Posts Tagged ‘risk’

Escalation Power: How To Use It, How To Defend Against It

Friday, January 28th, 2011
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Sometimes Escalation Is Necessary…

Sometimes Escalation Is Necessary…

When we’re talking about negotiating and someone brings up the tactic of escalation what pops into your head right off the bat? Do you see yourself becoming frustrated with the person that you’re negotiating with and getting up and storming off to go have a talk with their boss? That’s one form of escalation, but that’s not what we’re going to talk about here – we’re going to talk about the other type of escalation…

The Escalation Tactic

During a negotiation you may find yourself in a situation where you’ve taken your price down as low as you can possibly go. However, the other side may not have picked up on the fact that they’ve reached the bottom and they may be pressing for even more concessions from you.

Simply put, that’s not going to happen. However, you need a way to signal to the other side that they’ve gone too far. At the same time you don’t want to lose this deal. Clearly a clever tactic is needed here.

When you use the escalation tactic, you revisit an issue that the other side thought was resolved, you apologize, and then you change it. Most commonly this involves raising your price.

A case in point would be if you were close to closing a deal and all of a sudden the other side of the table started to make a series of demands for shorter delivery times or asking for more time to pay their bills. Clearly you can’t accept these kinds of demands at this stage in the negotiations. By using the escalation tactic now you can go back and, after apologizing, raise the price that you had previously agreed to.

This is going to have a dramatic impact on the other side of the table. They’re not going to know what to do – now everything is once again up in the air. Assuming that they still want a deal (and they almost always do), they’re going to have to start to work to try to get the price back down to where it used to be.

By forcing them to do this, you will have effectively moved the focus of the negotiation from what they had been asking for back to the bottom line price. Once the original price has been reached again, the negotiations should be over and the issues that had been causing you problems should no longer be on the table.

How To Defend Against To Escalation Tactic

In the hands of a skilled sales negotiator, the escalation tactic is a powerful tool. That’s why if you find yourself sitting on the other side of the table when the escalation tactic starts to be used, you’re going to need to know what to do.

There is no simple way to deal with an escalation during a negotiation. What I can offer you is four steps that will provide you with a way to defend yourself against the full power of this tactic:

  1. Call Them On It: using this tactic resets the clock on the sales negotiation and is going to require that both sides invest more time and energy than they had originally intended to. The other side may end up not being willing to make this kind of investment. Challenge them and find out.

  2. Pause: stop the negotiations when the other side starts to use this tactic. This will give you time to consider both what they are now offering and will give you time to fully consider what all of your possible responses are.

  3. Mirror Image: hey, they are resetting the clock so why not do the same thing yourself. Review what’s been agreed to so far and pick out one of their hard won points and state that you can’t live with what’s been agreed to and state that it’s going to have to be renegotiated.

  4. Hit The Big Red Button: consider walking away from the deal. In fact, tell the other side of the table that you are considering walking away from the deal. See if this causes them to reconsider their use of this tactic.

What All Of This Means For You

Every negotiator needs to have a set of tactics that they can use in a variety of negotiating situations. Should you find yourself in a situation where the other side of the table is asking for too much from you, the escalation tactic provides you with an effective way to communicate to them that you are unwilling to budge.

The escalation tactic requires you to revisit some negotiation point, apologize to the other side of the table, and then undo the agreement that had been reached. More often than not this has to do with a previously agreed to price that you end up raising.

As a sales negotiator you are going to have to be careful when you use this powerful negotiating tactic. There are effective counter measures to it and if you aren’t fully committed to what you are doing, you may find yourself putting the deal at risk. The escalation tactic is one more tool for you to have on hand so that you can use it when the time is right.

- Dr. Jim Anderson
Blue Elephant Consulting –
Your Source For Real World Negotiating Skills™

Question For You: Under what circumstances do you think that using the escalation tactic would help you close a negotiation?

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

What We’ll Be Talking About Next Time

How are your mind reading skills? Not so good? Dang – just imagine how handy that would come in during your next sales negotiation. You could just close your eyes and you’d be able to see what the other side of the table was thinking. I can’t help you get magical powers, but I might be able to do something that’s pretty close…

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Posted in negotiation tactics | 4 Comments »

What Motivates The Other Side Of A Sales Negotiation?

