Posts Tagged ‘strategy’

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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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How Do You Deal With The Rest Of The Iceberg During A Negotiation?

Tuesday, January 6th, 2009
When Negotiating, It's Important To Deal With Unstated Issues In Order To Be Successful

When Negotiating, It's Important To Deal With Unstated Issues In Order To Be Successful

As the captain of the Titanic, Edward John Smith, did a fairly good job of looking out for the parts of icebergs that were above water. What got him in the end is when the Titanic hit a part of an iceberg that he couldn’t see because it was below water. In negotiating, all too often we can fool ourselves into thinking that we know all of the issues that are being negotiated. How wrong we are…

When we negotiate with the other side of the table, the issues that are really being negotiated are often a lot more subtle than those issues that were listed on the agenda at the start of the negotiations. In fact, the issues that originally appeared to be big issues, more often than not turn out to not be all that big of a deal after all.

The things that we often spend the most time talking about, services, goods being sold, and price are of course important. However, the clever negotiator realizes that these are only the tip of the proverbial iceberg.

As a negotiator you need to realize that there will be a large collection of issues that need to be addressed but which will never get written into the final contract. What are these issues you ask? Simple – they are personal issues that the other side holds dear. Neither side can make these personal demands out loud during the negotiation; however, if you don’t address and resolve them, then you won’t be reaching an agreement.

If these personal negotiating issues are so important, then what are they so that we can start to look for them? They take many different forms during each negotiation and you are going to have to do some digging to find the ones that relate to your current talks, but here are some examples for you to keep your eyes open for:

  • Personal Schedules: “I need to get this negotiation completed by tomorrow because my wife wants to go visit her mother this week.” Both sides of the table have schedules that they need to meet and this can influence the negotiations.
  • Internal Organizational Issues: “My boss has been fired and I now work for someone who has a different agenda.” The world is a dynamic place and even as a negotiation goes on, things change. These changes can impact the direction that the negotiation is heading in.
  • Physical Health: “I’ve got a pounding headache.” We need to be constantly reminding ourselves that negotiating has a physical side to it. How either side is currently feeling can have a significant impact on how the negotiations progress.
  • Social Status: “I need this negotiation to be successful so that I can show my boss that I’m valuable to the company.” A negotiation does not occur in a bubble – it has visibility and has impacts. Both sides of the table want to be seen in a favorable light when the negotiations are over.
  • Workload: “I am already swamped and I need to be careful to not take on any more work.” This is the curse of the modern workplace – too much to do and never enough time to do it. You need to watch the other side to determine if they are dragging their feet because they fear an increase in their workload.

These types of personal issues are a critical part of every negotiation. If you can remain sensitive to these types of issues and are prepared to help the other side find a way to deal with them, then you will be that much closer to successfully concluding the negotiation.

Have you ever been involved in a negotiation in which a personal issue became a big deal? When did you first discover that there were non-agenda issues on the table? Did you have your own personal issues that needed to be addressed? How did this all turn out? Leave me a comment and let me know what you are thinking.

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Use The “Reverse-Godfather” Approach To Win A Negotiation

Tuesday, December 30th, 2008

Some Negotiations Are Like Visiting The Godfather - Just A Bit Scary

Some Negotiations Are Like Visiting The Godfather - Just A Bit Scary

In the classic movie, The Godfather, Marlin Brando utters the unforgettable phrase “I’ll make him an offer he can’t refuse.” Clearly Brando’s character Don Corleone is operating from a position of negotiating power as the head of an organized crime family. However, is there anything in this phrase that us mere mortals can use?

It turns out that, with a twist, yes there is something here for us negotiators. Specifically, what we can do is make the other side of the table an offer that they MUST refuse. Now why would you ever do such a thing?

This is a powerful negotiating tool and when used correctly it can produce amazing results. When you make an offer to the other side that you know that they just have to refuse, what you really are doing is setting the stage for when you make offers later on. These future offers will look reasonable in comparison to the offer that they refused.

During a negotiation, time is one of your most valuable tools. The more time that you have, the more power that you have. Making an offer that the other side must refuse will buy you more time that will allow you to spend it exploring additional alternatives that may end up being acceptable to both sides.

