Become A Master Negotiator

Negotiation Lessons from the NBA Lockout – January 2012 Master Negotiator

Everyone Negotiates — Fri, 27 Jan 2012 21:50:11 +0000

In our October 2011 issue of the Master Negotiator, we talked about the National Basketball Association’s (NBA) lockout and the inability of the Commissioner of the NBA, the team owners and the players to pull together a win-win outcome after months of on-going negotiation.

The three areas where both sides could not find agreement were: the division of revenues between the owners and the players, the structure of the salary cap system and the length of the players’ contracts.

A harsh reality the owners brought to light and remained steadfast was in the fact that 22 of the 30 NBA franchises were losing money each year and ultimately, the owners needed a Collective Bargaining Agreement that would help them run their teams like a business that consistently makes a profit.

In October’s newsletter, we made a few predictions. First, we said that the players would never gain back the money they were losing during the lockout by not coming to agreement. Second, that it would also be hard for the owners to quickly come to agreement because the league is composed of “haves,” the teams from big profitable markets, and the “have nots,” the less profitable teams from smaller markets. And third, we predicted that the lockout would be resolved in late December or early January.

On November 28th, the NBA came to agreement with the players after a 149 day lockout. We are proud to say that we were two for three in our predictions. First, the players will never gain back the money they lost while not playing. During the 2010 – 2011 season, the average salary of a NBA professional was approximately $5,000,000 a season. With the first 16 games scrapped due to the lockout, you can estimate that the player making an average salary lost about $1,000,000 not playing ball. This was a double whammy. Not only did the players lose money from the salary split from 57 percent to approximately a 50-50 split, they will never recover the salaries they lost.

Second, we predicted that it would be difficult for the owners to quickly reach consensus because of the large market (profitable) and smaller market (unprofitable) teams. What the owners did well was keep their differences under wrap and hold steadfast in their united goal of making the entire NBA a more competitive and profitable league. Also, some owners from the smaller teams were singled out for being holdouts. My inside sources say that the leaks about who was holding out were not even correct. The owners demonstrated a great example of the following tactic: the side who is least committed to the outcome holds the most power. The owners were not committed to playing the game if that meant continuing under a Collective Bargaining Agreement that lacked balance and fairness towards all teams. Great team owners show us that being united and not overly committed to a flawed past contract, can really help create a great negotiation outcome for everyone.

Third, on our final prediction that the lockout would be resolved in the last part of December or the first week in January, we were spot on. Part of our prediction was based on the last lockout. If the dispute was not resolved by the end of November, we felt confident that David Stern would have made a public announcement that if the contract could not be quickly reached, the NBA would abolish the whole season. Just like the 1998-1999 lockout, we felt confident that neither sides wanted this to happen, especially the players who risked losing an average of 5 million dollars.

What are our lessons to be learned in this negotiation? There are four of them.

Economics is the driving force. When you have a league of “haves” and “have nots” – a league when the NBA already owns one team that could not make it on their own – something had to be done economically for the entire league to be competitive and survive. When people see survival at stake, it makes it much easier to make your case and stand your ground.
It really helped the negotiation by having all the teams united in the goal of changing the Collective Bargaining Agreement in the best interests of the NBA. The Players Association did everything they could think of to try and divide the owners, but it did not work.
Fear was the deciding factor. The owners feared agreeing to a contract that was going to continue to create a losing business model. The players feared losing another paycheck. Ultimately, the fear of losing your next paycheck was even greater than the fear of entering into a bad contract that could lead to financial ruins.
Almost everyone, with the exception of the owners, lost. The players lost both in the short term and in the long term. The ushers, ticket takers, concession stand employees and security workers all lost. Some of these people relied on the income they make at the games to support their families. The businesses that make their living supporting the teams or surrounding the venue all lost. And last, the people who actually pay the bills – the fans – lost. Some of the fans have stated that they are so disgusted about the greed on both sides of the table that they will not go back to another game.

Final analysis? Lose, lose, lose, lose and a win.

Getting Time and Information on Your Side – November 2011 Master Negotiator

Everyone Negotiates — Tue, 06 Dec 2011 17:33:59 +0000

Time and information are two critical elements in any negotiation. To get these elements on your side, you must realize one very important fact: the negotiation process begins long before you ever meet with the other party.

Time

Most people think negotiation starts and ends when the two parties actually meet. Nothing could be further from the truth.

