The Art & Science of Negotiating a Sale – Part 2

This is the second part in our series of the Art & Science of Negotiating a Sale.

Negotiation Decoy

This is a very controversial tactic that raises the question: ‘How can you know whether the other party is being totally honest when disclosing their interests?‘ Might they be ‘loading the dice‘ in their favor by embedding extra false interests into their agenda? So you hear about 13 interests, when in actuality they only have 10?

Here is an example of how this can create a win-lose in their favor.  First, you make an exchange on an invalid or decoy interest of theirs, and it is only later when they drop this exchange from the agreement. The result is that this leaves you with an unmet interest of yours, and them with an agreement that meets all of their interests. A similar challenge arises when the other party agrees to ‘forget‘ about their fabricated interests if you will forget about your real interests.

How can you defend against this deceitful tactic? Being thorough may be enough. Remember to get them to explain their motivation behind each interest by asking how each interest helps them. Then work together to rank their interests. If you still feel dubious, trust your hunches and inquire further. Research more widely and if necessary, withdraw from immediate decisions and regroup.

Your best method of protecting yourself consists of thorough preparation so you are able to predict, and then understand, what they should and will be asking for. Review their expressed interests against your expectations. Then expand your interpersonal perceptions to notice when the other party is being deceitful. There are always indicators and you are strongly advised to sharpen your senses.

Extreme Offers

From the buyer’s perceptive he/she, will hear the seller ask for a lot more than he expected. As a seller, the buyer will offer you much less than you expected. The buyer’s intent is to lower your expectations and thereby obtain a concession without having to give one in return. The danger is that you will be miffed and enraged, refusing to have any further dealings with the other party.

It’s vital to note that the other party’s culture may ordain this tactic as a normal practice. A German or American trading in China will grow accustomed to excessive proposals. If the culture, in which you must operate, dictates excessive opening offers, then we suggest that you to blend in and take advice on how to play by local rules and customs.

Especially in western countries, separate the individual from their behavior or tactic. If you are surprised, show your surprise and even allow yourself to chuckle. This can diffuse the situation and initiate an agreement. We don’t generally recommend an unwarranted counter proposal. Let the other side know that their expectations need to be adjusted, and refer to other deals as precedents to persuade them by how much.

The Negotiation Nibble

Just when you believe you have fully agreed and are about to ink the contract, the buyer utilizing this tactic will ask “Transportation and insurance is included, isn’t it?” There is a powerful urge to make this final concession for the sake of signing the deal. This urge must be resisted. The quid-pro-quo principle of getting something of value for giving something of value should be employed:

In contracts where we pay for transportation and insurance, we add an extra 3% to the price. So yes, if you are willing to pay the extra 3%, then we will cover these two items.

We generally suggest you ask for the reason for the interest behind this newly raised request. If it was left out earlier by mistake, then perhaps there is an opportunity to meet this need in some other creative manner that meets both parties’ needs. A terrific way to thwart nibbling and other disagreeable surprises is by being explicit and thorough in specifying precisely what is included and excluded in the deal.

Cherry Picking

Buyers can design their perfect deal through shopping around and by obtaining many bids before they first approach you. They may offer you a proposal that fully meets their interests on price and discount structures, quality, service, timescales etc. They may frequently tell you “this is what the competition is offering us, so you’ll need to at least match it!” In actuality they would have “cherry picked” the most desirable offerings from each of your competition’s proposals.

By asking the identities of these potential competitors, you are better able to satisfy your own interests. Simply ask them who offered this dream deal, and whether this company actually did offer them an identical deal to the one they say you have to beat. If it seems too good to be true you may be right! Take the time to do your own market research. Examine the standard conditions and current deals of these named competitors.

Draw the other sides’ attention to the notion of quid-pro-quo and mutual concession making. Explain that if the deal is to be worth your while you will need to obtain something in return for altering your offer in favor of their cherry picked deal. It could be that you will be the one who is challenged with the task of bringing this buyer’s expectations back down to earth, and perhaps you will win the deal in so doing. Remember savvy buyers negotiate in reverse preference order. They will get best and final pricing from sellers they do not intend to buy from and use these quotes to “beat you up” and get a discount or other negotiated value.

Good Cop – Bad Cop

No matter how often we watch these antics in old and new movies, many negotiators often don’t recognize when this classic tactic occur in front of their very eyes. You will be facing two or more negotiators; one is aggressively demanding concessions while the other is, by comparison, more sensible. Often the hotheaded “bad cop” doesn’t have to be there at all. The other party will make references to their aggressive boss or other team members’ demands for your concessions.

It is absolutely vital that you to notice what is transpiring, and remember that despite appearances, the ‘good cop‘ is not on your side. You can alter the dynamics by calling them on their behavior: “You know what this reminds me of? A police interrogation scene from an old movie with that old good cop / bad cop routine. Now I know you guys wouldn’t intentionally be doing that routine on me, so let’s get back to the reason why came together today.

Alternatively you could concentrate all your efforts on the bad cop, and ignore the good cop. Since it is the bad cop you have to please, it should be her/his interests that need to be fully understood.

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.

In our next post, we’ll explore the remainingl sales negotiation decoys.

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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