Interestingly enough, this technique can also be used to either stall the negotiations or even perhaps cause the negotiations to break down and come to a complete halt. You may want to do this if it turns out that moving the negotiations to a different time would be more favorable to you. This may allow you to create a better set of arguments that will result in a better outcome for you in the end.

If we could read the other side’s mind this whole negotiation thing would go much quicker. Since (most of us) can’t do this, making an offer that the other side must refuse will help you to bound the negotiations and get closer to finding out what the other side views as being an acceptable offer.

What’s interesting about making a clearly unacceptable offer is that it will interrupt the flow of the negotiating conversation. When the other side starts to believe that perhaps no agreement may be able to be reached, they are often likely to drop their “negotiating face” and talk candidly with you.

This is your best chance to discover their real motivations – sorta like reading their minds. Once you have this information, then you will be well positioned to make use this knowledge to make a follow-up offer that will be much more acceptable to the other side.

Yes, yes – as with everything in life, there is some risk associated with using this technique. The other side may become so upset that they just up and walk away from the negotiations. However, using this technique carefully and in the correct negotiating situations can open up avenues to reaching a solution that were not previously available. Remember that before you use this technique, you want to make sure that you have left yourself a way to re-enter the negotiation – don’t get shut out!

Have you ever been given an offer that you just had to refuse? Did you refuse it? What happened next? What was the final outcome of negotiations? 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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The Ultimate Negotiation: A Very Tough Customer

Tuesday, November 11th, 2008
A Tough Customer Requires Special Negotiation Skills

A Tough Customer Requires Special Negotiation Skills

In the world of negotiations there are the easy ones (getting a discount on that lawnmower that you bought) and the hard ones (a difficult customer to whom nobody has ever been able to sell). It’s the difficult customers that are the most interesting because they are a real challenge no matter what stage of negotiating you are at. Let’s take a look at this type of customer and see if we can come up with a strategy that will boost your chances of successfully concluding a negotiation with them.

Negotiations with a difficult customer rarely look like a formal negotiation with both parties sitting on different sides of the table. Rather, a negotiation with a difficult customer often starts out as a discussion and then steers into negotiation territory. That’s why you as a negotiator always needs to be ready to switch into negotiator mode when the customer wants to start negotiating.

One of the best things that you can do right off the bat when you are dealing with a difficult customer, says Grande Lum who is a negotiation training profession, is to take ownership of the situation. All too often customers become upset with the way things are going and they feel that nobody is stepping up to the plate in order to take charge and solve the problem. By accepting ownership of the situation and perhaps even going so far as to apologize if it is called for, you can diffuse the situation from the start.

Your next challenge is to find out why they are being difficult. There is a good chance that their motivation for being so adversarial has nothing to do with the deal that you are currently discussing. Rather, long simmering issues with you company, other people who work for your company, etc. could be spilling over into the deal that you are currently working on. Of course there is also the possibility that this is just the way that this customer deals with anyone who is trying to get him/her to buy something – it’s a negotiating tactic.

Lum has come up with a clever way to deal with difficult customers which he calls the ICON framework for negotiation. ICON stands for the four steps that you need to move through during the negotiation: Interest, Criteria, Options, and No-Agreement Alternatives. When using this frame work, you first probe the customer for Interest, then you use the information gleamed from this to establish a Criteria that you can use to understand and persuade, next you brainstorm with the customer to come up with Options and finally you make sure that you identify No-Agreement Alternatives so that you have a fallback option should the negotiations not work out.

If you are looking for a magical silver bullet that will instantly solve your negotiation problems with a difficult customer, bad news – it doesn’t exist. However, if you can get them engaged and get them talking and into a problem solving mode then you’ve succeeded in getting them working in the right process. In some cases this just is not possible with your customer. You then need to reach out to others who work at his/her company and ask for their help in understanding what is causing your negotiation problems.

How have you helped to move things along when you find yourself negotiating with tough customers? What techniques have you used to resolve the problem? Have you ever had to work with other people at the customer’s firm in order to get things moving again? Leave a comment and let me know what you are thinking.

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