A woman once asked for my advice on what strategy to use when requesting a raise during her annual review with her boss. All the options she had considered dealt with the review session itself. She had not considered the preplanning and information gathering she needed to do to create a powerful negotiation. She had not taken into account such things as: documenting her accomplishments over the previous year; figuring out what her boss’s needs and goals were, and how she could help him achieve those goals; finding out what types of raises her boss had given in the past and in what amounts; nor developing a clear vision of her own goals for the negotiation. The fact is, the negotiation actually began the day this woman started working for the company–and will continue until her next employment opportunity. Most negotiations, like life, are a continuous process. How you spend the time before you meet with the other party is extremely important.

Of course, the time spent in the interactive negotiating process also plays a critical role. Most often, negotiations will conclude in the final 20 percent of the time allowed. This aspect of negotiation follows an interesting rule that seems to apply to life in general. It’s called the 80/20 rule, or the Pareto Principle (after Vilfredo Pareto, the Italian economist and sociologist who defined it). It states: “20 percent of what you do produces 80 percent of the results; conversely, 80 percent of what you do produces only 20 percent of the results.”

In negotiation, this can be translated to: “80 percent of your results are generally agreed upon in the last 20 percent of your time.” Time and deadlines can favor either side, depending on the circumstances. Here are a few suggestions that will help you bring time to your side of the negotiations.

Have patience. Because most concessions and settlements occur in the last 20 percent of the available time, remain levelheaded and wait for the right moment to act. As a general rule, patience pays.
If there are benefits to resolving the negotiation quickly, sell the other party on the value a quick settlement will have for him. There will be times when one or both parties will benefit if negotiations are resolved quickly.
Realize deadlines can be moved, changed or eliminated. As your deadline approaches, do not panic. Simply change the deadline.
Try to find out the other party’s deadline. In most negotiations, you are better off if you know your counterpoint’s deadline. As you near his deadline, his stress level will increase and he will most likely make concessions.
Take your time. Generally, you will not achieve the best outcome quickly. Although there are exceptions to this rule, you are usually better off negotiating slowly and with perseverance.

Information

Information is another key issue in negotiation. Most often, the side with the most information will receive the better outcome. Unfortunately, since most people tend to perceive the negotiation as the time the two parties spend actually discussing terms, they fail to get adequate information before meeting.

A negotiation is not an event, it is a process. It starts long before the face-to-face encounter. One reason you have to start preparing much earlier is that during the actual negotiation, it is likely that your counterpart will conceal her true interests, needs and motivations. Your chance of getting this information during the negotiation is relatively remote.

The earlier you start, the easier it is to obtain information. People are more willing to give out information prior to beginning any formal interaction. For example, before buying your next car, go to several dealerships asking questions about the models you are interested in, the financing plans available, and how willing different salespeople are to deal. When you actually began negotiating to buy a particular car, all this background information can be used to your advantage.

Where do you get information? From anyone who has knowledge that will help you in your negotiation. You can find useful material by researching facts and statistics; going on the Internet; talking to someone who has negotiated with the other party in the past; talking directly to the other party; or speaking with friends, relatives and others who’ve been in similar negotiations. Take the example of buying a house. By speaking to your real estate agent and doing some research on your own, you can easily find out what other houses in the area have sold for and whether the seller has any reason for wanting to sell quickly (like a job transfer). By talking with other friends who have bought houses, you can discover areas that are often negotiable and that may affect the seller’s willingness to come down in price, like the closing date, or flexibility in demanding repairs.

Be Prepared

Put time and information on your side with advanced preparation. Use the time before you meet to gather information about the other party’s needs, what he or she considers negotiable, and his or her likely negotiating strategies. Based on this information, you can plan your own strategies for success.

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Everyone Loses in the NBA Lockout (For Now) – October 2011 Master Negotiator

Everyone Negotiates — Mon, 31 Oct 2011 17:25:51 +0000

What happens when you put the following people into one room: David Stern (The Commissioner of the NBA), Billy Hunter (Union Executive Director), a selected group of NBA team owners, and last, a group of players who happen to be some of the highest paid people in America? You end up with a room full of egos so big that they don’t have the capacity to negotiate to a win-win outcome.

This group of individuals has met many times in hopes of coming to some type of outcome that both sides could agree on. Most recently, negotiations broke down after a 3 day marathon session, complete with a mediator who had successfully helped the NFL and MSL come to win-win outcomes. At this point, there have been no new dates set for both sides to come together and meet again.

