Become A Master Negotiator

Summary: Walking away from an unacceptable deal.

In any relationship, the side with the least commitment to continuing the relationship has the most power. Being able to walk away from the bargaining table when the tide turns against you gives you leverage.

Example

Kathleen wants to buy a daybed for her daughter. The bed has been advertised for $177. When Kathleen starts to pay for the bed, the salesman tells her there is an additional $25 delivery fee. Kathleen doesn’t want to pay the fee, since her husband can pick up the bed in his company truck. The salesman agrees to waive the delivery charge.

A week later when Kathleen and her husband go to pick up the bed, the clerk behind the counter states that the person Kathleen talked to previously did not have the authority to remove the delivery charge. After going back and forth, Kathleen finally says, “Just give me my $177 back and we’ll buy the bed somewhere else.”

Counter

If someone uses These Boots Are Made for Walking on you and you can meet your goals without that person (e.g., other people are interested in your product or service), let your counterpart walk. In the example above, the clerk apparently thinks the store can sell the bed to someone else for the full price plus delivery charge, so he is not concerned that Kathleen is walking away. If he decides that waiving the $25 charge is a small concession to make, he may utilize the tactic of Losing the Battle to Win the War. But if the clerk ends up chasing after Kathleen and bringing her back to the bargaining table, his power will deteriorate considerably. Car salespeople are notorious for going after customers when they start to walk away. Remember, if you keep walking, the leverage will be on your side, as long as you have a way of contacting your counterpart again should you desire.

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

Summary: Using empathy to show understanding for a counterpart’s concerns and to explain one’s own point of view.

Feel, Felt, Found is effective for helping your counterpart understand your point of view.

Example

The buyer states, “I can’t believe you’re asking $30,000 for this software package.” The seller responds, “I can understand how you feel about the price. Many other owners have felt the same way until they found out how customizable and trouble-free our software is. There really is a difference, and that is what makes this price such a great value.”

Counter

The buyer could respond with the tactic of That’s Not Good Enough, insisting that $30,000 is simply too much, then pausing and waiting for the seller’s response. Or, the buyer could appeal to a Higher Authority, explaining that his wife or business partner will let him spend only $28,000. Finally, he could use the tactic of the Trade-Off Concession and agree to pay the $30,000 if the seller will throw in service and support for one year.

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

Summary: Putting the terms of the agreement in writing to ensure that both parties are on the same page.

Whenever you and a counterpart reach agreement in a negotiation, you should be the one to put the agreement in writing. This gives you the opportunity to tie down any loose ends.

Example

You agree to lease 4,000 square feet of office space for $4,000 per month. As part of the deal, you agree to sign a two-year lease, and the building owner agrees to give you two months’ free rent. After the handshake, you offer to put the terms in writing. Tying down the loose ends in your favor, you write: Two-year lease commencing May 1, 2013

Price of $4,000 per month for 4,000 square feet, on a gross basis, not triple net (The difference between these small words can add up to hundreds of dollars each month. On a gross rent, the landlord pays all extra costs, such as taxes, garbage removal, cleaning fees, etc.)

Free rent for two months beginning with the May 1 move-in date (Some landlords like to put the free rent in the middle or at the end of the lease.)

Counter

If the landlord does not agree with how you have tied up the loose ends in your written agreement, he should immediately write to you, explaining how he thinks the issues should be handled. If he does not respond immediately, he will lose tremendous bargaining power when the two of you reconvene at the negotiating table.

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

Summary: Using competitive bids to put pressure on a counterpart.

In most businesses, The Power of Competition can be devastating. The seller, who knows that a customer can easily go to the competition for the same product or service, has to justify everything and may end up giving away more than originally planned. Just the threat of competition may be enough to force concessions.

Example

Using The Power of Competition, a client states, “I have gotten three bids, and yours is five hundred dollars higher than the other two. I would really like to work with you, but your price is too high.”

