Create a Deadline
All negotiators know that each party will tend to make concessions at the deadline. Furthermore, most negotiators realize that both sides have deadlines (although many sellers erroneously don’t truly believe this….convinced buyers can wait forever). So therein lies the question, “How do I create a deadline?” Simple, make it conditional, providing a simple and effective way to always ‘change your mind’. For example, you can tell the customer, “Based upon additional activity in the market, it appears as if we’re going to experience some capacity constraints. Clearly I’d prefer to keep your order(s) moving, rather than give someone else priority, but I need some sort of indication that I’m making a sound business decision.” Then wait. Many buyers will see through this tactic, but nevertheless it’s their reaction that exposes their true feelings. A quick reply via email or voicemail leaves me convinced there exists a “real deal”. Should they not respond, you can always blame a “shift in the market” when asked about your “new found capacity”. Try it!
Get Them to Negotiate
We’re regularly asked, “What if the other side doesn’t want to negotiate?” My response is always the same, “Give ’em choices, they’ll negotiate”. My experience shows me that if you provide the other side with several choices (at least two, but more is better), they typically tell you what they like about each choice, and also what they don’t like. Inadvertently they have begun the negotiation. At that point, I simply respond with a simple LoopTM as follows: “If I do that for you, will you do this for me?” Let the dance begin.
Understand the Market
A frequent question asked in our seminars is “Who should open first, the buyer or the seller?” Conventional wisdom (and an old cliché) suggest that it is a bad idea to open the negotiation first (“He who opens first loses”). This mindset is unfortunate since it often leads to missed opportunities. If you truly know the market, it is to your advantage to go on the offensive and open first. Opening first allows you to set expectations and “Raise the Bar!” The other party then goes on defense. However, if you are unsure of the market, we advise against opening first. Imagine how you would feel when opening first, with no knowledge of the market, and the other party immediately responds with “OK” and accepts your first offer! That’s called “leaving money on the table”.
Determine the Budget
Customer’s often have budget limitations. Remember, that as a buyer, the budget represents your “bottom line” in the negotiation. For sellers, finding out the customer’s budget is very important. Ask various internal stakeholders “What is the budget?” During price discussions, either before or during the negotiations, the buyer might respond with “Your proposal exceeds the budget”. This may simply be an effort to get a lower price or it may be legitimate. In either case, consider one of the following responses: “OK then, how much is the budget?” or “No problem, we can work together to reduce the scope of the proposal to match the budget” (rather than reducing the price and margins).
These concepts, and many, many more are taught in our negotiation training workshops. Contact us for more details!