Friday, September 24th, 2010
Image CreditWhat the other side wants is what is going to motivate them

What the other side wants is what is going to motivate them

In order to be successful in a sales negotiation, you need to play two roles: your side of the negotiating table as well as the other. When you are trying to determine how the other side of the table views the world (and therefore how they will negotiate with you), one of the most important discoveries that you need to make is to find out just what motivates them…

More Than Meets The Eye

One of the most important things that you’ve got to realize about the motivations that are driving the other side of the table, is that they may be unknown. The analogy is much like an iceberg: it’s not what is above the surface, but rather the part that is below the surface that you’ve got to watch out for.

When you are stepping into the other side’s shoes in order to better understand what their motivations are, you’ve got to think beyond the obvious. Once you’ve identified the obvious things that may be driving their positions, take the time to go farther – what might be making these issues important to them?

Can We Talk About Value?

A key component to better understanding how motivated the other side is going to be is to understand what they think that what we are offering to them is worth. The more value that it has, the more motivated they will be to reach a deal with us.

An important point to realize is that there are two types of value that you need to take into consideration: short term and long term. The longer term the value is of the issues that are being negotiated, then the greater value they have and the more likely a deal can be reached.

The Third Man

Reaching a deal is a wonderful feeling for everyone at the table. We shake hands and congratulate each other after it’s done. However, the deal that we’ve reached may not be for the people at the table.

In order to fully understand the motivation that is driving the other side of the table, we need to make sure that we know who is pulling the strings. If a deal is reached, who within the other side’s organization stands to benefit the most?

Get Out Your Wallet

One of the keys to understanding motivation is to know who’s going to pay? Every agreement that we reach has a cost associated with it. This means that in the end, someone is going to have to get their wallet out.

Don’t let yourself get fooled into thinking that it’s the other side of the table that’s going to be paying. It can often be a 3rd party such as their customer, etc.

Problems With Risk

In order to understand what motivates someone, you need to understand both what they want – and what they don’t want. This means that you’re going to have to develop an understanding of how they view risk.

The key is to understand just how risk adverse they are. The more risk adverse they are, the stronger lever you have that can be pulled during the negotiations

What All Of This Means For You

Motivation is what drives you during a sales negotiation. It’s the same thing that is driving the other side of the table during the negotiation also. You need to take the time to understand the other side’s motivations.

To do this you’re going to need to find out what their motivations are, understand who is driving their motivations, and realize who’s going to benefit the most from the negotiations.

Once you’ve got this all covered, you’ll be in a good place. You’ll be able to understand why the other side makes the decisions that they do. Once you have this level of understanding, reaching a deal with the other side will have become that much easier…

- Dr. Jim Anderson
Blue Elephant Consulting –
Your Source For Real World Negotiating Skills™

Question For You: What’s the best way to discover what motivates the other side in a negotiaton?

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

What We’ll Be Talking About Next Time

Let’s go hunting, shall we? If you are getting ready to enter into a sales negotiation, then you need to make sure that you have collected all of the information about the deal and the other side of the table that you can. In order to do this, you’re going to have to get good at hunting for information. Let me act as your hunting guide…

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To Team Or Not To Team, That Is The Question

Friday, January 22nd, 2010
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It’s Easier To Make It To The Finish Line When You Have A Team

It’s Easier To Make It To The Finish Line When You Have A Team

Don’t you just love movies? Whenever there is a negotiation going on in a movie, be it with hostage takers or closing a big business deal, there is always the picture of the noble solitary sales negotiator doing his / her best to close the deal against almost impossible odds. Can you tell me what is wrong with this picture?

Say Hello To Negotiating: The New Team Sport

The arrival of the 21st Century has brought with it a great deal of complexity. This is especially seen when it comes to sales negotiations. It doesn’t seem all that long ago that almost all sales negotiations were carried out by a single negotiator – teams of negotiators were reserved for extraordinary deals.

However, due to the complexity of deals and their often technical nature, teams have become more of the norm instead of the exception when negotiating sales deals these days.

Why Bother Creating A Team To Handle A Negotiation?

There are a number of advantages of doing sales negotiations using a team of negotiators. Not all of these benefits may be obvious upon first glance. Here are a few of the most important reasons for using a team to negotiate your next sales deal:

  • Knowledge: As smart as a single person may be, a team will always bring more raw knowledge to the table. It’s just a fact of life that a team of negotiators will have had more experiences and more diverse experiences than any one single negotiator could possibly have had.
  • Creativity: In order to reach a deal with the other side of the table, the ability to create a novel deal that works to the advantage of both sides is a critical skill. In order to make this happen, the creativity of the entire team is going to have to be harnessed in order to search out all of the possible solutions to the issues that will arise during the negotiations. A single negotiator will hit a brick wall when a team is still going strong and creating ways around issues.
  • Details: It’s a fact of life that it’s the little details of any sales negotiation that can result in a deal that is good or bad for either side. The challenge in modern negotiations is trying to stay on top of a sea of constantly shifting information and understanding just what the ramifications of each agreed to change will be. This is too much for one person and perfect for a team where responsibilities can be divided up amongst the team members.
  • Risk: research into how negotiating teams operate has shown that as a group, teams of negotiators will generally set higher goals for a negotiation and will take more risks during the negotiation in order to achieve those goals. The flip side to this behavior is that when the stakes grow too large, when they threaten the organization, teams will become more conservative than individual negotiators.

