Posts Tagged ‘tactic’

Don’t Believe What Anyone Says Is What Sales Negotiators Need To Learn To Do

Tuesday, July 7th, 2009
Sales Negotiators Need To Know When To Hold The Truth - And When To Fold

Sales Negotiators Need To Know When To Hold The Truth - And When To Fold

People are either honest or they aren’t right? Umm, well not exactly. Look, in a sales negotiation everything is not as it seems. I hate to use strong words like “lying” or anything like that, but let’s just say that a healthy dose of skepticism is often a sales negotiator’s best friend.

What’s Going On Here – Can’t Anyone Tell The Truth?

The older a sales negotiator gets, the more he / she is less likely to believe just about ANYTHING that they are told. There is a reason for this! In the end, sales negotiating is all about power – who has it and who doesn’t. However, just like in the game of poker bluffing is not only allowed, it is often encouraged.

If you don’t believe me (or you don’t WANT to believe me), then think about how a buyer and a seller interact when they are trying to complete a deal to buy a house – talk about some serious poker playing!

Where Do The LInes Get Drawn?

We are in a very murky area here and it’s very easy for a sales negotiator to stumble over the line and fall into the dark side – becoming a flat-out lier. It’s necessary that you operate here, but you’ve got to watch your step.

Our house buyer / seller are going to be presenting information that may not quite be the complete truth. The house seller is going to be talking about all of the things that make the house a fantastic house – and leaving out any discussion about the leaky pipes in the basement and the squirrels that have set up a home in the attic.

Likewise the buyer is going to be trying to mask any real interest that he / she may have in buying this particular house. Additionally, the buyer will be working hard to NOT communicate how much funding he / she has to complete the purchase. Is anyone lying here? No – but they are also not telling the complete truth.

One Word – Be Skeptical

A good sales negotiator is ALWAYS skeptical about anything that he / she is told by the other side. This includes when the other side uses facts & figures (where did they come from?), experts (what makes them an expert?), and handsome bound color documents (Kinko’s can turn out great stuff overnight).

As a sales negotiator your job is to always be asking questions. Take nothing at face value and always assume that the other side is probably not giving you the complete story. This is how you are are going to transfer power from the other side to you.

Final Thoughts

Being a “doubting Thomas” is a great skill for a sales negotiator to have. One important rule of life has been give to us by the Las Vegas board of tourism: “What happens during a Sales Negotiation, stays in the negotiation.” This means that you can’t have any hard feelings about what information the other side revealed (or didn’t) during the negotiation after it is all over and done. Having a healthy dose of doubt while negotiating will allow you to close better deals and close them quicker.

Questions For You

Have you ever accepted anything that the other side has told you at face value during a  sales negotiation? Did it turn out to be completely true? Have you ever been fooled by the other side? Have you ever stretched the truth during a sales negotiation? How did the other side use the information that you gave them? Leave me a comment and let me know what you are thinking.

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What We’ll Be Talking About Next Time

We all hear so much about the smooth Donald Trumps of the world that we can fall in to the belief that everyone shows up for a sales negotiation better prepared than we are. Nothing could be further from the truth. In fact, there are four common sales negotiation mistakes that even really smart people make all the time. Are you making any of them?

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How Sales Negotiators Can Defend Against The Good Cop / Bad Cop Tactic

Tuesday, March 10th, 2009
Sales Negotiators Need To Have A Defense Against The Good Cop / Bad Cop Tactic

Sales Negotiators Need To Have A Defense Against The Good Cop / Bad Cop Tactic

I like movies. I especially like police movies. I’m guessing that one of the reasons that I like movies with police in them so much is because it’s almost a given that sometime during the movie the police heroes will resort to using the “Good Cop / Bad Cop” negotiating tactic. Every sales negotiator out there should be smiling right about now…

I guess I should take just a moment and make sure that we’re all on the same page here. The Good Cop / Bad Cop tactic is a decoy tactic and here’s how it works. The other side has at least two people. One takes a hard line and makes unreasonable demands on you. He / she also appears to be unyielding – you’ll get no concessions from them. The other person is much nicer. He / she is willing to be your friend, is a little embarrassed about his / her partner’s hard stand, and just wants to work with you to reach a deal.

Umm, the key thing to realize here is that you’re being presented with a show: both of these people are working together. They hoping to get as much out of you as possible. The goal is to get you to believe that you were lucky to get as much as you did considering just how tough the “bad cop” was.

