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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Summary: Adjusting goals when it appears the original goals are unobtainable.

Sometimes you may be unable to accomplish your negotiation goals. In those instances, it may be best to quickly switch goals. For example, if you are buying a house and the seller wants a price that is unacceptable to you, you may first try the tactic of YIKES! You’ve Got to Be Kidding! If that doesn’t work, you may try to support your offer with Facts and Statistics. But if both these tactics are unsuccessful and you realize your original goal is unobtainable, you may need to change your goal.

Example

An individual buys a two-thousand-dollar couch from a furniture warehouse. When the couch is delivered, the buyer finds out that its springs make exceedingly annoying squeaks whenever anyone sits down. The initial goal of the buyer is to get the furniture warehouse to replace the couch with a new one. But when the buyer calls, the manager states that the company is going out of business, so all sales are final. All the tactics the buyer has initially planned to use (e.g., stressing the value of a long-term relationship, threatening to report the company to the Better Business Bureau) will be useless since the seller has no commitment to the relationship. So the buyer decides to switch her position and asks, “If you will not replace the couch, will you at least come to my home and see if there is anything you can do to fix the squeaks?” The seller agrees. After examining the problem, the manager puts the buyer in contact with the manufacturer, who agrees to send out a service technician to fix the problem or replace the couch.

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Summary: Adding an extra or add-on to make a deal work.

At times you may need to add a little something extra to make a deal work. For example, a salesperson may decrease the price of a product, add a warranty or training at no additional charge, or agree to extend a sale price to make a deal more enticing. This tactic of offering an extra or add-on is called Sweetening the Deal.

Example

A customer tells a carpet saleswoman, “Your carpet is a dollar per yard more expensive than your competitor’s.” The seller Sweetens the Deal by saying, “I will carpet each of your closets for free if you will sign the contract today.”

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Summary: Making a final, specific demand to force a counterpart to make a decision.

From time to time it may be in your best interest to “draw a line in the sand,” or create a rule that allows you to hold your counterpart accountable. One tactic you can use is to tell your counterpart the actions you will take if your conditions are not met.

Example

A client calls a consulting firm and asks to tentatively reserve a date for a seminar to be presented at her company in approximately six months. Three months prior to the date in question, the consulting firm calls the client and asks her to confirm the reserved date or the firm will have to offer it to another client who has requested the same day. The client is told that a confirmation is needed within twenty-four hours, which makes the deadline her Ultimatum.

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Summary: Getting something in return for everything that is given up.

A good rule to remember in negotiation is to get something in return every time you give up something.

Example

A home buyer states, “I will buy your house for $480,000, but for that price, you will have to throw in your washer and dryer.” The seller responds, “If I do that, you will have to close escrow in thirty days,” or, “You will have to pay $482,000.”

If the seller does not get a trade-off every time she makes a concession, her counterpart will most likely ask for more concessions. Then, if the seller suddenly says, “Wait a moment. I already gave you the washer and dryer, and now you are asking for more concessions,” the buyer can respond, “Why are you bringing up the washer and dryer? We already agreed to that.”

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Summary: Using statistics to support an offer or a point of view.

Anytime you can incorporate Facts and Statistics into your presentation, you have a tool that your counterpart will find difficult to handle. Reliable facts can add a tremendous amount of power and credibility to your case. But be careful—if you quote statistics incorrectly and your counterpart proves you wrong, you lose your credibility. Once this happens, you have to fight twice as hard to gain any deal point.

Example

An employee goes to his boss with a recently published salary survey documenting that the employee’s salary is significantly below market. The employee has pulled Facts and Statistics that examine salary levels by industry, position, and geographic location to demonstrate the discrepancy.

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