Posts Tagged ‘satisfaction’

« Older Entries
Newer Entries »

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.

Tags: , , , , , , , , , , , , , , ,
Posted in how to negotiate | 4 Comments »

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.

Tags: , , , , , , , , , , , , , , , ,
Posted in how to negotiate | No Comments »

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.

Tags: , , , , , , , , , ,
Posted in art of negotiation | 2 Comments »

Every Negotiation Needs A Rap(port) Star!

Tuesday, December 16th, 2008
Establishing Rapport With The Other Side Is Music To Everyone's Ears

Establishing Rapport With The Other Side Is Music To Everyone

So here’s something that will blow your mind: studies have shown that car shopping customers are willing to pay between $200 and $300 MORE for a car if during the negotiation process they became convinced that the salesperson was committed to their satisfaction.

Wow – talk about a successful negotiation for the salesperson. But wait, isn’t the customer the customer getting something out of this also – satisfaction. Think back over all of those deals in which you have been the customer and in which you walked away afterwards feeling less than satisfied. Perhaps nobody is getting taken for a ride here (sorry for the pun).

It’s possible that the customer side in this type of deal can actually put a value on being made to feel satisfied: $200-$300. Hmm, if it’s true when people are buying cars, just imagine what feeling satisfied must be worth when you are working on a much larger deal!

All this comes down to one thing: part of the price that is being negotiated is friendship and goodwill. Angry, bitter, combative negotiators will get beaten down on price each and every time. In all business negotiations we must remember that we are negotiating not only things (goods and services), but also attitudes.

As the car buying study shows, part of the price of any deal that you negotiate will include:

  1. Trust: does the other side trust that you have been straight with them and that you will keep your word after the deal is signed?
  2. Friendship: yes, friendship does still exist in the 21st Century. Does the other side believe that they have developed a relationship with you that will continue to exist after the negotiations are completed?
  3. Integrity: would you do something that you knew was wrong? Would you sell a product or a service that you knew was flawed or wasn’t going to meet a customer’s needs?
  4. Goodwill: do you have that intangible asset that makes the other side believe that you will do them no harm?
  5. Credibility: does your track record support what you are saying?
  6. Authority: do you really have the ability to deliver all that you have promised?
  7. Status: are you the peer or the better of the other side – are you the right one for them to be negotiating with?

It’s important to note that there is a HUGE difference between establishing rapport (a connection) with the other side vs. just being cooperative. Experiments have shown that when the other side is exploitative, they can easily take advantage of cooperative negotiators.

So where does all of this lead to? It’s as simple as realizing that compatible attitudes between both sides of the negotiating table are needed in order to be able to reach solid, long-lasting agreements. In the end, there is no way that either side can trust what the other side has promised if the two sides can’t trust each other.

Although they may not be listed on the list of bargaining points that you drew up before the negotiations started, everything that we’ve discussed including recognition, friendship, and trust are always items that are up for negotiation. It’s well worth the extra time that it takes to make sure both sides walk way mutually satisfied.

Have you ever negotiated a deal and then left unsatisfied? How much would you have paid to have been satisfied? Have you ever formed a lasting friendship with the other side during a negotiation? How important is trust to you when you are negotiating with someone? Leave me a comment and let me know what you are thinking.

Tags: , , , , , , , , , , , , , , ,
Posted in satisfaction | 1 Comment »

Negotiation Do’s & Don’ts From The Master Negotiators

Thursday, December 4th, 2008
Master Negotiators Use Many Different Skills To Achieve Their Goals

Master Negotiators Use Many Different Skills To Achieve Their Goals

If only there was some book, some DVD to watch, or some class that you could take that would provide you with access to all of the secrets of those master negotiators whom we are always reading about. You know the ones, they negotiate the billion dollar business deal, the hostage negotiations, they settle the labor strikes, and they come up with solutions to lawsuits before they hit the courts. Just what are their secrets?

As we’ve discussed before, there are no such courses, DVDs, or courses to take because of the nature of negotiating: it’s not just a couple of key ideas, but rather a whole bunch of very small things that when taken together make a master negotiator.

However, there is no need to despair! The good folks over at Karrass have been doing research into what makes a good negotiator for quite some time. Based on this they have been able to pull together a list of ten things that a master negotiator needs to be able to do.

What I’m hoping that you’ll get from this list is the awareness that there is nothing earth shattering here. No great secrets are revealed. No hidden negotiating ninja secrets are being brought to the surface for the first time. Rather, a set of skills are being identified as being those skills that a master negotiator needs to have.

It’s not that a master negotiator has just one of these skills that makes them so skillful. Rather it’s the fact that they have ALL of these skills that makes them a master negotiator. Now there’s something to think about! Here’s the list, let’s see how many of these negotiating skills you already have:

  1. Nothing Is Fixed: Don’t let the other side of the table try to intimidate you with “last & final” offers, firm fixed prices, or even “take it or leave it” statements. Remember -  this is a negotiation and that means that everything is negotiable.
  2. Deeper Is Better For Both Sides: Although you are negotiating directly with the person(s) on the other side of the table, you are really negotiating with their entire organization. This means that before your negotiating partner can agree to your terms, they are going to have to get buy-in from their organization. During your negotiations you need to cover all of the key details in enough depth that the other side will be able to thoroughly explain the deal internally.
  3. Got To Get Satisfaction: Forget win-lose, win-win, etc. Negotiating is all about making sure that both sides come away feeling satisfied with the outcome. Although it’s easy to focus on the stated negotiation issues, be sure to look for other “hidden” issues that are also important to the other side. Addressing these issues will boost satisfaction and increase the probability of reaching agreement.
  4. These Boots Are Made For Walking: One of the most powerful negotiating techniques is also one of the most difficult to do – leave & walk out. This by itself would kill a negotiation, so you also have to master the other half of this skill – you need to know when to return later.
  5. Conflict Is King: The very reason that you are negotiating is because there are differences between both sides. Differences mean that there will be conflict. You need to be able to deal with conflict. If you have an overpowering need to be liked, then you will end up giving too much away during the negotiation just to be reassured that the other side likes you in the end.
  6. Too Much: In any negotiation, you can screw up. You can end up asking the other side for more than they are willing / able to give. When you realize that you’ve done this is the time for you to take a step back and tell the other side that you are willing to renegotiate. No matter what, make sure that you show empathy for the other side’s situation.
  7. No Such Thing As Too Much Education: You will never know everything that there is to know about negotiation. There are so many small tricks & techniques that it will take you a lifetime to master even some of them. This means that you always need to be reading and studying in order to boost your knowledge of negotiating strategy & tactics.
  8. Aim High: Where you end up in a negotiation has a great deal to do with where you set your target. If you aim high, then you will be prepared to take the negotiating risks that go with higher goals. Lofty goals don’t come easily so you are going to have to be willing to work hard and to take your time.
  9. Be Testy: Since you can never completely know what the other side of the table is thinking, you need to always be testing him / her. You just might surprise yourself when the other side gives in to one of your demands. Once again, this type of testing requires that you take your time and be very, very patient.
  10. Take Your Team To School: Negotiating is often a team sport and you want your team to be in the best shape possible. You need to make sure that your team has been trained to negotiate the way that you want them to. This is the one area that investing in quality training (just like the training offered by Blue Elephant Consulting) can really pay dividends.

How many of these tips do you already use in your negotiations? Which ones were new to you? How do you keep improving your negotiating skills? Leave me a comment and let me know what you are thinking.

Tags: , , , , , , , , ,
Posted in negotiation skills | 3 Comments »

« Older Entries
Newer Entries »