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How To Use The “Pivot Technique” To Defend Your Price During A Sales Negotiation

Friday, June 4th, 2010
Image Credit Good Sales Negotiators Know How To Move Around A Fixed Issue

Good Sales Negotiators Know How To Move Around A Fixed Issue

I just love Ferris wheels. They are generally huge, have the ability to take you way up into the sky and then always bring you safely back down to earth. If you’ve ever taken the time to look at how a Ferris wheel is built, then you already know about one of the key negotiating techniques that top sales negotiators use when they need to defend a price…

How Ferris Wheels Are Like Sales Negotiating

Many sales negotiations get hung up and fall apart when the discussion finally gets around to the issue of price. The reason for this is pretty simple: one side of the table wants a lower price and the other side either doesn’t want to or can’t lower it. End of discussion – both sides shake hands and walk away.

It turns out that things don’t have to end this way. The “pivot technique” is one way that experienced sales negotiators have found to meet this issue head on and not derail the negotiations. One way to mentally picture the pivot technique in action is to think of a Ferris wheel with a center hub and passenger holding cars (gondolas) distributed in a circle around the hub.

The Pivot Technique In Action

Think of the price of your product or service as being the hub of a Ferris wheel – it’s both fixed and unmoving. However, a Ferris wheel with just a hub is no fun at all. That’s why it has gondolas to carry passengers. In the pivot technique these gondolas represent other negotiating points that you can use to make sure that the negotiations continue even when you have a fixed hub.

Although this may seem obvious, during the heat of a negotiation it’s not – you don’t focus on the hub, you spend your time talking about the gondolas. There are a lot of different ways to do this: the number of gondolas and just exactly what is in them is completely up to you.

Don’t get me wrong: neither you nor the other side is going to forget that this is all being held together by an immovable hub. However, as the number of gondolas increases and their contents become more desirable, the hub will cease to become as much of a significant issue.

What All Of This Means For You

A sales negotiation that falls apart because of price is a tragedy that didn’t need to happen. Yes, price is important to both sides; however, the total value of the deal is much more important.

The pivot technique is a tool that experienced negotiators use to get around the problem of having to negotiate with a price that can’t be lowered. By adding additional points to negotiate to the table, we have the ability to build a complete package to be negotiated and this makes the price only a single component of a much bigger deal.

There are no silver bullets in sales negotiations. However, the pivot technique is a powerful tool that can help you avoid having your next sales negotiation come to an end because you couldn’t change your price.

- Dr. Jim Anderson
Blue Elephant Consulting –
Your Source For Real World Negotiating Help For Technical Staff

Question For You: How many additional negotiating points do you think will be required in order for you to be able to maintain your product’s price?

Click here to get automatic updates when The Accidental Negotiator Blog is updated.

What We’ll Be Talking About Next Time

So let’s say that you were going to drive to some place far, far away. Let’s go a step farther and say that you sorta knew where you were going to go to, but that you had never been there before. Can you imagine yourself just jumping into the car and driving with doing any planning? Believe it or not, this is exactly how some sales negotiators jump into a negotiation…

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Tactics 101: Giving Away Nothing & Becoming A Litterbug

Friday, May 28th, 2010
Image Credit
Is It Really A Gift If There’s Nothing In The Box?

Is It Really A Gift If There’s Nothing In The Box?

In the world of negotiating, the actual process of negotiating is very much an art. In order to be good at it, a master sales negotiator needs to have a complete collection of negotiating tactics at his or her disposal. Not every negotiation will call for every tactic to be used, but as any auto mechanic can tell you, having the right tool for the job can make your life a lot easier.

Empty Concessions Make The Perfect Gift

As a negotiator you will be expected to make concessions to the other side of the table during the negotiation in order to keep making progress towards an eventual deal. However, sometimes you may find yourself in a bind – they want a lower price and you can’t go any lower than you already are.

It is in cases like this that empty concessions can come in quite handy. Ultimately, the value of any given concession is determined by how the side that is getting it views it. This means that by identifying a negotiation point that means very little to you, but which means a great deal to the to the other side of the table, you will have found the perfect empty concession.

When you find yourself backed into a negotiating corner, an empty concession is exactly the kind of tool that you can use to increase the other side’s level of satisfaction without having to give in on a point that is important to you.

Littering Really Isn’t All That Bad

In some negotiations, it can seem as though the other side of the table holds all of the cards – you are at their mercy. However, this is never the case. The concept of “littering on their lawn” simply means that you have the ability to make statements that will cause them to pause and realize that what you are offering them has more value than they had originally thought.

