you more time to make a better decision. Fourth, you could simply ignore the time limit.

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

Summary: Appealing to a counterpart’s ego.

One effective way to gain leverage in a negotiation is to use Flattery or Sweet Talk. When used effectively, flattery has the impact of motivating the counterpart to respond.

Example

The president of a nonprofit corporation asks a speaker to give the opening address at the organization’s fundraising dinner. The president begins his request with the statement, “Although I don’t have the budget to pay you, I need a great speaker and you are the best I know.” This type of flattery, combined with the opportunity to do something for a worthy cause, makes the request hard for the speaker to turn down.

Counter

If the flattery seems sincere, the speaker should express her appreciation. But, it’s important for her to be able to set the flattery aside when making a decision. If she wants to counter the offer, she can emphasize the importance or value of her speaking skills. A second option would be to ask for some compensation other than money such as a free advertisement in the program for the fundraiser.

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

Summary: Moving a counterpart toward an unpleasant outcome, then threatening to push.

When both sides in a negotiation have a great deal to lose if the negotiation fails and a great deal to win if it succeeds, the You’ll Be Sorry tactic can be useful. One counterpart pushes the other right up to the edge of some terrible outcome, then threatens one final shove.

Example

Lee Iacocca, former chairman of Chrysler Corporation, used this tactic of pushing his counterparts to the brink when he was negotiating with the automobile unions in the late 1970s. Iacocca’s goal was to have the unions accept a final wage package of $17 per hour. The union would not settle for any less than $20 per hour. One bitter night, Iacocca addressed the union negotiating committee. “It was one of the shortest speeches I have ever given,” he later recalled. He told the committee, “You’ve got until morning to make a decision. If you don’t help me out . . . I’ll declare bankruptcy in the morning and you’ll be out of work. You’ve got eight hours to make up your minds. It’s up to you.” In this example, Iacocca practiced You’ll Be Sorry, forcing the unions to the edge of the cliff and then threatening to push. Although the unions did concede, this historic Chrysler story turned out to be a win-win for everyone: the workers, the government, the company, and Lee Iacocca.

Counter

If a counterpart uses You’ll Be Sorry against you and you believe that your counterpart has the power to back up the threat, you have two choices: You can utilize These Boots Are Made for Walking and accept the consequences, or you can decide what is most important to you and use the Trade-Off Concession to negotiate other deal points.

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

Summary: Trying to influence a deal point by offering the ideal way to fulfill all of a counterpart’s needs.

When your counterpart lays a proposal, solution, or deal point on the table, it’s a good idea to test how strongly that counterpart feels about his or her position. One great way to do this is to offer your counterpart The Perfect Solution.

Example

A general contractor provides a proposal to build a patio and barbecue for a homeowner for $15,000. When the contractor states the price, the homeowner responds that he doesn’t want to spend any more than $12,000. The contractor replies, “If I could design and build for you The Perfect Solution to all your patio and barbecue needs, would you be able to come up with the additional $3,000?”

Counter

The homeowner could counter with the tactic of the Higher Authority, blaming the budget on his wife, equity line of credit, or someone or something else with decision-making power. Second, he could utilize the tactic of Asking an Open-Ended Question and ask the contractor, “If I can’t find an additional $3,000, what would you recommend I do?” Third, he might try the Reward in Heaven tactic, suggesting, “If you could build the patio and barbecue for close to $12,000, I will be a great reference for you in years to come.” Fourth, he could ask the contractor for a breakdown of the costs to see if there are any parts of the project he could do himself.

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

Summary: Using negative information about a competitor to affect a counterpart’s decision.

Sometimes you can change the power and direction of a negotiation simply by Providing Negative Information.

Example

A saleswoman is making a product presentation to a customer, who eventually says he’s thinking about buying the product from ABC Company, one of the saleswoman’s competitors. The saleswoman has read a great deal of negative information and reviews about ABC’s service, financial stability, and product quality. So she tells the customer, “Before you make a final decision, I recommend that you read these reviews on ABC Company.”

Counter

The customer has to do his homework and verify everything the salesperson says. The salesperson will undoubtedly weigh the negative information about the competitor’s product to be favorable to her own company. The customer should ask the saleswoman to explain why her product is superior to the competitor’s, and substantiate her claims. If the customer is really interested in ABS Company’s product, he should provide them with the opportunity to answer the negative claims made by both the saleswoman and online sources.

