Archive for July, 2008

Three Secrets That Have Been Missing From Negotiation Training

Tuesday, July 29th, 2008

Good negotiators use the same secrets to communicate that cheerleaders do

This is going to be a bit of a rant, so I should probably apologize for that in advance.

Over the past 10 years I have have read countless books on negotiating, attended training course after training course, and in the end I was left feeling that something very fundamental was missing — there were secrets to being being a successful negotiator that weren’t being talked about. There is nothing more frustrating than knowing that you don’t know something. I knew that I needed to find somebody who knew these secrets and who would be willing to share them with me.

When in doubt, talk to Sales. So that’s what I did – I started going out on customer visits with every salesperson that would let me tag along. What I saw was that there were good sales people and bad sales people. The good sales people would dive into a negotiation with a customer, tussle about the details, and in the end they would emerge with an agreement that was good for their company and with a satisfied customer no matter what they had gotten or given up. The bad sales people would enter a negotiation as though they were jumping into a street fight, have a knock-down-drag-out with the customer, and finally emerge bruised with a bad agreement and an angry customer. So what were they doing differently?

The bad sales people had clearly gone to the same negotiating classes that I had attended. They used the same negotiating vocabulary that I used and they stepped though a negotiation using the basic steps that I was currently using. They couldn’t really teach me anything. It was the good sales people who held the negotiating secrets that I was looking for.

As I focused on what the good sales people were doing, it very slowly dawned on me that they were being successful because of things that they were doing that weren’t taught in any negotiating course that I had ever taken. This clearly called for some serious beer conversations in order to gain access to these secrets.

Over way too many beers, I was eventually able to tease the answers out of the really good sales people about how they were so successful in negotiating with their customers. At a very high level, what they told me was that I had been missing the other side of the negotiation coin: persuasion. What they said is that negotiating is basically convincing someone to do something. What the bad sales people are missing is the other half of the process: persuading the customer that this is what they want. In fact, if you are good at persuasion then the customer will be falling all over themselves to buy what you have.

As I took all of this in, it started to become clear that what the good sales people were doing could be broken into three main sets of skills:

  • Rapport: they developed a sense of bonding with their customers that allowed the customers to treat them not like “the other side of the table”, but rather like an old friend that they were meeting once again.

  • Body Language: just like a cheerleader, the good sales people realized that in addition to the words that were coming out of their mouths, their bodies were also talking to the customer and they made sure that what their bodies were saying matched what their mouths were saying.
  • Knowing What To Say & When To Say It: the bad sales people always seemed to have periods of awkward silence when they met with customers. The good sales people, on the other hand, always seemed to have something to say and it always seemed to get a positive response out of the customer.

There is a lot more to this persuasion stuff and we’ll talk more about it. However, for now understand that even if you think that you know everything about negotiating, if you don’t have the persuasion skills that you need, then you still have a lot to learn!

Tags: , , , ,

Make More Sales: Understanding Buyer Power & What To Do About It

Friday, July 25th, 2008

Learn how to minimize buyer power and maximize seller power

So you want to sell something (perhaps yourself for a new job?) and you feel that the other side (the buyer) has all the power. Ok, you’re right – just give up and stop reading right now.

Hmm, you’re still reading. Perhaps although it looks like the buyer has all the power, this really is not the case. Let’s take a careful look at what is really going on here and perhaps we can boost your self confidence just a bit.

First a quick review is probably called for. In negotiating, power is all in your head. We imagine that there are many sources of power and they can be based on resources, regulations, laws, or even psychological factors. In the end, we all have different views of just exactly what power means. Most of these views only exist in our heads and they form a critical part of what can be called our inner reality.

Given all that, what can we as a seller in a negotiation do to minimize the buyer’s power while maximizing our own? Let’s take a look at common sources of power and see how we can gain the upper hand:

  • Organizational Time: the buyer may be under the gun because he/she needs what we have to sell in order to meet a demand that his organization is putting on him: “Fill that position NOW!”

  • Personal Time: the buyer may have poor time management skills and has painted himself into a corner so that he needs to make a purchase NOW!
  • Specifications: the product that you are offering (yes, even if it’s just you) may be the only one that fits the requirements that he’s trying to fill.
  • Location: the closer your product is to where the customer needs it to be the better.
  • Re-Validation: does the buyer have the time/energy/budget to re-validate another supplier if he doesn’t select your product?
  • Warranty: does your product come with a better warranty than any other offers that the buyer has?

In any negotiating situation not all of these sources of power are going to be valid. However, I’m willing to bet you that at least some of them will be. If you spend just a bit of time thinking about it before you enter into a situation where you are going to be selling something, I think that you’ll find that you really have much more power than you thought that you did!

Tags: , , , ,

Funny Money Ain’t So Funny When It’s YOUR Money

Wednesday, July 23rd, 2008

Be careful when you negotiate about funny money

In the world of negotiating we spend a lot of time talking about “funny money” and so you should know what it is because it can end up costing you a lot of real money even if you don’t think that you made any concessions during the negotiation! We all know what “real” money is – we can touch it, we can spend it, and we know how much of it we have. Funny money is exactly the opposite of this: taxes, credit cards, monthly payments, and interest rates all fall into this category of money.

