The Accidental Negotiator

Archive for the ‘deals’ Category

The James Bond Approach To Negotiating

Tuesday, August 5th, 2008

The other day I happened to drop in on my friend Mike only to discover him hard at work on some mysterious project. He had a list of local electronics stores and he was checking them off with a pencil one-by-one all the while he was surfing a seemingly endless set of web sites and performing a cut and paste operation from each one of them to an Excel spreadsheet that already looked like a day trader’s tracking system.

When I asked him what he was up to, he told me that he had finally broken down and was going to buy the Panasonic 50″ TV of his dreams that evening and he was going to buy it at the Best Buy located close to his house so that he could get it home and start watching it that night. When I inquired as to why all of the frantic action was taking place, he just stared at me for a moment and said “…if I want to get the best price, then I’ve got to do some espionage to find out how low they can go…“

Ok, so I guess that I should have seen that one coming. Mike did bring up a very good point: often the outcome of a negotiation is determined before the talking even starts and the winner is the side that collected the BEST information. Note that I didn’t say the MOST information, because this is a case where quality definitely triumphs over quantity. Getting more information on the other person’s situation, constraints, and motivations will increase your power while allowing you to do a better job of defending your important issues.

You can’t view information gathering as a one-shot activity. It is a process that continues even after the negotiations start and that will require you to shift in and out of multiple modes during the negotiations. You should look at information gathering as a process that will continue throughout the entire negotiation session. This means that you’ll need to establish a personal connection with the other side before you jump into the heart of your negotiation. The ability to see and understand the other side’s viewpoint is critical to understanding their negotiating position.

In business to business negotiations one of the most often overlooked sources of information is your staff no matter what department they are in. Often times we have employees who used to work for the other side, or employees who have close personal connections to the other side’s staff. These are great resources to draw on in order to learn more about the set of environmental drivers that will be shaping the other side’s negotiating position.

I gave Mike a call yesterday in order to find out how his purchase had turned out. He was beside himself with glee. “When they saw me come in with my stack of research papers, they turned me over to the manager right away. He and I talked for about 45 minutes and in the end I had gotten $400 off of the list price and a free 1 year warranty.” It looks like you can put a price tag on the value of gathering information.

So what’s your story? Have you ever had a chance to “go undercover” and collect information that ended up helping you during a negotiation? Have your friends ever asked you to do some sleuthing in order to help them get a better deal…?

Tags: information gathering, espionage, deals, negotiation

Posted in deals, espionage, information gathering, negotiation | No Comments »

Even The Experts Screw Up: 7 Years Of Wasted Negotiations

Friday, August 1st, 2008

What would you expect the very best negotiators in the world would spend their time doing? Whatever it was, it would have to have something to do with money and lots of it. We’re probably talking about billions and billions here. Well guess what, a whole bunch of them work for the World Trade Organization (WTO) which is located in Geneva and they just screwed up big time: a 7-year effort to forge a new global trade pact collapsed on Wednesday. There now – don’t you feel better about your negotiating abilities?

First Microsoft and Yahoo couldn’t find a way to make a deal and now this. What happened and why couldn’t the big boys resolve this issue? In a nutshell, the negotiations had dragged on for so long that the priorities of the 30 or so players involved had changed. Specifically, what was being negotiated was for developing countries such as China and India to lower their tariffs on industrial goods from the West while the West would cut tariff and subsidy’s on farm products. Sounds simple enough, doesn’t it? What caused this train to come off its tracks was that the developing countries wanted the ability to raise tariffs on imports if there was a sudden surge in imports. The big deal was not if this could be done, but rather how best to define a “surge”. China and India wanted to set the trigger at 10%, the U.S. wanted to set it at 40%. Neither side could agree, and so now the whole deal is off.

So what really happened here students of the negotiating arts? Clearly both sides of this deal felt that they had a better option than the one that was on the table. The experts say that individual countries will now go on negotiating bilateral trade deals. However, one downside to this is that the WTO may now be seen as being weaker and may be less able to help resolve issues that show up in existing agreements.

What can we eager learners learn from all of this? Two things: you should always make sure that you research and fully understand what the other side’s alternatives are. This will help you to better understand just how firm you can stand on a given issue during the negotiations. Secondly, you must realize that the more parties that are involved in the negotiations, the longer and more drawn out the negotiations will be. Do your research and only negotiate at a short table and maybe you’ll be able to complete your next negotiation in less than 7 years and with better results!

Tags: WTO, deals, trade, deadlock, planning

Posted in deadlock, deals, planning, trade, WTO | 1 Comment »

Three Secrets That Have Been Missing From Negotiation Training

Tuesday, July 29th, 2008

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: negotiation, persuasion , deals, sales, success

Posted in deals, negotiation, persuasion, sales, success | 12 Comments »

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

Friday, July 25th, 2008

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: sales, deals, buyer, power, planning

Posted in buyer, deals, planning, power, sales | 1 Comment »