Posts Tagged ‘conflict’

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Can Sales Negotiation Be Done Via Email and Text?

Tuesday, May 26th, 2009
Email Is A Powerful Tool, But Is It The Right Tool For Sales Negotiations?

Email Is A Powerful Tool, But Is It The Right Tool For Sales Negotiations?

I might be setting off a bit of a firestorm with this idea, but here in the 21st Century do you think that it is possible to conduct sales negotiations using more smart phones and less human contact?

The Need For Modern Solutions

The #1 attraction of using a smart phone (Blackberry, iPhone, or whatever) in the first place is that it can speed just about anything up. The immediacy of e-communications allows deals to develop quicker and to move at speeds that once were unimaginable. However, when it comes to sales negotiations, things can get a bit trickier.

What we are all just starting to deal with here are the questions that come up surrounding e-mail negotiations. Some of these questions include:

  • Is it possible to conduct sales negotiations completely via email?
  • What impact does this have on what kinds of information can be shared during the sales negotiation?
  • When is human contact called for?

The New Rules

Using email as a central part of any sales negotiation changes a number of things. The first is that anything that you put into an email will live forever and may come back to haunt you. It is a great way to send information to the other side, keep almost perfect records, and make sure that everyone involved is informed on where things stand.

At the same time there are pitfalls that everyone must be aware of. These tend to show up whenever there are conflicts or misunderstands. The problems come about because the one thing that email does not do well is communicate emotions or nuances.

So what are the “new rules” in this world of email supported sales negotiations? Here are a few of them:

  1. Slow Down: do not write and send emails on the fly. Remember, these things live forever. I prefer to write the email one day, save it, re-read it the next day and then send it. I’m always careful to leave the “To:” field blank while I’m composing an email JUST IN CASE the “send” key get pressed too early.
  2. Only You Can Prevent Forest Fires: in order to prevent those cases where misunderstandings start small but keep getting blown out of proportion, don’t use ALL CAPITAL LETTERS, multiple !!!!!, or including flip comments (“How about making a real counteroffer?”).
  3. Don’t Forget The Phone: In every sales negotiation, there will probably be a time in which it would be better if you picked up the phone and talked with the other side instead of sending them another email. Realize that this moment exists, look for it, and act when it shows up.

Lessons Learned

The take-away from all of this is that times are changing. Gone are the days that all sales negotiations could take place face to face. Negotiating via email is here to stay and we all need to get used to the new rules of the game.

The experts who have been living with this new way of doing business have one final suggestion for all of us. They recommend that prior to starting the negotiating process, all parties meet in person. This is the key to allowing everyone to understand their body language and how they react to things. In the end, this is critical so that you can understand the true intent behind the words in their emails.

Do you negotiate via email today? Has there ever been a miscommunication caused by email? What caused the problem? How was it resolved? 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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Posted in how to negotiate | 3 Comments »

Negotiation Battle: Tom Hanks vs. Mel Gibson

Thursday, February 5th, 2009
The SAG And The Studios Are Deadlocked In Their Negations, Now What?

The SAG And The Studios Are Deadlocked In Their Negations, Now What?

In the world of Hollywood, they have the ability to make the unreal seem oh so real. However, right now they are having a great deal of difficulty negotiating to make a contract between the big movie studios and the Screen Actors Guild (SAG) become a reality. Are we going to be looking at another actors strike?

Perhaps a bit of a background is needed here. The SAG is a 120,000 member union that represents, what else, actors. The SAG is currently negotiating with the major studios to create a new contract for its members – their old contact ran out back in June.

This type of negotiation is fairly common. However, what’s making it interesting this time around is that there appears to be a difference in opinion on how best to negotiate within the SAG. This is causing a split to occur and may be significantly reducing the SAG’s negotiating power.

Within the SAG there are two groups that are taking differing views of how the negotiations need to proceed. The first group, called Members First,  is lead by the SAG’s president Alan Rosenberg and their Executive Director Doug Allen. Doug also happens to be the SAG’s chief negotiator. The second group calls itself Unite for Strength and has won several key seats on the board and now, by aligning with other board members,  has a slight majority.

So what’s the issue here?

Currently the SAG is in deadlock in their negotiations with the big studios. The Members First team wants to have the SAG members vote to authorize a strike if the negotiating team needs to call one. The Unite for Strength team wants the board to vote against having a strike vote as well as having them replace the current negotiating team. Talk about bad blood!

If the Unite for Strength team got their way, then they would probably try to jump-start the stalled negotiations with the studios. They would go along with the pay terms for new media that other unions have negotiated with the studios as  an exchange for getting improvements in the traditional media pay areas.

Why does the Unite for Strength team not want a strike vote to be taken? They believe that a strike now would be a poor decision based on the current economic state of the country.

Tom Hanks supports the Unite for Strength team. Mel Gibson supports the Members First team.