So what’s a sales negotiator to do when you come up against a good cop / bad cop team? There are some simple ways to deal with the bad cop:

  1. Let the bad cop talk and talk. In many cases his / her own side of the table will end up getting fed up with them.
  2. Hit the big red button and complain to your / their higher authority.
  3. Leave! (This always gets their attention)
  4. Turn the tables and in public put the blame on the other side of the table for the failure to make more progress in the negotiations.
  5. Bring your own good cop / bad cop to the table.

Have you ever encountered a good cop / bad cop team when you’ve been negotiating a sale? How bad was the bad cop? How good was the good cop? How did you counter this tactic? Did the tactic work on you? 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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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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Negotiating Self Defense: Countering The Reverse Auction Tactic

Thursday, January 22nd, 2009
Sellers Need To Defend Themselves Against Buyers Who Use The Reverse Auction Negotiating Tactic

Sellers Need To Defend Themselves Against Buyers Who Use The Reverse Auction Negotiating Tactic

I’ve always liked superheros. From my earliest days of reading comic books to my current-day trips to the movie theater to see Spiderman and Iron Man, I just don’t seem to be able to get my fill of superheros.

I believe that superheros, although fictional (probably – however I still have hope), can teach us a lot about how to become better negotiators. One lesson that all superheros seem to learn in superhero school is that in order to be successful in a fight, they always need to have good self defense skills.

In negotiations, sellers need to have a good defense against one negotiating tactic that a buyer can use which is called the “reverse auction”. It works like this: let’s pretend that you wanted to build buy a new car. You visit three different car dealers and get three different offers. As you can imagine, each of these offers will contain a confusing mix of different financing and option packages.

Your next step will be to call a “reverse auction”. You go back to each dealer an tell them that you’ve visited the other two dealers. Each dealer will then proceed to tell you why they are the best and why you should avoid buying from the other dealers. After you’ve had a chance to talk with all three dealers, you now understand the subtleties and the options associated with buying the car that you want.

With all of this new information, you are now able to more clearly refine your specifications because the alternatives have become clear. You can now specify the specific financing and option packages that the dealers can bid on.

You will end up selecting the dealer who can provide the best price while providing the most car for that price. By using a reverse auction, the buyer was able to learn a great deal about buying a specific new car and was able to trade off options that he/she originally did not know existed.

All of this is great if you are a buyer, but what if you are the seller (or the dealer in the case of our example)?

It turns out that although it may initially appear as though the buyer is holding all the cards when they are using the reverse auction tactic, that’s not really true – you still have a great deal of negotiating power.

Your greatest strength comes from the simple fact that the reverse auction takes a great deal of the buyer’s time in order to do correctly. They have to identify sellers, collect bids, evaluate, revisit to collect information, and then revisit again to negotiate a final deal. All this takes time that they may not have to give.

What you need to do is to present yourself as being the seller who best understands that the buyer’s needs are. If you can convince him of your credibility then you’ll be well positioned to close the deal.

Here are a few tips that will help you come out ahead when your buyer decides to us the reverse auction tactic on you:

  1. Be Last: You want to be the last person that the buyer talks with, not the first. This may allow you to short-circuit the reverse auction process.
  2. Use Your Best: When dealing with the buyer, you want to use either your best negotiators or at least make sure that you are well prepared for the discussion (no distractions!).
  3. Give In Slowly: This is always a good tip – do not hurry to make concessions to the buyer.
  4. Sell, Sell, Sell: Make sure that you sell the buyer on your strengths and benefits.
  5. Use Limits: Clearly communicate to the buyer that the scope of your authority is limited in this deal to the bottom-line figure.
  6. Use Experts: The buyer is desperately looking for somebody to believe in so that they can be convinced that you are the right one to buy from. Make sure that you provide the expert that they need to find.
  7. Use Innovation As A Back-Up: Life is unpredictable. Sometimes a reverse auction will start to go badly for you. In these cases, you need to make sure that you have a new and innovative approach that you can whip out if this happens – lifetime free oil changes anyone?
  8. Find The Decision Maker: You can talk with the buyer until you are blue in the face, but it will be all for naught if you haven’t done your homework and made sure that they really are the final decision maker. Check before you invest the time and energy.

Have you ever been in a situation where a buyer used the reverse auction tactic on you? Did you feel as though they had the power in the negotiation or that you had it? Was time a key factor that the buyer was dealing with? Were you able to convince them that you were the expert? Leave me a comment and let me know what you are thinking.

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