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Japanese Sales Negotiation Secrets

Tuesday, April 21st, 2009

Sales Negotiations With Japanese Partners Require New Skills

Sales Negotiations With Japanese Partners Require New Skills

All too often Americans (like me) think that we know everything. The reality is that our society has only been around for a bit over 200 years and we’re just getting started. That’s why it can be valuable for a sales negotiator to take a look at how societies that have been around for 1,000′s of years negotiate. Like, say, Japan…

The U.S. really started to take a look at how we dealt Japan in the 1980′s when trade between our countries exploded. What people quickly realized is that both sides of the table were fundamentally different. There for the first decade or so, U.S. sales negotiators were getting taken to the bank more often than not because the Japanese sales negotiators were doing a better job.

Over time HOW these negotiations were being conducted was closely studied. Three techniques quickly became apparent:

  1. Considered Response / Respectful Silence: when Japanese sales negotiators are on the other side of the table, be prepared to sit quietly. Western sales negotiators don’t know what to do when nobody is talking – and the Japanese know this. They can sit, work out math problems, draw in long breaths, etc. and say nothing for minutes at a time. This is all designed to get you to become flustered and give in on a point or say something that you shouldn’t say.
  2. KAN – “Seeking Heavenly Approval”: Western sales negotiators like to focus on the here and now. Japanese sales negotiators realize that this deal is just part of a much bigger relationship. After the details of the agreement have been worked out and it appears as though you are close to closing the deal, members of the Japanese team will pause. They will consider if they really want to do this deal with you – is it going to be worth it in the long run, or are you just going to be too much of a hassle to deal with? This moment is called KAN – reaching “heavenly approval”.
  3. Time & Money: the Japanese view the sales negotiation process differently than their Western partners do. We in the west see it as something to race through and quickly get done with. The Japanese view it as something to be nurtured. They set aside enough time to do it properly. They resist attempts to wrap it up quickly. They will revisit points over and over again in order to test your resolve. This is how Japanese sales negotiators turn time into money.

It is entirely possible to enter into sales negotiations with Japanese partners on the other side of the table and come out with an agreement that you feel good about. However, you need to fully understand how they see the world and adjust your sales negotiating style to this situation.

Have you ever had a chance to negotiate with a Japanese team? Were there long, uncomfortable periods of silence? Did they seem to slow things down and do more thinking as the end of the negotiations approached? Did you remember to budget enough time for the negotiation or did they budget more time than you had? Leave me a comment and let me know what you are thinking.

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Should Sales Negotiators Be In Long Term Relationships?

Tuesday, April 7th, 2009

Do Buyers Or Sellers Get More Out Of A Long-Term Relationship?

Do Buyers Or Sellers Get More Out Of A Long-Term Relationship?

Who wouldn’t want to be in a long term relationship? I mean we wanted our parents to be in one, we want to be in one, movies always end by having the hero walk off into the sunset and into a long term relationship, right? It turns out (as with so many things in life), when it comes to sales negotiations it depends on what side of the table that you’re sitting on as to if you should want to be in a long term relationship…

Let’s be straight here, getting ourselves into a long term relationship makes life sooo much easier. There are all sorts of benefits like reliability, friendship, and even peace of mind. However, it has been shown that over time these types of relationships start to favor one party over the other. Here’s what can happen:

  • You can lose your objectivity
  • You can become compliant
  • You can lose your company’s secrecy
  • You can become too dependent on the other side

If you are a seller, then getting into a long term relationship can be a very good thing. Generally speaking, long term relationships favor the seller over the buyer. Here’s why:

  • More often than not, product specifications change over time.
  • Changes in product specifications tend to increase the seller’s margin.
  • The seller can tailor standard offerings into special products and charge more for them.
  • The seller has fuller access to the buyer’s organization – the reverse is not true.

Sure seems like the seller has an unfair advantage doesn’t it? Buyers should take heart, there are actually a number of things that a buyer can do to even the score:

  • Change buyers every few years just to shake things up.
  • Expand the number of competitors vying to be your supplier.
  • Have another group evaluate each long term relationship every so often.

Long term relationships do have their advantages; however, just as with your love life, you need to step back every so often and make sure that this relationship is the right for you right now.