What’s Wrong With Using Teams To Negotiate

Although the advantages of using a team of negotiators to complete a deal is generally a better idea then relying on one single superhuman negotiator, there are some drawbacks to the team approach.

The single greatest drawback to using a team is that it requires a strong leader. You might be scratching your head at this issue, but it is really the heart of most negotiating team problems: poor leadership. The reason that it can be so hard to get a good leader for a negotiating team is because the skill set needed to be a good leader is so large.

Negotiating team leaders need to have several characteristics in order to be successful. In order to accomplish the goals that the team has set for the negotiation, the team leader has to be both flexible and firm. Ultimately the team leader needs to act like a conductor and make sure that the negotiation continues to flow in a direction that will result in a deal being reached. He / she can’t allow it to get hung up on small issues or get lost in a discussion about some issue that is not relevant to reaching a deal.

What All Of This Means For You

Each sales negotiation is unique. It has its own set of challenges and its own opportunities. One of the first decisions that needs to be made is if you’ll approach the negotiations by yourself or with a team of negotiators. More often than not the right answer is going to be to use a team.

A team of negotiators can accomplish much more than a single negotiator can. From such practical issues as being better able to keep track of all of the details of an ongoing negotiation to also being better suited to creating creative solutions to obstacles that pop up, teams are almost always a better approach.

As long as you can supply a skilled negotiating team leader, you should be in good shape. This means that if you want that job, you’ve got some studying to do. Negotiating is hard. Successfully leading a team of negotiators is even harder!

Do you feel more comfortable negotiating by yourself or as part of a team?

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

What We’ll Be Talking About Next Time

Today’s sales negotiation sessions have become so complex that it’s almost too much for a single negotiator to handle. That’s one reason that more and more sales negotiators are being handled by teams of trained negotiators. This simplifies a lot of the record keeping and tactical details of a negotiation; however, it introduces a new layer of complexity – how to manage the negotiating team…

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5 Keys To Sales Negotiation Success

Friday, January 15th, 2010
Image Credit You Can Never Have Too Many Sales Negotiating Keys

You Can Never Have Too Many Sales Negotiating Keys

How can you become a better sales negotiator? For such a simple question, there seems to be no corresponding simple answer. I guess that we all know that the best sales negotiators seem to always know what to do and when to do it. Now if there was only some way that we could pick up those same skills! I believe that the right way to reach this level of sales negotiating skill is to develop the same set of skills that the really good negotiators have. I’ve got five of them for you to learn right here…

Things That You Need To Know

Today’s modern cars are wonders of invention. However, they all seem to be so complex with wires, computers, and whatnot. Sales negotiations today are pretty much the same way: they have become much more complex in part because we all have access to so much more information.

In order to deal with the new challenges of today’s sales negotiations, you’re going to need some more tools. Here are five tools that you should have in your toolbox:

  • Two Ears: It’s too bad that these things don’t come with an owner’s guide. Your ears are your single best tool for determining what’s going on with the other side of the table. The best sales negotiators have the ability to listen very carefully and to then focus all of their senses on just what the other side of the table is really trying to say.
  • A Really Big Calendar: All too often I’ve seen sales negotiations go off track because one or more of the teams was too focused only on the short term. The best sales negotiators have the ability to see time for what it really is: the sum of the past, the present, the future, and the really far out future. If you have the ability to see time as one big continuous sliding scale and to understand where the deal that is being negotiated fits on that scale, then you’ll be able to make better decisions.
  • Deal Knowledge: No matter how good of a sales negotiator you are, you still cannot just show up at a negotiation, sit down, and then strike a good deal. You need to have a good understanding of what you have to offer the other side, what they have that you want, as well as the environment in which you are trying to strike a deal. .
  • A Sense Of Humor: As we work hard to improve our sales negotiating skills, this is the one thing that we too easily overlook. It turns out that when the negotiations reach a roadblock, or when tempers flare up, having the skill that allows you to take a step back and say something that gets everyone to laugh is invaluable. Sometimes this is the only thing that can restart a negotiation.
  • The Christmas Spirit: Well, maybe not Christmas itself but at least the ability to both give and take at the negotiating table. If you show up thinking only about what you will be able to squeeze out of the other side of the table, you are in for a long an fruitless negotiation. Likewise, if you are too focused on keeping the other side of the table happy, then you’ll walk away feeling like you did not get a good deal.
  • A Risky Personality: The world that we live in contains risk. Every deal that we negotiate increases the amount of risk in our lives. If we have the type of personality that allows us to deal with this kind of risk, then we can deal with all of the uncertainty that it takes to strike a deal with the other side of the table.

