Thursday, August 5, 2010

Negotiating Tactics

These are some of my favorite negotiating tactics.  Tactics are things that you say and do to help the other side do more of what you want them to do. 

1.  Fear of Loss.  Show someone how not choosing your product or service will damage their position.  For example, if your product has been proven to help businesses make $10,000 more each month, you might say something like, "It's going to cost you $120,000 per year NOT to do this deal."

2.  Time Pressure.  I personally hate when people do this to me.  Here, you make it clear that the current good deal will go away after a certain date - "This deal's good thru the end of the month."  "If we can get this done today, I can knock off an additional 10%."  Another way people use time pressure is in renewing contracts.  I find that advertising sales people won't contact me to find out if I want to renew my ads until about a week or so before the supposed closing date.

3.  Walk Away Power.  This is a good counter-tactic for time pressure.  When someone says you only have a week or a day (or whatever) to get this done, I'll often tell them nevermind.  Don't succumb to time pressure and other negotiating tactics if you don't have to.  Walk away power can be powerful.  You can always come back to the negotiating table if and when circumstances change.  You're never back into a corner unless you put yourself there.

4.  Show people the net positive value of their good decisions.  If something will cost $1,000 up front, but then bring in $5,000 more, then the net positive gain is $4,000.  When people see what's in it for them, and financial gain is a huge motivator, they will usually agree to a deal.

5.  Show shock and disbelief.  When someone makes an offer to you, no matter how good it seems to you inside, you should show disbelief that they would consider such a bad offer.  To really sell it, you need to look noticeably disturbed for a while after the offer.  Many times, the opposition will modify their offer out of fear that you might walk away.

6.  Isolate points of agreement.  Once both sides agree on what they already agree on, it makes it much easier to break down the remaining points of disagreement.  "We already agree on the color, the quantity, and the base price.  Now, we just need to work on leasing terms and a fair final payment amount."  This prevents the deal from being clouded up unnecessarily and allows you to negotiate the remaining points individually.

7.  Break prices down to their absolute smallest points.  For example, if you are trying to get someone to pay you $12,000 per year for your services, tell them that it would only cost $33 per day.  Then of course remind them of their potential benefit which could be $48,000 per year or 4 times their investment.

8.  Calling people out on their tactics.  This usually will make them feel silly and embarrassed for trying to use negotiating tactics on you.  For example (and this happened to me once), if someone tries using the "good cop, bad cop" tactic on you where one of them is on your side and friendly, while the other is more aggressive and abrasive, it's funny to call them out on it.  I stopped the conversation and said, "wait a minute - is that good cop, bad cop?  I'll do this deal for the amount I originally stated or not at all.  What's it going to be?"  Winner - me!

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