What are the sticking points? The sides remain divided over three main issues: the division of revenues, the structure of the salary cap system and the length of the players’ contracts. First, let’s discuss the revenue split. Under the current contract, the players have 57 percent of the split in an environment where NBA owners have lost around $300 million. The owners have insisted a 50-50 split under the new contracts before they even begin discussing the salary cap. Prior to the last negotiations breaking down, the players seemed to be entertaining a 50-53 percent sliding scale, depending on revenues. The owners don’t seem to be budging and are trying to get back about 700 million dollars they have lost. The owners currently claim that 22 out of 30 NBA franchises lose money each year. To help the NBA franchises be more profitable, the owners are trying to negotiate shorter contract lengths while, naturally, the players want longer contract lengths. Ultimately, the owners need to run their teams more like a business that consistently makes a profit.

So why do we say that everyone loses in this situation? It has long been our belief that, in a short period of time, people seldom gain back what they lost during a strike. It will take years for the players and the owners to re-coup the loses they are currently experiencing. One challenge the NBA has is that some teams make a ton of money, some teams lose a ton of money. The teams that lose a ton of money each year may actually be financially ahead by not playing ball. This makes it even harder for the owners to come to a quick agreement on a winnable outcome. So who is losing right now?

First, let’s start with the little guy: Every usher, every ticket taker, every janitor, every security person, every waitress at nearby restaurants, and every retiree who relies on this work for their income is losing right now in a big way. Most likely, some business owners have asked their management and full time employees to take pay cuts to help them make ends meet during such a difficult time. Considering the fact that the purchasing of tickets, products and food, spurs an increase in employment, this lockout is not helping the U.S. economy get back on its feet.

Second, the players: Every day that goes by, more games will be cancelled. In the 1998-1999 lockout, it took until February 5th 1999 to play an NBA game. It is our prediction that it will be late December or early January before the teams are back on the court. If that does not happen, the season may even be abolished. The season was supposed to begin on November 1st. All games have been cancelled until November 14th, costing the players over 170 million dollars in salaries. More game cancellations will be announced shortly. Why can’t both sides find a common ground? Both sides say ‘there are principles involved.’ When you combine principles with huge egos, you mix a volatile cocktail that dictates everyone is going to lose.

Third, the owners: The owners of the more profitable franchises are losing substantial amounts of money by not playing ball. These are the owners who want to be at the table and work out an outcome. They are not only losing fan income, they are losing millions in television and sponsorship revenue each day the teams are not back on the court. Here is the twist. Some of the teams in the NBA that are not doing as well financially, either with fan, sponsorship or television revenue, might be losing less money not playing ball under the old contract. These owners may be the only ones that will win by not coming to an early agreement.

Fourth, the fans: If you think about it, fans are the most important asset in this negotiation and they are the only ones who are not represented at the table. We are trying to divide up 2 billion dollars among 400 players who have a job that, when you think about it, is not a necessity. If the fans stopped paying for the tickets and attending the games, the rest of the negotiation becomes a moot point. For most fans, and especially season ticket holders, attending the games is not about the money they spend on tickets. It is about the fan experience and being a part of something special about which most NBA fans feel tremendous pride.

So there it is, just about everyone is losing. Do we have any recommendations for a group of egos this strong and big? Use the tactic of selling people on the problem, not the solution. The solution is to come to a win-win outcome both sides may not be happy with, but can live with. That tactic has not worked. If they can’t come to a resolution, and all past behavior demonstrates they either don’t have the capacity or willingness, then what happens for both sides? It is only when the problem becomes big enough in each side’s mind, that we have a potential for a resolution. This negotiation is to be continued…

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The Different Ways to Say “No” – September 2011 Master Negotiator

Everyone Negotiates — Tue, 11 Oct 2011 15:32:11 +0000

In a negotiation, there are times when you have to tell your counterpart “No.” The challenge is that for some people, the word “no” is the equivalent of a four letter word. Telling your counterpart a resounding “No,” could cause the negotiation to deteriorate to the point that neither counterpart is able to achieve a win-win outcome.

