The Art & Science of Negotiating a Sale – Part 3

This is the third part in our series of sales negotiation tactics.

Take it or Leave it

This tactic is quite confrontational and can border on belligerence. Such open forms of aggression are best not met with equal force. Concentrate on the interest behind the demand, and then work together with the other party to generate options that allow the interest to be met in some other way.

The workers won’t accept less than a 2% increase in salary, take it or leave it!” can be met with “I understand the workers require 2% more in salary, so please help me to understand what they will be doing with 2% more?” It could well be that this money would go towards their retirement plans. If so, the company could offer to raise the pension contributions to satisfy the desired security levels. Until you know why they want a 2% rise, you’re not in any position to create alternatives.

If you suspect a bluff, one good way to expose the bluff is to inquire, “Am I your vendor of choice, and If we come to an agreement, is this the ONLY obstacle in the way of concluding our deal and signing the agreement? If you don’t pose this question, you run the risk of making a concession only to face another demand. Often you will flush out more of their interests through asking this question.

Similar is “You are going to have to do better than that!” Again, we suggest you ask them “ if we come to an agreement on the price, will you be willing to sign here and now?” You are not committing yourself, but merely exposing their intentions. Another consideration is to use the quid-pro-quo principle: “If we reduce your price, then we need you to increase your order,” but be specific on how much of an order increase will reduce the price by how much.

Power of Print and Policies

We tend to give the written word and company policies more weight and credibility than the spoken word and requests. For this reason we recommend you list your prices in writing rather than discuss them verbally. Written words are seen in a light of enhanced legitimacy, and are less often challenged.

Moral Appeal

You will hear the other side framing their request as being the ‘fair‘ or ‘right‘ way. In so doing, by disagreeing with their proposal, you run the risk of being labeled as ‘unfair‘ or ‘wrong‘!

“If we agree to pay in 30 days, then it’s only fair that you let us have our standard 5% discount”. “Let’s be equitable and share the costs on this.” “If I take this deal back to my boss, he will chew my ear off! Can you please help me out just a little?

Remind the other party that you earned your trusted position through quid-pro-quo in negotiations. So if you make this concession for them, you must receive a concession in return. If there are interests of yours that are not fully met, now is the time to discuss them. “If I give you a discount of 5%, then I need you to add product group Y to this order.

The moral appeal could conceal an interest that has yet to be fully met. In the third example you could ask, “So what interests would your boss want met, can you rank them?

Negotiation by Association

Also known as ‘Name Dropping‘. This tactic is demonstrated when a seller brings up having done business with a VIP or a venerated company. Alternatively they may exhibit a picture in their office of themselves shaking hands with personalities or leaders like Nelson Mandela. The peril lies in the human tendency of wanting to conduct business with individuals who are well connected.

Most important is to distinguish what is happening and not permit yourself to be influenced or swayed to treat this person any differently than you would have without this information. It’s all too often no more than a thinly guised negotiating tactic.

If you believe they are stretching the truth, ask them what they performed with the person or company. Appear interested and ask for details. If they cite a company ask for the name and position of the person they dealt with. If they become vague or change the topic you can draw your own conclusions.

Negotiation Default

The default tactic tests your thoroughness and diligence. You are given a benefit such as an extra service or more products, along with a contractual term or note stipulating that they presume these terms are to your liking. The responsibility falls upon you to contact the other party and explain that you did not ask for these additional products or services. If you are lazy and don’t read all communication, or if you don’t take action, you will be setting a precedent of implied agreement that is hard to escape from further down the line. Many feel taken advantage of and become aggressive as a result. We would again suggest that aggression is not the best route when negotiating with counterparties employing such tactics.

It is best to be firm when replying to a default tactic. Make the other party aware that you know the intention behind the products, and that you would value them if they personally remove these variations from the agreement.

Negotiating a Deliberate Mistake

This tactic plays on your ethics or lack thereof. This tactic comes down to the ethics of your counterparty, and must therefore be aggressively guarded against when you suspect their moral standing or cultural preferences. You may be tempted with a contract or offering that is clearly to your advantage – contrary to your discussions. The risk lies in you’re eagerly signing before the other party realizes their error or omission, only to have this matter brought to your notice and corrected later on. We suggest you point out the slip-up or omission as soon as you notice it. This tactic, as with the others, has a way of boomeranging and will catch up with you in the medium to longer term.

Negotiation Planted Information

It is somehow human nature to trust what we have learned about the other party because of what they have said about themselves. It is chiefly for this reason that (friendly) mergers and acquisitions (M&A) are often only announced shortly before being agreed upon by the parties involved. The danger exists when the press publishes an unfounded and speculative article; thereby shooting holes in the trust that has been steadily building between companies and their shareholders. There are many case histories that have recorded how one side ‘leaked‘ information to the press in order to slant the M&A negotiation in their favor.

As far as is practical, research the information that is available, and withstand reacting in the moment. If you have a good relationship with the other party, you can save a lot of time by sharing the information with them, face to face while negotiating, and asking for the truth behind it. If they confirm the rumor to be true, ask for their sources.

Negotiation Withdrawal

Withdrawal comes in two main forms:

  1. Withdrawal of a previously agreed term or tentative agreement.
  2. Withdrawal from the negotiations altogether.

With the first, the other party will request that you retract their side of an already agreed tentative agreement. Be cautious by learning how circumstances have changed to warrant their changed need. Review your notes to see what you had promised to them, and remind them that you too will need to withdraw this item in return. Find out what interests they are looking to satisfy, and seek to create new options by negotiating creatively together. Corporate negotiations are characteristically highly complex – necessitating parties to sense when changes in circumstances demand a revisit.