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

Summary: Making an offer and assuming a counterpart will accept it.

With this tactic, you make an offer and assume that your counterpart will take it. You’ve undoubtedly met salespeople who, before a negotiation has been settled, just assume you will buy their product and ask, “How Would You Like to Pay for That—cash or credit card?”

Example

You are asking $300,000 for your house. You’ve stated that you’ll consider taking less if the buyer will agree to a short escrow, but you haven’t specified how much less would be acceptable to you. The buyer says he’ll buy your house for $270,000 and asks if you’d prefer a fifteen or thirty day escrow.

Counter

First, you could use the tactic of YIKES! You’ve Got to Be Kidding!-blowing up to get the price back to a respectable figure. Second, you could try making a Trade-Off Concession. You could say that you will accept the price of $270,000 if the buyer will pay in cash and buy the next day. Third, using I’ll Meet You in the Middle. You could come up with a higher price and split the difference. Fourth, you could utilize These Boots Are Made for Walking.

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

Summary: Doing something irrational to encourage a counterpart to concede deal points just to escape from the behavior.

Once in a while it pays to do something crazy—something so irrational that your counterpart will concede just to get rid of you. To make this technique effective, you have to do something so far afield from rational behavior that your actions are obviously absurd.

Example

At the DMV, I once observed a woman who was so upset about having waited in three different lines without finding anyone who could solve her problem that she began crying and screaming, “All I want is for someone to treat me like a human being!” When this outburst started, a manager took the woman aside and personally helped her sort out her registration problems.

Counter

If someone uses this tactic on you, don’t take the behavior personally. Realize that many negotiators do the absurd just for effect. You can always walk away until your counterpart agrees to become reasonable. Another possible tactic is No More Mr. Nice Guy. If your counterpart realizes that every time she becomes unreasonable, you withdraw the last offer you already agreed to, she will soon recognize that her behavior is costing her. Another option is to get closer to someone who is acting crazy. Telling a person who is being absurd, “I love working with you because you display such great passion and emotion,” usually diffuses the effectiveness of the crazy behavior.

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

Summary: Promising something favorable in the future in return for concessions now.

One counterpart in a negotiation may promise the other counterpart, “If you can meet my demands, I will reward you at a later date.”

Example

I once negotiated with an experienced printing buyer. When I was reviewing the job he wanted me to give him a quote on, he made a point of telling me how much printing he was going to be purchasing down the road. Naturally, when I quoted the job, I gave him a very low price because I wanted his future business. When I called the buyer back with the quote, he said that he really wanted to use me but my price was higher than he had expected. He offered, “If you can reduce the price another $500 on this job, I will give you all my future work.” In effect, he was promising that I would get my Reward in Heaven.

Counter

Unfortunately, most people fall for this tactic. My experience has taught me that the promised reward rarely comes through.

One possible response is to simply fight fire with fire. Using the tactic of the Trade-Off Concession, I might have said, “I am not able to discount this job, but if you give me this job and then have another one for me in the next thirty days, I will discount the second job.” A second effective counter would have been citing Standard Practice or Policy: “It is not my company’s policy to discount first-time jobs or allow me to discount a job on the promise of future business.”

Experienced negotiators have been burned by this technique too often. Please spare yourself the frustration of not getting the reward!

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

Summary: Using the argument that “It’s always been done this way.”

Standard Practice or Policy is a tactic used to convince a counterpart to proceed in a certain way simply because that way is “policy.” This tactic works well because it suggests that the way being proposed is the usual or customary procedure and, therefore, is probably the safest approach. The most common example is the standard contract. The party being asked to sign a standard contract will probably just assume that the contract doesn’t need to be changed. However, questioning just how “standard” a contract really is usually produces good results.

Example

Fernando is renting some office space. The landlord hands Fernando a lease to sign, saying, “It’s a standard commercial lease. Just initial it in two places and sign at the bottom.”

Counter

Fernando has several options here. Using the tactic of the Salami, he could start slicing away, ever so slightly, at what is considered “standard,” agreeing to some terms of the lease but not others. He could use the tactic of the Trade-Off Concession, agreeing to all the terms of the lease in return for one month’s free rent. He could rewrite the contract to suit his own needs. Or, utilizing the tactic These Boots Are Made for Walking, he could always leave and go rent space from someone else.

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