Currently, the major grocery store chains of Ralphs, Albertsons and Vons are in negotiations over a contract defining new wage and benefits. The grocery stores want their employees to take on more responsibility in paying for their health care benefits. Both sides have said a resounding, “No,” to each other’s proposals and at this point, there is a threat of a strike. Because of the damage done to both sides in the strike that occurred two contract negotiations ago, it is our prediction that this mediation will be resolved without progressing to a strike. So, when you need to say, “No,” what are other options that may help resolve the disagreement. The following 8 tips will help to move your negotiation forward:

Just say it: Although uncomfortable for some people, the easy way to tell a counterpart, “No,” without any mixed signals is simply to look them in the eye and say, “No, I am not going to agree to that.”
Conditional ‘No’: This technique works exceptionally well for the amiable person who does not like looking people square in the eye and telling them an outright, “No.” Instead of telling your counterpart, “No, I can’t/won’t do that for you,” use a ‘conditional no’ and say, “I can’t get the project done for you this week, but I can work on it later this month, if that will work for you.”

Anticipate the Objection: Before your counterpart asks you for something that you cannot agree to, say something like, “I know your members feel they have earned the right to their health benefits. In today’s economy, though, with our margins shrinking to the lowest levels in our history, we can no longer continue to carry the full burden paying for the same portion of health care expenses.”
If-then: In some situations, if your counterpart was willing to meet certain conditions, you would not then have to say “No.” For example, “If you could agree to get your members to pay $100 per month toward their health care, instead of the $150.00 we were originally asking you to do, then we could make this work.”
Selective Agreement: In this situation, you can actually agree to a portion of what your counterpart says without saying, “No,” to the entire statement. For example, you state, “I am in agreement with you that your members, if given the choice, would allow us to pay their entire health care plan for years to come.” Although you partially agreed, you made no comments regarding whether you were willing to make a concession or not.
If You Were Me: When your counterpart makes a request that makes no sense for you to agree to, one great way to counter is to ask a great question like, “If you were in my shoes representing our shareholders, how could you agree to a health care concession that will bankrupt the business and leave everyone without a job?”
Ask for Clarification: Before ever saying, “No,” to your counterpart, don’t assume you know exactly what they are asking. Ask clarifying questions to gain a better understanding. With a better understanding, you may be able to use one of the above options rather than an outright “No.”
I will think about it and get back to you: In certain situations, it may be in your best interest to not tell your counterpart, “No.” For example, if you are not sure if you have another option with a different counterpart, you may want to keep your options open. Let your counterpart know that you will think about it and get back to them. One caution with this option: amiable people use this option when they do not feel comfortable saying “No.” They will tell you they will get back to you when they have no intention of doing so. They use this strategy to simply give them distance from their counterpart and buy time.

Use these strategies to help you and your counterpart achieve a win-win outcome, even when you have to say, “No.”

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Overconfidence – August 2011 Master Negotiator

Everyone Negotiates — Thu, 18 Aug 2011 15:56:38 +0000

In last’s month’s Master Negotiator, we talked about the importance of having confidence when you negotiate and, specifically, what you can to do build an even higher level of confidence. This month, we are going to explore what happens when you take one of your strengths, confidence, and turn up the volume on it to the point it becomes overconfidence and undermines your success as a negotiator. Unfortunately, there is a very fine line between the success confidence brings to the table and the fall to death that can occur when one negotiator is overconfident.

As a negotiator, when you are overconfident, the following behaviors may undermine your ability to build a relationship with your counterpart and create a win-win outcome.

Overconfidence comes across as cocky and arrogant. Overconfident negotiators do not feel a need to value their counterpart’s opinion, needs and goals or take the necessary time to build a relationship where the counterpart is motivated to help create a win-win outcome. Some negotiators will actually chose a more expensive outcome from a competitor rather than have to deal with an overconfident negotiator who comes across with the same impact quill of a porcupine.

Lack of preparation. When you are overconfident, you tend to believe you already know what you need to know and feel that no additional preparation is needed.
Fewer options. When you exude overconfidence, you tend to believe that your way is the only way and that the counterpart, if they are smart, will see the merit of your ways and agree to your proposal. When you believe your way is the right way, you tend to overlook things like the possibility of competition stepping up to the plate and, therefore, don’t take the time to think through options.
Unwilling to walk away. One of the best ways to counter an overconfident negotiator is to take away something the negotiator believes is rightfully his or hers. If you are selling a piece of equipment for $10,000, an overconfident negotiator is likely to offer you $4,000.00 and tell you to take it or leave it. As the seller, your guts tell you this overconfident negotiator is a jerk and you decide that you do not want to sell your equipment to him at any price. You respond, “Your offer offends me and I have decided to not sell my equipment and take it off the market.” Overconfident negotiators are not good at losing something they had their sights on and most likely are going to come back at a significantly better price.
Talk more than you listen. Recently I was having a drink in the Delta Club room in Atlanta. A pompous, overconfident jack ass came in and sat next to me. Instead of saying hi and asking what I did for a leaving, he picked up his phone, announced to the person he was calling that he was “alpha dog” and preceded to talk to this person about a deal he was working on. What he did not know is I am working with one of my clients on the same deal. The insights he shared were invaluable in helping my client to strategize their negotiation. Someone needs to tell “alpha dog” that keeping your mouth shut in highly public places may work to his advantage.
Make assumptions and jump to false conclusions. When you are overconfident, you’ll do things that don’t make sense. You have to believe that all the people involved in the phone tappings at the British tabloid, The News of the World, never thought about the possibility that Rupert Murdock would take the extreme option of closing down the paper. When you realize that the News of the World was less than one percent of News Corps overall profits, the pain that these phone tappings have caused over the last four years make sense that for one percent of the profit, keeping the tabloid around is just not worth the trouble.