The following four examples show how negotiating litter can be made to work for you:

  • Value: pointing out to the other side that yes, they could strike a deal with another company for a lower price; however, they would end up getting less value from the deal for the following reasons…
  • The Price Is Right: sitting down with the other side and reviewing both your costs and your prices can quickly show them that you really are making a reasonable amount of money on this deal – not too much, not too little.
  • We’re Different: point out why comparing your offer to another firm’s offer is not really an apples-to-apples comparison. Show that your firm actually provides many additional services.
  • Total Cost: just focusing on the price of the item being bought or sold can be misleading. Taking the time to discuss all of the costs of the deal, both before and after the sale, can show that your total costs are lower than the competition.

What All Of This Means For You

Nobody is ever born a top-notch sales negotiator. Instead, we all improve a little bit during every negotiation that we are involved in. A key part of this improvement is making sure that we know all of the tactics that we’ll need.

Concessions that mean very little to you, but which mean a great deal to the other side of the table are a fantastic tool to use when you find yourself backed into a corner. Casting doubt in the minds of the other side by littering on their carefully planned reasoning can cause the other side to become willing to reach a deal much quicker.

They say that knowledge is power and the more negotiating tactics you know, then the more negotiating power you will have…

- Dr. Jim Anderson
Blue Elephant Consulting –
Your Source For Real World Negotiating Help For Technical Staff

Question For You: If the other side doesn’t ask, should you make empty concessions anyway since they don’t mean anything to you?

Click here to get automatic updates when The Accidental Negotiator Blog is updated.

What We’ll Be Talking About Next Time

If you’ve ever taken the time to look at how a Ferris wheel is built, then you already know about one of the key negotiating techniques that top sales negotiators use when they need to defend a price…

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Deadline? We Don’t Need No Stinkin Deadline…

Tuesday, February 3rd, 2009
Deadlines Show Up During Negotiations, But Are They Real?

Deadlines Show Up During Negotiations, But Are They Real?

What would the world of negotiating be without deadlines? I can tell you that Hollywood movies would lose a lot of their plot if the bad guys couldn’t set impossible deadlines for our heroes to try to meet. What about real life – why do people use deadlines while negotiating?

It’s actually pretty simple, a deadline is an effective communication tool. Deadlines can be used by either side to apply pressure to the other side and force them to make a choice. If the party that’s under pressure chooses to accept the deadline, then the deal will be done. Otherwise, who knows?

You see, the trick with deadlines is that when you are presented with one you can never be quite sure that it’s real. In the game of poker this is called bluffing. The one thing that we do know about a deadline is that if we accept it, everything will be resolved. However, there will always be that unanswered question as to what would have happened if we had not met the deadline…

One solid piece of advice is given by experienced negotiators: always be skeptical of any deadline that you encounter during a negotiation. These types of fixed time limits have a tendency to come and go.

Now having said this, you also have to realize that in real life sometimes a deadline is real. If you choose to not meet it, then you are running the very real risk that this may kill the deal once and for all.

In order to help you see your way through the deadline maze, here are three questions that you need to ask yourself anytime that you encounter a deadline during a negotiation:

  1. For The Other Side: what deadlines do you know about that the other side has to live with? Do you know what will happen if they miss their deadlines?
  2. For You: what deadlines have been placed on me by either my team, my organization, or myself? Will these deadlines limit how effective I can be during this negotiation?
  3. Renegotiation: Is is possible for my team to renegotiate any of the deadlines that have been placed on us by our own people? Who says that we can or cannot?

As much as we all dread having the other side throw a deadline at us, we need to remember that deadlines are an effective tool that we have in our own bag of tricks. Studies of negotiations have been done and they have revealed that deadlines do one thing very well – they force the other side to make a decision.

All too often in a negotiation, things can be dragging on for too long. If you find yourself in this situation where the other side appears to be resisting making up their minds, then perhaps a deadline is called for.

This type of situation often shows up when the other side is faced with an especially difficult decision. They will drag their feet longer in order to avoid having to make up their mind. If you can convey to them that there is a sense of legitimacy to your deadline, then you can use this powerful tool to close the deal faster.

Have you ever been presented with a deadline during a negotiation? Were you able to determine if it was a real deadline? Did you meet the deadline or did you skip it? What happened then? Leave me a comment and let me know what you are thinking.

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A Negotiator’s Best Friend: Time To Think

Thursday, January 29th, 2009
Negotiators Need To Develop Patience In Order To Be Successful

Negotiators Need To Develop Patience In Order To Be Successful

Quick – what is the most important characteristic of a negotiator? Sorry, that was a trick question – there are a number of correct possible answers. However, one trait that needs to be on that list is patience. Although being an American can often be an great asset, in negotiations sometimes it can be a hindrance because we are impatient!

So what is patience? In short it’s the ability to wait, the ability to not rush to a conclusion. Although this can be very difficult to do, it is a trait well worth developing. With patience you can cause the following things to happen:

  1. Get the other side to grant concession after concession.
  2. Discover new issues that need to be negotiated.
  3. Cause the other side to have internal divisions.
  4. Cause the other side to redefine their objectives.
  5. Provide time for both sides to accept new ideas.

