Trade Away This Bad Negotiating Technique

As I look around my basement, I realize that maybe I’m hanging on to too much stuff. When I trade for goods and services (some call that “negotiating”), I realize I’m also pretty good at hanging on to my profit when I’m the seller, and my money when I’m the buyer. How good are you at hanging on to what you already have? One simple technique can make you much better at it.

This works even when no money is trading hands. Perhaps just your time is involved. Maybe your boss wants you to take on “just one more thing.” Or you’ve been scheduled for one more meeting. Pretty soon you’re overwhelmed and kicking yourself for saying “Yes” a few too many times. Maybe you can’t say “No” either, but there is another option.

Bad Negotiating Exemplified

Let’s imagine for a moment you’re a seller engaged in a dialog with a potential buyer that goes like this:

– Buyer: “You’re higher than your competition. What can you do when you sharpen your pencil?”

– Seller: “I am authorized to match our competition’s price.”

– Buyer: “Great! Unfortunately, I see your standard shipping is 2 weeks, and I need it on Tuesday. Can you do that?”

– Seller: “I can expedite shipping for you. You can have it by Tuesday if you order now.”

– Buyer: “Nice! But I won’t be able to use it without the accessories kit. Will you include it at no charge if I buy?”

– Seller: “Sure, I’ll do that just for you, because you’re special.”

Let’s stop our example there, although the dialog (and the concessions) certainly didn’t stop there. Notice that at no time did the Buyer commit to the purchase, despite the fact that the Seller has discounted away profit and increased costs by expediting shipping and giving away accessories. The Buyer is “on a roll”; why wouldn’t they keep asking for more concessions?

They will, because they are grinding, a negotiating technique that enables them to continue to sweeten the deal until they either take pity on the Seller and stop, or the Seller makes them stop.

A Fair Turn

Stopping a grinder is easy. Simply replace concessions with trades. Whenever you are asked to give something up, prepare to trade for something of perceived value.

When your boss asks you to do “just one more thing,” ask what can come off your current projects list to make room for the new one. When one more meeting comes up, ask which deadline can be pushed back to accommodate the new unplanned need for your time. When your buyer asks for a price concession, ask for… well, what CAN you trade?

Bring In Your Trade-Offs

When negotiating, it can literally pay to be prepared. Anticipate the potential concession requests you may encounter. As a seller, you can prepare a list of possible trade-offs, which might include:

– Reduced feature set

– Slower (less expensive) shipping

– Accepting delivery (and making payment) sooner

– Faster payment terms

– Cash instead of credit

– Adding a “bonus” instead of reducing the price

– Increasing the order size

– Testimonial letter

– Referral to a new prospect

– Booking the order NOW

Partnerships, Alliances and Joint Ventures

In this age of partnerships, alliances, and joint ventures, the need for skilled negotiators is more important than ever.

Partnership ventures can really complicate a relationship. They certainly require special negotiations.

There will be issues where both parties seriously disagree. There will be benefits and contributions that involve unknown or uncertain sharing requirements. Partnership ventures require assumptions – many of which will be wrong. There will always be an imbalance of power between the two parties in the sharing of benefits and contributions. The right formulas must be negotiated.

What are acceptable labor, overhead costs, and profits?

Can the supplier sell new designs, techniques, software, and components to a competitor?

When one party runs into trouble what happens? Who picks up the work? Costs?

What accounting system is used? Does each party have the right to audit the other?

How are changes handled? Priced? Rejected or accepted?

What further complicates these types of negotiations is that the original negotiators who established the partnership venture often move on. Project managers, engineers, technical staff, sales people, and operational staff then have the responsibility to make the venture work. This requires hundreds of negotiations and re-negotiations over the life of the venture.

Things often go wrong, or do not provide the originally intended results. One of our clients just told us about a partnership they have with a foreign company to deliver software, computer and engineering services. The original agreement was based on a set of assumptions that would make the venture equally profitable for both companies, based upon a split of the work over the next five years. Not long into the project, our client realized that the work formula would not provide an equitable split of the profits. Using a sophisticated negotiating approach, they were able to successfully re-negotiate the agreement. The modified work allocations assure each party will get the originally intended share of the profits.

Those who are most outspoken against negotiating usually base their dislike on two assumptions: (1) each side should tell the other everything, and (2) both sides in a venture will instinctively be fair and reasonable. I think such assumptions are absolutely naive – particularly in partnerships.

There are a lot of people who will not tell you everything you want to know. In most business transactions there will be issues that will require difficult negotiations. People who say “put everything on the table”-even in a partnership-are simply being naive. There are two important traits of any good negotiator-tact and discretion. A negotiator must think: What should I say? How much should I say? When should I say it? And in partnering-which I compare to a good marriage-there are things I say, things I say partially, things I say later, and things that are never said because they would only cause tension.

In a partnership roles change. Participants become contract managers and a relationship managers rather than just buyers, sellers, designers or engineers.

And, there will always be issues involved in the breaking of the partnership. Once the marriage ends, there must be a divorce. What happens at termination? How are costs settled? Is there a non-compete clause to protect secrets and techniques? How about trademarks, copyrights, patents, tooling, warranties, software, designs, drawings, data, customer lists?

Partnering is not the end of negotiations; it’s just the beginning. Be prepared.

Smile and Walk Away Negotiation Strategy

One of the best negotiation strategies you have when negotiating over the price of something is to get up and prepare to leave while saying, “Thanks for everything, but I’m not interested in the terms of this deal.” You may also say something like, “This deal is not for me,” or “I just can’t do it at that price.” Say this with a smile, shake their hand, and wish them all the best as you prepare to leave.

Never put yourself in a position where you can’t walk away. Don’t fall in love with a product or service. If the seller knows you “must have it,” it will be much more difficult for you to negotiate the best price. If you can stay emotionally detached from your deals, you will be able to make smarter, more rational decisions.

The key is to be able to walk away on good terms. If you explode with a barrage of expletives and storm out slamming the door at the “outrageous prices,” or something similar, you will have closed off future negotiations with this seller. If you smile, wish them the best, and leave on good terms, you have not closed the door to future negotiations. Keep a positive attitude and don’t get personal. It’s just business.

I used this the last time I purchased a car. I had the absolute rock bottom lowest price sitting before me after having several changes in price and interest rate already. And in fact, I had a deal that was in my range of acceptance and that was a good deal on the car sitting in front of me. However, I wanted to try and get a bit better. I stood up, told the salesperson that I appreciated his time and what he offered, but it just wasn’t good enough for us to buy the car. I then told my wife we should leave. And we did! We shook hands, took his card, and left.

We drove down the street a ways and pulled into a parking lot where we could talk. We discussed that the price they came down to was pretty good according to the research we had done on the vehicle before that day. They also had lowered the interest rate to a rate just below the best our personal bank was offering on the same auto loans. Over all, it was a pretty good deal and we would not get much better. We waited about 30 minutes and I called the salesman from my cell phone. I told him that we really liked the vehicle, and if he could just help us out by coming down a bit more we might be able to make the deal work. He said he could come down another $500.00. (Earlier, before we walked, he told us they couldn’t come down any lower.) I told him if he would do that we would go back to the dealership and buy the car. A couple hours later we were driving our new car home.

So remember, don’t become too attached and be prepared to walk away. If you do walk, smile and walk away on good terms. Smiling and walking away just might help you get the deal you want.

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