If you’ve received negative feedback during a negotiation, such as your counterpart walking out on you or telling you that you are rude, you may be emitting an attitude of overconfidence. Adjust your behaviors and your negotiations will most likely result in more positive outcomes for you and your counterparts.

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Purposeful Questioning for Negotiating a Job Offer

Everyone Negotiates — Thu, 04 Aug 2011 22:12:02 +0000

You are interviewing for a job as a sales representative for a company that makes software for lawyers. Two of your main goals are to have more flexible working hours and to be able to telecommute a couple of days a week. You might ask the following questions to fulfill various purposes.

Gain information: “What specific types of experience are you looking for in a sales representative?” (You might not want to ask “Does the position call for any specific knowledge of the law?” if you are not experienced in that area.)

Clarify or verify information: CLARIFY: “When would you need me to start?” VERIFY: “This is a full-time position, isn’t it?”

Check understanding and level of interest: “What is more important to you – that the salesperson is in the office forty hours a week, or that he increases sales?”

Determine behavioral style: “Would you like me to role-play a typical sales presentation? Or would you prefer to see statistics that show how much I increased sales for my last company?”

Gain participation: “In what areas are you hoping to improve sales?”

Give information: “Did you know that I am fully set up to work from my home office and, in my current position, work two days a week from home?”

Start someone thinking: “What attributes do you think are most important in a salesperson?”

Bring attention back to the subject: “Can we talk more about flex time? Do your salespeople have to be in the office from nine to five?”

Reach agreement: “If I could guarantee an increase in your sales volume, would you be willing to consider more flexible working hours?”

Increase reception to your ideas: (If you want to work early hours and you live on the West Coast): “Don’t you think it’s best to call on potential customers on the East Coast first thing in the morning?”

Reduce tension: “Whenever I bring up the subject of flex time, you seem a little uncomfortable. Can you tell me why?”

Give positive strokes or build rapport: “It’s pretty frustrating when you know your product is better than all the others on the market, and yet your sales are not what they should be, isn’t it?”

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Negotiating With Confidence – July 2011 Master Negotiator

Everyone Negotiates — Wed, 27 Jul 2011 08:00:30 +0000

When you negotiate, confidence is a great attribute to help you achieve a win-win outcome. Dictionary.com defines confidence as the belief in oneself and one’s powers or abilities. When you have deep confidence, your counterpart usually recognizes the confidence that you exude, both verbally and nonverbally. The benefits of having high confidence include:

Feeling strong about what you are asking for from your counterpart
Feeling strong that you are right
Having the ability to say “no” to your counterpart if what they are asking for is not reasonable or in your best interests
When you have confidence, it positively impacts the outcome of the negotiation because your counterpart tends to ask for less and give in to your requests more often than if you lacked confidence

So the question becomes, how does one increase the belief in self or in one’s powers and abilities? The following 5 tips will help you to become a more confident negotiator.