Counter

To counter this challenge, the vendor should defend her price, citing her product’s quality and service. Once we were out on a sales call with a seasoned veteran who responded to a client’s question about price by stating matter-of-factly, “Mrs. Jones, my price is higher than the competition’s because I am the one who is going to do the job right.” He said this so confidently that he convinced the client and us.

Another approach is to ask the client to show you the other bids. In some cases, you might be able to detail how your service or product surpasses the other bid.

Finally, realize that many clients will say your price is too high just to get rid of you when they have no intention of working with you even if you do lower your price.

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

Summary: Conceding on a deal point that is not as important to one as the larger goal.

To promote the long-term best interest of a relationship or accomplish a larger goal, conceding a deal point may sometimes be the best option.

Example

A woman wants to purchase a brand new home that is going to cost almost $150,000 more than the home she and her husband are currently living in. Taking on that much new debt scares her husband. He tells his wife that the new home is a huge financial stretch for them and he doesn’t think they should buy it at this time. The wife responds saying she would consider staying in the current home if they could get new carpet and have the kitchen remodeled. Knowing that these changes will cost him a lot less than the debt on the new home, the husband agrees to the carpet and remodel.

Counter

The wife already countered in this negotiation by presenting the remodel as an alternative to purchasing a new home. To maintain a healthy relationship with her husband, she might want to accept this win-win outcome.

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

Summary: Appealing to a counterpart’s sense of power to get him to make a decision.

Asking a question like, “Do you have the power to make this deal happen?” can be an effective tactic. Some people feel compelled to say “yes” for the sole reason that it strokes their ego. People with big egos believe they are always right, and like to feel in charge.

Example

A man goes out to buy a car for his family. He is a bottom-line, results-oriented type of guy who is good at negotiating a great deal. Once he makes the decision to buy a car, he wants to do the research, take a test drive, negotiate a deal, and purchase the car all in one afternoon. The salesperson, sensing the buyer’s need for power, asks, “Do you have the power to make this type of decision without your wife?” The husband replies, “I am the sole decision maker when it comes to purchasing the family car.”

Counter

Obviously, the tactic of Higher Authority would work best here—and it is probably in this man’s best interest to employ it. He could say, “Although my wife and I usually agree on this type of purchase, I will have to review the purchase agreement with her to gain her approval.”

It is usually wise to get someone else to review any deal you are structuring. Asking someone else to review your proposed outcome is not a sign of weakness, but a sign of strength.

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

Summary: Delaying a negotiation or decision to encourage the impatient counterpart to make a better offer.

Salespeople are typically short on patience when they smell a deal in the air. In fact, sales trainers sometimes teach that if you do not strike while the iron is hot, you might lose the deal. But impatience may encourage a negotiator to make unnecessary concessions. Knowing this, a savvy counterpart might stall for time, trying to make the impatient negotiator nervous and more willing to make trade-offs.

Example

A saleswoman prepares a proposal for a customer and, over the next few days, calls two or three times to ask what the customer thinks of the proposal. The customer never calls back because he is stalling, hoping the saleswoman will be willing to make some concessions if she feels he isn’t particularly interested in making a deal. Worried that the customer might be doing business with a competitor, the saleswoman gets nervous. Although she is not sure if the customer has even had time to review any of her proposals, the saleswoman leaves a message that her “numbers are ballpark, based on the information given, and there is room to negotiate.”

Counter

You should never discount a price before your counterpart tells you there is a need to do so. The best counter in this situation would probably be for the saleswoman to wait patiently for a reply. Or she could send an email to the customer, stating, “I have tried to get in contact with you several times over the last week, and for whatever reason, we have been unable to connect.” Under no circumstances should she leave any more phone messages.

When a counterpart is obviously stalling, be patient. Don’t keep using the same tactic to make contact. Think like a dolphin and do something different.