You will need to judge as to whether the second is a tactic or an actual withdrawal. Listen very carefully to their wording to identify whether they are giving you a conditional withdrawal. “We are going to have to break off discussions with your insistence on a 50% share in this venture!” Here you are given the 50% share condition/demand to overcome, without knowing their underlying interest. Start by reiterating those areas you know that you both agreed upon. Your overarching reason for meeting, your sharing interests, and the areas agreed so far. Once you are both back in an agreement frame, ask them why they don’t want you to have a 50% share. It may be that in China the government controls joint ventures. Perhaps you can appoint the CEO while they appoint the Chairperson, and your decision-making procedures permit you to veto any proposals despite their 51% share. They get the public perception of control and you get equal say.

Competition

The law of supply and demand can appear in many guises, a very subtle form of aggression. Similar to ‘Cherry Picking‘ you may hear that your competitor proposed the same deal for a lower price. You may be informed that unless you meet their price the contract will have to go out for bids. There may be insinuations that relate to conversation or the products of your competitors. Perhaps you will observe a competitor’s product catalogue on their desk with post-it notes peeking out from several pages.

Time and again you will be faced with a generalization of “Everyone else is providing this service as standard“. Of course you will want to contest this generalization immediately, or it sticks and they start believing their own claim. Identify whom exactly they have spoken with, and then precede to compare your offering to the buyer’s needs and the other party in detail. Don’t take their word for it; perform your own research if you don’t already know what your competition is offering.

First establish precisely how similar your competitors’ offering really is. Quality, volume, service, delivery, time-scales and payment terms need to match to make for a meaningful price comparison. Very seldom will your offering be totally dissimilar from the competition. Ideally your meticulous preparation prior to negotiating would have armed you with information on your competitor’s value proposition. Work to distinguish your proposal or offer so as not to be commoditized and beaten down on price.

Negotiation Deadlines

Deadlines can force parties into movement through making choices. Deadlines may be a result of circumstance (return flight departure time approaching), or have a real consequence (project grinds to a halt without a person or a product), or they may merely be a tactic to force your hand and deny you adequate preparation time.

Ask for consequences – “What will happen if we don’t meet your deadline?” Perhaps through working together you can open their eyes to alternatives that relieve the pressure from the seemingly unmovable deadline.

Negotiation Limits

Buyers impose limits on money, time, capacity, personnel and more. The most feared to a sales person is limited money. “We love you, your product and organization – we just can’t afford to pay more than X.

Perhaps you can deliver within their stated limit, but always apply the quid-pro-quo principle and receive something back for making any concession. “If I sell at X, then you will need to forgo your after sales support and reduce warranty to 1 year.” “What would you like to take out of our proposal to get to the pricing you need?”

One technique is ‘sleight of mouth,‘ used to refocus the conversation on creating value, rather than the notion of a whole deal sale. Experience teaches that when the risk of losing a valuable product or service is fully understood, then the limiting restrictions are brought into proper perspective. “Yes I do understand your budget restraints. Let’s also remember that the capabilities you said you needed delivers the value you mentioned to your company of 2000 hours per year, which is worth X2 discounted over 10 years. So the real cost isn’t X, it’s the risk of not saving X2.

It’s important to be able to discern between if your counterparty is using a limit as part of their arsenal of negotiating tactics, or if they are under a real constraint.

Take it or Leave it

This tactic is quite confrontational and can border on belligerence. Such open forms of aggression are best not met with equal force. Concentrate on the interest behind the demand, and then work together with the other party to generate options that allow the interest to be met in some other way.

The workers won’t accept less than a 2% increase in salary, take it or leave it!” can be met with “I understand the workers require 2% more in salary, so please help me to understand what they will be doing with 2% more?” It could well be that this money would go towards their retirement plans. If so, the company could offer to raise the pension contributions to satisfy the desired security levels. Until you know why they want a 2% rise, you’re not in any position to create alternatives.

If you suspect a bluff, one good way to expose the bluff is to inquire, “Am I your vendor of choice, and If we come to an agreement, is this the ONLY obstacle in the way of concluding our deal and signing the agreement? If you don’t pose this question, you run the risk of making a concession only to face another demand. Often you will flush out more of their interests through asking this question.

Similar is “You are going to have to do better than that!” Again, we suggest you ask them “ if we come to an agreement on the price, will you be willing to sign here and now?” You are not committing yourself, but merely exposing their intentions. Another consideration is to use the quid-pro-quo principle: “If we reduce your price, then we need you to increase your order,” but be specific on how much of an order increase will reduce the price by how much.

Philippe Lavie, president KeyRoad Enterprises LLC, dedicated to helping companies plan for, accelerate, and manage their revenue growth. KeyRoad training services help companies implement customized sales processes, messaging, and training programs designed to drive increase revenue and greater accuracy in their pipeline management.

Philippe Lavie, president of KeyRoad Enterprises, is based in Chicago IL and San Francisco CA. He can be reached at: 415-229-9226 or at plavie@keyroad.com

Rob Gullett is a Senior Consultant for KeyRoad Enterprises, LLC and CustomerCentric Selling© (CCS) based in San Francisco CA. He can be reached at:  (925) 330-7255 or by email at: robgullett@keyroad.com

Special gratitude to the following referenced authors, companies, and organizations:

  • CustomerCentric Selling©
  • “Getting to Yes” by Roger Fisher and William Ury
  • “Power of Negotiation” by William Zartment and Jeffrey Rubin
  • HBR and Harvard Business School – case studies on negotiations
  • Spin Selling© by Neil Rackham

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