Are you currently in a (business) long term relationship? Are you the buyer or the seller? Do you think that this relationship is still a good one to be involved in? How can you double check this? Leave me a comment and let me know what you are thinking.

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Classic Sales Negotiation Tactic: I’ve Got To Talk To My Boss…

Tuesday, February 17th, 2009
The Escalating Authority Sales Tactic Is Crude But Often Works

The Escalating Authority Sales Tactic Is Crude But Often Works

Picture this scene: it was about 20 years ago (ouch!) and I was still dating my wife when she suddenly had to replace her car. She knew exactly what she wanted: a Honda Civic with a manual transmission. There was a local Honda dealer near where she lived so one evening we went there to have a talk about buying a car.

The salesman that we talked with was the “older guy who reminds you of your uncle” variety. I had an opportunity to sit back and watch my soon-to-be-my-wife bargain with him over the price. She started low, he started high, and after a bit of back-and-forth, they were still fairly far apart. Now my bride-to-be had done her homework and had called a bank to find out how much this car was really worth (20 years ago = no real Internet). So she knew what the correct outcome of this sales negotiation needed to be.

The salesman that we were dealing with looked at the gap in offered / accepted prices and said, of course, “are you sure that you can’t do any better than this”. When my girlfriend said “No”. He then said “I’m going to have to go talk with my boss about this…” And off he went.

Returning about 10 minutes later, he had a slightly lower price, but still the gulf between what my girlfriend was willing to pay and his new lower price was great. TWO MORE TIMES HE WENT BACK TO TALK WITH HIS BOSS. I couldn’t believe this – I was watching a classic Greek play being staged before my very eyes. At any rate, my girlfriend got the price that she was asking for in the end after about 90 minutes of haggling. What was going on here?

I didn’t know the name of this sales negotiation tactic at the time, but I do now. It’s called the “Escalating Authority” tactic. This tactic uses the need to have a deal approved by a reluctant higher authority in order to gain more concessions from the other side of the table.

This tactic is used by salespeople all the time. The reason that they use it is because it often works. Here’s what a salesperson can expect to get out of using the “Escalating Authority” tactic:

  • Helps to lower the other side’s expectations.
  • Causes the other side’s arguments to come out early instead of later.
  • May cause conflict within the other side’s negotiating team.
  • Causes the other side to state their negotiating demands earlier.
  • Just physically wears the other side down.
  • May end up lowering the self-confidence of the other side.
  • Uses up the other side’s valuable time.

The party that this tactic is being used on is not without defenses. There are several counter measures that can be put in place in order to diminish or eliminate the effectiveness of this sales negotiation tactic:

  • Match the other side: bring your higher level people to the table when they say that they need to go to their higher level people.
  • Walk out.
  • Bypass the other side of the table and go directly to their senior management.
  • Manage the expectations of a quick resolution on your side of the table.
  • Communicate to your side of the table what tactic is being used against you and let them know that one of its goals is to lower their expectations for the outcome of this sales negotiation.
  • Don’t repeat yourself. Force the other side of the table to relay all that you have said to each higher level of their management.

In the end, the Escalating Authority tactic is a fairly crude negotiating tool that is used most often by amateur negotiators. It can be countered easily and effectively. Keep your eyes open and make sure that you spot it when someone starts to use it on you – the best Escalating Authority tacic defense is a good offense!

Have you ever had the Escalating Authority tactic used on you during a negotiation? How did you respond to it? In the end was it successful? Have you ever had a chance to use it during a negotiation? Leave me a comment and let me know what you are thinking.

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What If There Was No “What If” Negotiation Tactic?

Tuesday, January 13th, 2009

The "what If" Negotiating Tactic Is A Powerful Way To Get More Information

The "What If" Negotiating Tactic Is A Powerful Way To Get More Information

During a negotiation, there often arise cases where we’d really like to get the seller to give us information that they really don’t want to give to us. If only there was some way to test the other side’s willingness to settle with us. Oh, and if there was a way to also “zero in” on the seller’s lowest selling price, this would be nice also.

It turns out that such a tactic does exist – it’s called (what else) the “what if” tactic. An example of how you’d use this tactic would be if you were buying blue widgets from someone.