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

Summary: Stalling a negotiation by creating the perception one is too busy to respond to a counterpart’s request.

To be an effective negotiator, you need access to the person who has the knowledge and ability to negotiate. Many years ago, secretaries played the role of Shark in the Moat, letting only a few, select people have contact with their bosses. Today we are more technologically advanced – we have Electronic Sharks in the Moat such as caller ID, voicemail, and email. It’s difficult to negotiate when you can’t get past someone’s electronic shark. Some negotiators use this tactic to their advantage.

Example

A commercial real estate professional is trying to secure an appointment with a corporate executive. No matter how many times the real estate professional calls, he constantly reaches the executive’s email or voicemail, and the executive herself, or the secretary, calls back at odd hours and leaves a voicemail or an email in response. Although the responses give the real estate professional hope of an actual meeting, the Electronic Shark in the Moat is very effective at keeping a distance between the two counterparts.

Counter

The real estate professional could try calling very early in the morning or very late in the afternoon when there is less chance that the Electronic Shark in the Moat is on duty. A second tactic is to utilize Find Us an Umpire (either within or outside the executive’s company) to help bring the two people together.

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

Summary: Refusing to take no for an answer.

If you have children, especially teenagers, you know that sometimes you may give in to their demands just to be able to get on with your life. The same tactic works quite well in the business world.

Example

I have a son who was the master at asking for something over and over again, from many different creative angles, until he accomplishes his goal. At one time, his major life goal was to own a video game console. He asked for one almost every day for a period of two years. His creative questions included, “Could I buy it with my own money?” And “Could I buy a handheld until I can get the console?” He also asked why other parents I respect bought their kids video games. The questions went on and on. I even told him, “Video games are a dead horse in our house, and if the horse is dead, you should get off it!” Refusing to give up, my son creatively asked the following great question: “Dad, is it important to you and Mom that I can make quick decisions in complex situations?” When I said, “Yes,” he came back with, “Great! I think video games help kids make quick decisions in complex situations.” After two years, he finally got his game console. As I relfect upon this, I understand why persistence is such a successful tactic.

Counter

In this particular example, my best defense would probably have been a solid track record of not caving in to persistence. A second effective tactic would have been No More Mr. Nice Guy—I could have removed a deal point that my son felt had already been conceded. For example, I could have said, “If you bring up video games one more time this week, I will take away your computer for the rest of the week.” Since spending time on the internet was as high on my son’s explicit need list as video games, this tactic might have worked well.

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

Summary: Taking back something that has already been agreed to.

This tactic is particularly effective when your counterpart is not being honest or is pushing you to the end of your rope with excessive demands. You take something back that you have already agreed to.

Example

Lloyd and Nancy have been renting an apartment for three years. For about six months they have been feeling ill, but no one can figure out what their problem is. One day, while moving furniture, they find a wall covered with black mold. After doing some research, they discover that this mold could be what has been causing their health problems. On March 10, Lloyd and Nancy move out of the apartment and tell the landlord that they will not return until the moldy wall has been repaired. By March 20, the landlord has taken no action, so Lloyd and Nancy tell the landlord that they are moving out and requesting a refund of their deposit. When the landlord refuses, saying that Lloyd and Nancy have not provided thirty days’ notice, they hire an attorney, who demands the return of the couple’s deposit and a refund of the rent for March as well.

Counter

A fair person would probably have quickly repaired the moldy wall or returned the security deposit as requested, and therefore would not need any counter to this tactic. However, looking at the negotiation from the landlord’s point of view, he could try asking if the couple would be satisfied if he fulfilled the original request for a repair. Another option would be to show how he has been working on solving Lloyd and Nancy’s problem (collecting bids for the repair, etc.). Or he can agree to the lawyer’s demands but try to gain something in return, using the Trade-off Concession: “I will agree to cut a check for March’s rent and the security deposit if you will sign an agreement not to hold me liable for any future illnesses.”

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