What All Of This Means For You

As they like to say in sales negotiating circles, if you’re not getting better, then you must be getting worse. This really applies to your sales negotiating skills — what have you done lately to acquire the skills that the really good negotiators have?

We’ve discussed five tools that if they aren’t already there, need to be added to your sales negotiating toolbox. Once you have mastered these skills, you’ll be ready to close more deals and close them quicker!

How important do you think a sense of humor is to a sales negotiation: critical, nice to have, or don’t need it?

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

What We’ll Be Talking About Next Time

Don’t you just love movies? Whenever there is a negotiation going on in a movie, be it with hostage takers or closing a big business deal, there is always the picture of the noble solitary sales negotiator doing his / her best to close the deal against almost impossible odds. Can you tell me what is wrong with this picture?

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Posted in negotiation skills | 4 Comments »

Negotiators Know That Persistence (& Risk Taking) Pay Off

Tuesday, October 6th, 2009
Persistence And Risk Taking In Negotiations Can Pay Off

Persistence And Risk Taking In Negotiations Can Pay Off

In this world there are two types of negotiators: the good ones and everyone else. The goal of any negotiator is to become a member of the group of good negotiators. The challenge is that the path to becoming a good negotiator is not always clear. However, there are two basic skills that lay on this path: persistence and the ability to take the right risks.

Persistence Pays Off For Negotiators

Persistence is another one of those skills that we all think should be obvious to ever negotiator; however, it’s very easy to not have it. When the other side of the table says “no” to one of our offers during a negotiation, it’s very easy to lose heart and give up.

However, the negotiator who treats every “no” as a step towards “yes” is the one who will be successful in the end. Realizing that there is a reason that the other side is saying no and then being persistent enough to continue talking until you uncover that reason is the key to success.

American negotiators have been confronted with negotiators from other countries who appeared to be unmovable in their positions. Day after day the negotiations would continue with no progress being made. In the case where the Americans would return to the table and not give up, eventually progress ended up being made. The other side’s unmovable position was just a ploy to see how committed the Americans were to the negotiations.

Risk Taking Has Its Rewards

Being persistent in a negotiation is a form of risk taking: you are risking continuing down a path that may not pan out for you. However, there are other forms of risk taking that can occur during a negotiation:

  • Deadlock: The risk of encountering a deadlock faces every negotiator. The more you press a point, the greater the possibility that the other side will become unyielding. A skilled negotiator knows how to not force the other side into a position from which there is no way out.
  • Losing Current Deals: Whenever a change to an existing deal is being negotiated, both parties realize that there is a risk that they could walk away from the table with no deal at all. Often it’s this fear of losing an existing deal that will keep both parties at the table. Sharp negotiators realize this and will be willing to push harder because they know the other side of the table won’t walk away.
  • Losing Opportunities: Both buyers and sellers can potentially not realize that a deal is more important to the other side than it seems at first glance. Sellers may be trying to break into a new market or buyers may be trying to get additional suppliers. In situations like this, the other side of the table can press harder because the risk of reaching a deadlock is much less.

Final Thoughts

Successful negotiators aren’t that much different from everyone else. The things that distinguish them are actually very small details. Two of the most important features of a good negotiator are persistence and knowing when to take risks.

Persistence means knowing when to keep on even after you’ve been told “no” by the other side. Good risk taking is when you know that your persistence will pay off for you in the end. When you can combine these skills, you will have become a good negotiator and you will be able to close better deals and close them quicker.

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

What We’ll Be Talking About Next Time

Quick: what’s the first thing that you think about when you picture your next negotiation in your mind? Unless you are Mother Teresa’s brother / sister I’ll bet that you saw yourself walking away from the bargaining table with the best deal in the world , you had gotten everything that you had wanted and more. Umm, what about the other side? That’s why win-win negotiating never works.

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