Just to make things a bit more complicated, the studios are insisting that their current offer on the table is their final offer. It contains some provisions that no SAG members likes such as a proposal to eliminate mandatory meal times (I mean come on, an actor has got to eat…)

So what should a negotiator make of all of this back-and-forth?

First, the public SAG split is bad news for the actors because it transfers power to the studios. When the other side of the table is in disagreement, your position is stronger. However, this also means that reaching an agreement with the SAG will be more difficult – the studios need to get all of the SAG to agree to a new contract.

It looks like SAG has done a poor job of PLANNING their side of the negotiation. There is a critical question of what is more important: money from traditional (films, TV) media or money from new (DVD, Web) media. Pick your poison, but this is an issue that all of the SAG needs to get behind.

Both sides of the table are at fault for allowing the deadlock to continue for six months. One subtle point here is that the studios may be willing to live with a deadlock because there is no current threat of a strike and the longer they wait, the greater the split within the SAG grows.

If the SAG replaces their negotiating team, then there will be a great deal of negotiating ground that will need to be revisited as the two negotiating teams meet for the first time and work out their negotiating positions.

What’s to be learned from this negotiating mess? A couple of key points: negotiations need to be planned out before discussions start so that inter-team squabbling can be taken care of BEFORE the talks start. Next, replacing a negotiating team during negotiations is a radical step that should be avoided at all costs – it’s just too expensive in terms of time. There’s a lot more to learn here, but I’m pretty sure that time will reveal what mistakes were made and which side ended up with more negotiating power…

If you were a member of the SAG, which team would you want to be a part of (the Tom Hanks team or the Mel Gibson team)? Who do you think has the stronger position in the negotiations right now? What would your next steps be if you were the studios? Leave me a comment and let me know what you are thinking.

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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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So Just How Do You Negotiate With Pirates?

Thursday, December 18th, 2008
Pirates Aren't Just In Movies - So You Had Better Be Ready To Negotiate With Them!

Pirates Aren't Just In Movies - So You Had Better Be Ready To Negotiate With Them!

Negotiating is both an art and a science. We study what works and what doesn’t in order to make sure that the next time that we are in a business situation in which somebody has something that we want, we are able to negotiate to get it. But what about pirates?

The newspapers are all abuzz about the pirates who are operating out of Somalia. So far this year, there have been 96 pirate attacks this year. 40 of these attacks have resulted in pirates boarding a ship, taking over control, and then demanding a ransom for the ship and its crew. World wide there have been 83 reported pirate attacks in the 3rd quarter alone.

When pirates capture a ship, they then demand a ransom in order to release it. These ransom demands are generally in the range of $1 – $2 million dollars. However, in the case of a Saudi oil tanker the ransom may have been as high as $15 million dollars.

What is a ship owner to do if his ship is captured by pirates? Apparently a lot of them are calling Holman Fenwick Willan, a London maritime firm. HFW has 6 lawyers who are currently working on pirate cases. Ashby Jones wrote an article in the Wall Street Journal in which HFW stated that they are working on “over a dozen” of the 20 pirate hijackings that have occurred in the Somalia area.

So just how does one negotiate with pirates? At HFW, their first job after being notified of a pirate highjacking is to calm their customer’s fears – nobody seems to know how to react to this sort of thing.

The next step is straight out of the negotiators handbook – do some research. HFW then works to find out just where the hijacked ship was registered, oh, and where exactly the hijacking occurred. This will set boundaries around the negotiations and will determine what laws are in play and will determine who is liable.

The issue of paying a ransom is, of course, a big deal. One key question that the negotiator needs to resolve right off the bat is if it is even legal to pay a ransom. It turns out that under U.K. law, paying a ransom IS legal and that’s important because for some reason most marine insurers are located in England.

The actual negotiations with the pirates are, to put it mildly, stressful. The negotiations are conducted by negotiators that HFW obtains for their clients. Forget suits and ties, this special breed of negotiators generally come from the miltary special forces. Probably the right men (I think that I can be sexist here) for the job.

Once a deal has been struck and the ship has been returned to the crew, the negotiations are not over. Indeed, they are often just beginning. The boat owners will now start to negotiate with the firms who were shipping cargo on the boat in order to get them to reimburse them for part of the ransom that was paid. These negotiations can drag on for a very long time.

We are all privledged to live in the 21st Century; however, sometimes aspects of the 1800’s, such as pirates, intrude into our world. Thankfully the negotiation skills that have been developed over the centuries serve us just as well now as they did then.

If you were called on to negotiate with pirates, what research would you do? Do you think that they would have the power in the negotiation or would you? Would creating a solution with mutual satisfaction be important to you in this type of deal? Leave me a comment and let me know what you are thinking.

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Posted in art of negotiation | 2 Comments »

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