Preparation… Preparation… Preparation
There are some negotiators who prepare on the way to meeting with their counterpart. When it comes to building confidence, this is not a good strategy. The more you prepare, the more you know the details, the facts, the history or the organization or person you are negotiating with, and your BATNA (Best Alternative to a Negotiated Agreement), the more confident you will be when you meet with your counterpart to negotiate.
Develop Options and Alternatives
If you have multiple options and alternatives to help create a win-win outcome, you will feel more confident in your ability to negotiate. The best negotiations are when both counterparts have multiple options or ways to complete an outcome where both parties consider it to be win-win. One outcome for you may be that if you cannot structure a reasonable deal with this vendor, there are several other vendors that would love to have your business.
Have a Clear, Positive Vision of the Outcome
A vision is a clear mental picture of the outcome. When you negotiate, you always have a vision that is one of three different outcomes. The first vision is a positive vision. You believe you will achieve a positive outcome and have done the preparation to align with your vision. The second vision a negotiator may have is a vision of the status quo. In this vision, you just want to gain or keep what is rightfully yours but you are not looking to win in the negotiation. The last vision a negotiator may hold is a negative vision. In this vision, the negotiator walks into the negotiation believing they are going to lose before the negotiation even starts. A positive vision is the only vision that will help you build confidence.
Hold Your Counterpart Accountable
Make sure every deal point you or your counterpart agrees to is measurable and time bound. When you do this well, you can feel more confident that what was agreed upon will happen. When the deal points are not measurable and time bound, there is a good chance you may still get your reward, but only in heaven.
Trust Your Guts
Becoming a confident negotiator is part knowledge and part guts. There are times when your counterpart says all the right things. In fact, what your counterpart says may even line up with the knowledge you have gained. But still, there is something about this counterpart you do not like or trust. When you do not like or trust someone, your guts are telling you that something stinks. If you believe your guts may be onto something, you will have the confidence to walk or choose an option you developed in point 2 above.

Confidence can be a great asset to your negotiation. But, too much of it will most likely do more harm than good. Next month we will cover the impact of how overconfidence can hinder your negotiations.

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The Power of Competition in Negotiation – June 2011 Master Negotiator

Everyone Negotiates — Mon, 25 Jul 2011 18:11:00 +0000

In a negotiation, the counterpart who has the power is better able to positively leverage or improve their outcome. One of the fastest ways to gain power is to introduce competition into the negotiation. People who make their living by selling a product or service typically do not like it when a buyer tells them they have a different or lower bid from a competitor. It forces a sales person to really “sell” the benefits and value of their proposal. The buyer, on the other hand, loves competition to help improve their deal. When you go out to buy a car from a dealership, and you find the exact same car at three different dealerships, you will achieve a much better outcome by sharing information with one dealer about what the other dealers are willing to do to sell the car.

In the last three weeks, two of our clients have been acquired by larger companies or capital firms. In each case, during the finalization of a deal with the buyer, a second potential buyer entered into the negotiation with an offer to buy the company. The first bidder significantly improved their offer to finalize the deal and eliminate the second bidder from the deal.

Competition holds tremendous power for 3 reasons.

First, competition means you have possible options and outcomes. When you have multiple options, you tend to be less committed to only one option. In a negotiation, it is important to know that the side who is least committed to the negotiation holds the most power. This is true in business and it’s true in personal relationships as well. The best negotiations and relationships flourish when there is equal commitment to a win-win outcome.

Second, one of the biggest implicit needs of any great sales person is the need to make the sale. Great sales people hate to lose a deal to a competitor. Sales people, with the thought of not losing to a competitor going through their mind, have made concessions that they would never make if they were not being compared to a competitor.

Third, competition helps you to build knowledge and gain expertise over the topic of negotiation. The more people you meet with and ask questions, the more you know.
But what if people are using competition against you to improve their deal? With competition holding power, how do you counter competition to ensure you achieve a win-win outcome? Here are five tips:

Call their bluff: A sales person recently told me a competitor was selling the same product he offered for $50,000 less. I told the sales person that something doesn’t sound right. Any smart buyer would call the competitor whose product is $50,000 less and place the order. A one minute phone call to save $50,000 yields an awesome return on investment. I also reminded the sales person of point number two listed below…something is going on in this sale that you either do not understand or see. I encouraged the sales person to let the buyer know he could not reduce his price by $50,000 and was interested in understanding why the buyer does not place the order with his competitor if price is the most important deal point to the buyer.
Uncover the true implicit need: If price was the most important deal point in a negotiation, we would all be driving Yugo cars and the company would still be in business. The reason we do not buy the lowest priced product or service every time is because implicit needs almost always override explicit needs. Explicit needs are deal points like: price, quantity, delivery, warranty, and terms. Implicit needs are seldom spoken and are things like: reputation, fear, image, the need to be right or make a good decision, to have trust in the relationship, and the need to be liked or loved.
Bring your own competition: If you are selling your car and the buyer wants you to deduct $1,000 from the asking price, you might be willing to negotiate this concession until another buyer shows up in your driveway and is willing to get closer to your asking price. At that moment, you will most likely be unwilling to discount your price. Unless, the second buyer took your car for a test drive, came back and told you he was not interested. In negotiation, competition can change the outcome of a deal in a heartbeat.
Walk away: As we have stated before, as long as you have the ability to walk-away from the deal, you will always hold more power in a negotiation. Once you become emotionally committed to a deal and lose the ability to walk away, the power quickly fades.
Remember, power is almost always equally balanced: If your counterpart continues to communicate with you; i.e. returns your calls or your emails or meets with you in person, you have power. If they truly believed that a competitor had the better deal than you, they would stop communication. Almost always, there is an implicit need creating the power that keeps your counterpart engaged.