So if we can all agree that patience is a good thing for a negotiator to have, the big question that comes up right off the bat is just how does one develop patience? Since pressure and patience are so closely linked, the ability to develop patience often comes down to how your organization works.

In order to build patience, here is what you need to do:

  1. You need to make sure that you have made sure that everyone on you negotiating team is made aware of the value of patience.
  2. You need to take the time to plan ahead.
  3. Get an inch, when you really need a yard. Time is something that you can always use – buy yourself more whenever you have an opportunity.
  4. Establish milestones that are future based so that everyone has the same view of the future.
  5. Manage the expectations of upper management so that pressure on the negotiating team is minimized as much as possible.

Speaking of upper management, as with all negotiating tactics, patience has two sides to it. Your upper management will be well aware that too much patience may result in the negotiating never reaching a conclusion.

Given the way the world works, there is a good chance that you’ll encounter a situation in which the other side of the table starts to use patience as a tactic against you! In these situations, there are several ways to defend yourself:

  1. Internally understand that his using patience may turn out to make things tougher on the other side than on you.
  2. Set a deadline in order to negate the other side’s use of patience.
  3. React by making sure that you are relaxed and make yourself comfortable.
  4. Prepare your internal team for a long march (also make sure that your senior management does not expect immediate results).
  5. Develop a strategy that will send signals to the other side that let’s them know that patience won’t work out for them.
  6. Make patience both costly and risky for the other side.
  7. Walk out!

Using simple patience is a tatic that is often overlooked in today’s go-go business environment. That’s one of the reasons that it can work so well! Make sure that you communicate the importance of patience to your entire negotiating team and you’ll be well positioned to do well during your next negotiation.

Have you ever used patience as a negoitiating tool? Was it successful? Has the other side ever used patience as a tool against you?  How did you react? Leave me a comment and let me know what you are thinking.

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Weird Negotiating: The Buy Now – Negotiate Later Tactic

Tuesday, January 27th, 2009
Buy Now - Negotiate Later Is A Dangerous Tactic That Should Be Used Carefully

Buy Now - Negotiate Later Is A Dangerous Tactic That Should Be Used Carefully

I’ve always thought that this tactic was just a little bit crazy, but I have come to think that it goes on a lot more than any of us may believe. To set the stage properly, you’ve got to be able to imagine a buyer who is desperate. For whatever reason, a project has got to be started NOW. Ultimately the project has a number of items that are going to have to be negotiated, but its got to start NOW.

Using the buy now – negotiate later tactic, the buyer asks the seller to start the project now on a prearranged contractual basis. The buyer will then provide some limited funds in order get things started and both the buyer and the seller agree to work out the details in the future.

Does this sound dangerous to you? This is not the way that I like to work – things can get messy really quickly. The key reason for the way that I feel is that it can be incredibly hard for a buyer to change vendors once the project is started. We all tend to make both financial as well as mental commitments that are hard to change after we’ve reached an initial agreement with the seller. What was once a temporary agreement, has somehow become permanent and the buyer is locked in to it.

With all of this having been said, buy now – negotiate later can still be the way for a buyer to go in certain special circumstances. Some of these are:

  • Blobs: Sometimes the amount of work that has to be done truly can’t be estimated until some initial work has been done.
  • Out Of Time: Although we’d all like to have plenty of time to sit down and complete a negotiation, sometimes there is no time for negotiation – work needs to begin right NOW!
  • Phantom Costs: Sometimes there has been an initial discussion of prices between both parties. This has left the buyer feeling as though the seller is trying to collect for expenses that will probably never occur.
  • Pilot Time: If the buyer has never dealt with the seller before or if the job requires unique specialized skills, then the buyer may want to try-it-before-he-buys-it. This will provide the buyer with a way to find out if the seller truly knows his stuff.
  • Seller’s Advantage: The seller may be willing to enter into this type of deal if he/she realizes that his bargaining power is going to be less later on. There are several different reasons why this can happen, the most common is that resources have been committed and this means that he/she will lose this contract opportunity.
  • Good Record: The buyer may be willing to enter into this type of agreement if his research shows that the seller has a good track record and past customers report that he probably won’t rip the buyer off.
  • Not To Exceed: The buyer can consider entering into this type of deal if the seller is willing to commit to a not-to-exceed price at the outset.

I’m still wary of these types of deals. Even sellers need to be careful. A seller’s power in a negotiation is the greatest during negotiations BEFORE work has started. Once services start to be delivered, then all bets are off.

Have you ever been part of a buy now – pay later deal? Why was this type of deal proposed? Who proposed it: the buyer or the seller? How did it turn out – was everyone happy in the end? Leave me a comment and let me know what you are thinking.

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