You’d ask the seller to give you a quote for 100, 1000, 10000, and 20000 blue widgets (sorta like asking “what if I was to buy…”). Once you have a response to your request for bids, you’ll have lots of information about their pricing scheme, any setup charges, learning experiences, and production costs.

The “what if” tactic is very powerful when used correctly. In order to help you get the most out of this tactic, here are several suggestions that can help you get information during a negotiation:

  1. What if we change the specifications?
  2. What if we change when the work is actually done?
  3. What if we buy more items than just the ones being negotiated?
  4. What if we provide the required materials?
  5. What if we increase / decrease the warranty period?
  6. What if we increase the quantity?
  7. What if we agree to a longer contract?

Now all of these suggestions are great news if you are trying to buy something. But what if you are the one doing the selling? In negotiations, everything is an opportunity.

Once you hear the buyer starting to ask “what if” type questions, you should start to be on alert to what might be coming next. Here are several ways that the seller can react to the  “what if” tactic:

  • Don’t come up with new prices “off the cuff”. Take time to plan your prices carefully.
  • Realize that not every “what if” question actually needs to be answered. You can avoid answering these types of questions by using responses such as “they won’t”, “we can’t”, or “that will be very expensive”.
  • Use the buyer’s deadline to avoid answering a “what if” question. Tell the other side that in order to answer one of their “what if” questions will require more time than they have available to negotiate.
  • If you offer a concession, then make it contingent on you receiving their order immediately.

The selling party has a counter tactic called “would you consider” which can be used in response to “what if” questions. Both of these tactics can open new negotiating possibilities that may help both parties move towards a successful solution.

Have you ever used the “what if tactic” during a registration? Did it work for you? Have you ever had this tactic used on you during a negotiation? How did you respond to it? Leave me a comment and let me know what you are thinking.

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Say Hello To The Bogey-Man – A Negotiator’s Best Friend

Tuesday, September 30th, 2008
When Negotiating, The Bogey Is Your Best Friend

When Negotiating, The Bogey Is Your Best Friend

As a negotiator, the key to your long-term success is to have a number of different techniques that you can use when a situation calls for it. One way to think about this is like a carpenter who has a tool belt with his most commonly used tools on it. As the carpenter is working on a job, just about any situation can be solved with one of the tools that he has close at hand. Today we’re going to talk about the negotiation equivalent of a carpenter’s hammer: a practical, simple, and ethical tool that everyone should know how to use. What’s this negotiating tool called you say? The Bogey.

The easiest way to define what the Bogey is, is to show you it in action. Let’s say that you want to have your house painted. You have a contractor come out to the house, he looks it over, and then he gives you a quote for $20,000 to do the job. You then tell the contractor “Hey, I love your proposal and I think that you do great work; however, all I have to spend is $17,000 that I got from an insurance claim. Here is a certified check for that amount.” The painter accepts your offer and gets to work.

So what happens when you use the Bogey technique? There are three fundamental principals of negotiating that are at work here and it’s important that you realize what they are:

  1. By complimenting the painter, you have boosted his ego. He realizes that you now expect something from him in return. In a subtle way, you have actually asked for his help and in most cases you will usually get it.
  2. In all negotiations, the seller knows more about his product than the buyer ever will. The Bogey is one way that the buyer can give the seller a chance to show what they know about the product.
  3. One of the fundamental rules of negotiating is that there is always a better deal available for all parties that are participating in the negotiation if only they are willing to search for it. The Bogey technique is how the search for this better deal starts.

When you present a Bogey to a seller, the seller generally won’t roll over and accept it. Instead he will come back with a more complete description of what he is selling to you: the quality of his product, his workmanship, the quantity of different items included in his quote, etc. Out of all of this you will now have a much better understanding of what you are buying. Now the real negotiation begins. The seller may lower his price, drop some options, change the delivery schedule, etc. No matter where it goes from here, you will end up ahead of the game.

Have you ever used the Bogey technique when you were negotiating? How did it work out for you? Has someone ever used this technique on you? How did you react as a seller – did you start to describe all the values of your product / service? Leave me a comment and let me know what you are thinking.

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