Competition is a powerful tactic to add to your negotiating repertoire. Whether it is being used against you, or you are using it to benefit your outcome, never underestimate the power of competition.

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6 Negotiation Lessons from Pawn Stars – May 2011 Master Negotiator

Everyone Negotiates — Tue, 31 May 2011 21:48:08 +0000

For informal negotiation training, most people would not think about watching a reality show. But, right there on the History Channel is a television show that is one of the best at demonstrating what it takes to become a great negotiator: Pawn Stars. By showcasing the daily interactions between the pawn store employees (Pawn Stars) and customers, Pawn Stars can be a perfect example of how to approach a negotiation, as well as how not to approach a negotiation.

In the video above, the Pawn Stars share tips gleaned from their years of experience of daily negotiations with many different customers. One thing to keep in mind while watching the video and reading this newsletter: these negotiation lessons extend to the world outside of pawn shops as well.

While working on your next deal, follow these negotiation tips from Pawn Stars for a successful outcome:

Treat everyone with respect. This is something that is clearly emphasized by the Pawn Stars. What most of our parents taught us about how to treat others was solid advice in the world of negotiation. If you treat everyone with courtesy and respect, you will have few problems dealing with people and you will be able to finalize more deals. Why be courteous and respectful to a pawn shop dealer? Because they will do equally well without your life-long treasure. If you can’t sell your product to a private party, and now, because of your lack of courtesy and respect, the pawn shop worker no longer wants to deal with you, when you leave, you will have very few options.
Do your homework. Before you walk into any negotiation, do your homework. By conducting some research online, you can quickly find the asking price or approximate value of almost anything. Develop as many realistic price comparisons for your product as you possibly can. With good research, you will have a good foundation to develop a reasonable asking price. But, remember who you are selling to when you set your price target or goals. Because the pawn shop is in business to make a lot more money when they re-sell your item, what they are willing to pay for your treasure may be 50 or 70 percent lower than what a private party may be willing to pay.

The importance of doing your homework is shown in the video below as it is apparent immediately who has done their homework and who has not:
Set a realistic price. In the pawn shop world, when you set a price that is significantly higher than what the dealer feels is reasonable, they are likely to counter you with a price that is significantly lower than the product’s true economic value. Throwing out unrealistic numbers wastes a lot of time and tends to upset the seller because of their emotional attachment to their product. Be realistic. The negotiation will move faster and both counterparts will leave with positive feelings about each other.
Believe in the value of what you are selling. If you have done your homework, know the realistic wholesale and retail pricing value of your product, then you can confidently state the price you are asking and stand firm if you feel the price you are being offered is unfair.
Be willing to comprise or haggle. In the world of negotiation, it is common knowledge that you should never say “yes” to the first offer. Whatever you are offered, be willing to counter, even if it is a small counter. If you do counter, your counterpart is likely to walk away from the negotiation feeling that they could have, and should have, done better.
Be willing to say “no” and walk away if the price is not right. It’s fun to watch how quickly the Pawn Stars will tell someone, “I know what you have holds great value to you. Unfortunately I have no idea how much someone is willing to pay me for that item. And, since I have no clue how much I can sell it for, I need you to sell this to someone else.” A great example of this can be seen in the following video where a customer wants to sell a Colonel Sanders’ suit:

In a negotiation, the person who holds the most power, is the person who is least committed to the relationship. In this case, because the Pawn Star, is not sure the value of what he is negotiating, he has very little commitment to making the deal. The Pawn Star cares about the product the seller wants to sell him, he just doesn’t care about it as much as the seller does and is, therefore, willing to walk away.

Not all of us will negotiate with a pawn shop employee in our lives, but all of us will negotiate.

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Negotiation Styles Quiz Revealed More than Just Demographics

Everyone Negotiates — Tue, 29 Mar 2011 16:32:24 +0000

Each style’s values are clearly represented in the results of the study

For the past month, we’ve been advertising our Negotiation Styles quiz with the goal of compiling demographic information on negotiation styles. We asked participants to answer 10 questions about themselves and to specify their job positions.