Watch any car commercial on TV and you’ll see that car dealers learned a long time ago that it is much easier to sell a car as “$300 a month” instead of a very scary $40,000. The current subprime mortgage mess is yet another example of the same thing: even if you really can’t afford a $200,000 house, maybe you can afford $500 a month until interest rates go up.

A few examples of how funny money sneaks its way into negotiations include:

  • Dollars per hour
  • A five year warranty
  • “Points” (percentage points on a deal, often found in real estate deals)
  • Price w/o delivery
  • A 5% fee.
  • Monthly payments

In the end, the key thing to remember about funny money when you are negotiating is that you should never negotiate for or about funny money unless you have spent the time BEFORE negotiating to think things through completely. Funny money may not really exist; however, you know what real money is and you can lose a lot of that if you don’t watch what is happening with the funny money!

Tags: ,,,

Deals That Make Money: How To Plan Your Concession

Friday, July 18th, 2008

Concessions are a powerful negotiating tool

When negotiating deals with someone, you realize that they aren’t just going to roll over and give you everything that you ask for. Instead, they are going to expect you to participate in a back-and-forth, give-and-take discussion in which both sides are expected to both concede as well as gain issues. This means that you need to have a strategy for each concession that you plan on offering to the other side. Looks like this calls for some serious planning!

First, let’s make sure that we all understand why we are willing to make a concession. There are two reasons that you’d make a concession during a negotiation. First, to persuade the other side to move us close to a deal or to avoid a deadlock. Secondly, to increase the other side’s satisfaction. Both of these reasons provide a powerful motivation to make concessions when it makes sense.

There are actually a great number of nuances to the best management of concessions; however, here are the four most important approaches that you should start to use immediately:

  1. Leave Yourself Lots Of Room (to Negotiate): Remember that a concession is a tool that is designed to help you move the negotiation along. If you leave yourself a great deal of “wiggle room” then you find that you’ll have more room in which to use your concession tools.

  2. A Concession Should Be Given Slowly — Be Stingy!: So much of the process of managing a concession has to do with managing the psychology of the other side. If you are too quick to offer a concession, then the other side will give it little value. If instead, they feel that they they had to work hard to get you to offer the concession, then they will highly value this hard won success.
  3. A.I.R.: Ask for something In Return.: This is a subtle one, but you need to make sure that you clearly communicate that during the negotiation, nothing is for free. This means that every time you make a concession, you need to ask the other side for something in return. The challenge comes because you don’t want to be seen as conducting a 1-for-1 negotiation. Instead, you’d like to be seen as more casual and carefree. However, deep down inside you need to be tracking all concessions and making sure that you’ve gotten something in return for everything that you’ve given up.
  4. Watch Your Rate Of Concessions: Yes you will end up making several concessions during a normal negotiation. However, you need to make sure that you space these concessions out and don’t bunch them together. Otherwise it will look like you are willing to give up more than you are. Especially be careful about what happens as you approach the end of the negotiation. Studies have shown that 80% of the concessions that are made, are made in the last 20% of the negotiation time. Don’t let deadlines cause you to make too many concessions!

There you have it. Using these four guidelines, you can turn a concession from an admission of negotiating weakness into a powerful tool.

Tags: deals, concession, money, negotiate

Deal + Negotiation = Contract (or the Four Modes To Get You There!)

Friday, July 11th, 2008

There Are Four Different Modes To Each Negotiation

Too many people look at a negotiation in a negative way. They sigh, and instantly become tired whenever the prospect of entering into a negotiation shows up. What they are missing is that a negotiation is not necessarily a contest. When there is a deal to be done or a contract to be signed then negotiation skills are required.

The secret to getting the best deals from your next negotiation is to realize that just like the different roles that you have to play as a skilled negotiator, there are four modes of negotiating that arise during each negotiation session. If you can learn to recognize these modes and come up with ways to deal with them, then you’ll know how to deal with them. Here are brief descriptions of the four modes, let’s see how many you recognize:

  • The Cooperative Mode (Both Win): During this phase, both parties realize that there is a better deal available to both of them if they are both willing to take the time and make the effort to look for it. They will know that they have found it when both sides have increased their profit and/or their satisfaction without harming the other side.

  • The Competitive Mode (Defending Your Interests): During this phase you are locked in a competitive battle with the other side. There will be a winner and a loser and you’ll be darned if you are going to be the loser! During this phase, you should say as little as possible because information is power and you don’t want to give too much power to the other side.
  • The Organizational Mode: This is very much like the “channeling” that mystics do for folks who have passed on to the spirit world. The other side is really representing their organization and because of this their hands are tied on some matters. When they say “No” it may not be the other negotiator that is saying it, but rather his/her organization that is saying it. During your preparation for negotiation make sure that you know the other side’s organizational structure and what pressures they will place on their negotiator.
  • The Personal Mode: The ultimate goal of any negotiation is for both parties to walk away feeling satisfied. What it’s going to take to satisfy the other side may lie buried beneath the actual issues that are being discussed. Your job as a negotiator is to be aware of your “satisfaction issues” and to uncover the other side’s.

There you have it. You’ve probably seen all four of these modes in play during your past negotiations; however, you may not have seen yourself in these modes also. Knowing that they exist and molding your reactions to them will help to make you a more successful negotiator.

Tags: , , , , ,