The results revealed more to us than we expected.

Before we delve into the results, here’s a quick refresher of the four different negotiation styles.

Let’s start with the Amiables, also referred to as the Blues. Amiables’ focus tends to be on preserving the relationships that are involved in the negotiations and ensuring that both parties are happy with the outcome. They are interested in showing genuine care and have a strong desire to feel valued in the negotiation.

While Amiables are focused on the relationship with their counterpart, Drivers, also known as Reds, are bottom-line results oriented individuals. In negotiations, Drivers are concerned mostly with winning and are less concerned about their relationship with their counterpart. They tend to be assertive, time oriented and persuasive.

At the other end of the behavioral spectrum are the Analyticals, Greens, who calmly and methodically explore all options and focus on facts and statistics to obtain a fair and economical outcome.

The fourth style is the Blends. Blends are negotiators who show no clear preference for any of the other three styles. Effortlessly using a combination of styles, blends tend to be personable, flexible, creative and open to change.

Which style best describes your negotiation approach?

Realize that these styles extend past traditional negotiation scenarios and can help provide insight on how we, and others, deal with relationships in general.

Last month when we asked our readers to participate, our desire was to give our readers and the general public an idea of the percentages of each style and which job positions they tend to gravitate towards in an effort to help readers better prepare for future negotiations.

Looking at the results, it is apparent that the representations are skewed. While this may not be a completely accurate portrayal of the typical demographics of the general public’s behavioral styles, it does accurately illustrate each style’s values. Before looking at the results below, can you guess which type had the least amount of responses?

With their bottom line, results-oriented focus, Drivers would be the least interested in taking part in a study like this, particularly if there was no direct relationship to their bottom line and no tangible reward. Only 4 out of 173 respondents were Drivers. It’s likely that in the general population, they are more numerous than what we see here. According to our experience, we estimate Drivers being at roughly 30 percent of the population.

Amiables may be slightly more interested in taking part in this survey than Drivers. However, it might be accurate to assume that if this survey had been conducted in person with volunteers interacting with the Amiables, they would be more represented than the 12 out of 173 respondents that our results display. Based on our experience, Amiables account for roughly 40 percent of the population.

The next style that is more numerous in the results is Analyticals. Notice the jump between Amiables, 12, and Analyticals, 77. This makes sense since Analyticals are drawn to gathering facts and information from the world around them through which to build their knowledge and ability to confidently negotiate. Though they are highly represented here, we would put Analyticals at around 20 percent of the general population.

Possibly the most surprising result is the numerous Blends that responded. Blend responses outnumbered Analyticals, putting them at 79 responses: the most numerous of all. Based on our experience, in the general population, Blends can be estimated to be at around 10 percent of the population. To speculate, the difference between their high participation rate vs their lower estimated percentage among the general population could be because of Blend’s preference for generally being personable, interested in their negotiation relationship, need for options and desire to experiment.

While the representation of styles in the graph’s population shows a response skewed towards Analyticals and Blends, the Styles by job position may be more true to life.

Here is what jumps out to us in terms of the job positions:

It makes sense that more than half of the Outside Sales Professionals would be a combination of Amiables and Blends, mostly Blends, since success in these positions is dependant on the relationship and a personable approach. Contracts and procurement require a high attention to detail and the majority of this sample consists of Analyticals: attention to detail is one of Analyticals’ strongest traits. CEOs and owners/presidents work with many different people and have to handle many different situations throughout the day and, since Blends are known for their versatility, the percentages match up with our expectations. Traditionally, we can and should expect more Reds in the CEOs position, however, the results of this chart make sense: Reds are time oriented and are the least likely to participate in studies of this nature. Reds are even less likely to participate if they are a CEO or the owner of a company.

When we set out to conduct this informal survey, we had hopes of helping readers understand which styles they might expect to encounter in negotiations. Instead our results reiterated an important fact that we share in our relationship strategies courses: there are exceptions to every rule and the behaviors of individuals are just that: individual. As human beings, it is our nature to take assumptions with us when we embark on something new, especially a negotiation. However, we must look past our assumptions and use our powers of observation, listening and questioning.

What are your thoughts on the results? Join the conversation on twitter with the hashtag #PBSStyles

Want to have an advantage over your negotiation partner? Click here to learn how to identify the different negotiation styles.

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