“Negotiating in the classic diplomatic sense assumes parties more anxious to agree than to disagree.”
Dean Acheson, US Secretary of State under President Harry S Truman
Negotiations occur in all areas of our lives, not just business. From large government contract negotiations with complex decision-making processes to conversations between mother and 7 year old son like this:
|Mother:||“What would you like for dinner tonight? Anything you like as Friday is treat night.”|
|Son:||“You’ve had a really hard week haven’t you Mum. I bet you’re tired.”|
|Mother:||“A little, but I’m OK.”|
|Son:||“You don’t really want to stand in the kitchen on a Friday night and cook do you?”|
|Mother:||“I’d rather not cook any night of the week!”|
|Son:||“So why don’t we go out for Chinese and then we can come home and I’ll help you tidy my room.”|
A little crude you could argue, and the mother (OK, I confess, it was me) really should have seen it coming but the 7 year old child knew which button to press – not only to get his favourite Chinese meal, but also to enlist help with tidying his bedroom into the bargain!
This byte is designed to help you to recognise the most common tactics used by buyers and provide you with a few ideas on how to handle them – your children you’ll have to work out for yourselves!
Bargaining tactics – Ploys used by buyers
The Bogey Ploy
The Bogey is commonly encountered when selling. It is seen to be acceptable because it appears ethical. Typical of the Bogey would be:
“We think that the solution you have outlined is ideal. It will satisfy our needs today, and see us through the next 2 or 3 years. However, you’re quoting £250,000 and we find now that there is only £200,000 in our budget. We can’t bridge a gap that big. Do you have any alternative suggestions?”
This tactic is effective because:
- It boosts the ego of the salesperson
- It is positioned not as a refusal of the offer, but as a request for help
- It gives the salesperson the opportunity to be valued (from the client’s point of view) as a problem solver
- It opens up the search for a better solution
How the salesperson can counter the bogey
Unless you are simply not prepared to move your position, you are committed to search for an alternative solution by adjusting your variables. But, don’t give your concessions. Trade them and trade them sparingly. Just because you have been handed a ‘nice Bogey’, doesn’t mean that you have to respond in such a ‘nice’ way that you start giving handouts.
The Crunch Ploy
The Crunch is simply, “You’ve got to do better than that”. Though as old as time, it is still a very effective tactic to use on a salesperson. Our likely thought responses might be:
- He must have been offered a better deal
- The costing department have got the price too high again
- He likes me and is giving me another chance to get the business
- Last time I lost the order and I didn’t get a second opportunity
- He knows something that I don’t
- I know there is some padding in my price
All of these mental responses are designed to weaken the salesperson’s psychological position in the negotiation and shift the balance of power.
How the salesperson can counter the crunch
First of all, recognise it. Simply by doing this, you gain confidence. Steps to counter the crunch might be:
- Ask the customer what deal needs to be struck to move forward
- Defend your price or proposed deal resolutely
- Find out the details of other offers the customer has had. The customer, deliberately or not, may be comparing apples to pears
- Put more emphasis on your special benefits
- Respond with your own “What if……”
If you have to concede, do it slowly and begrudgingly.
The “What if….” Ploy
“What if……” is quite a subtle ploy which can be slipped into the negotiation at any time. The salesperson who is familiar with this ploy will see the bait, but miss the hook. A typical example is the buyer who has an interest in buying 500 of an article saying, “What if we ordered 2,000?” The buyer has no intention of ordering that many but is interested in getting more information from the sales person. It is easy for the salesperson to hear the message as, “I could be interested in buying 4 times as much as we are talking about now”. Other “What ifs……” could be:
- What if we agree to buy on a contract basis?
- What if we buy product A and product B?
- What if we undertake to do all the servicing ourselves?
- What if we supply some of the components ourselves?
- What if we change the specification?
- What if we give you this order and sign a letter of intent for our next order?
How the salesperson can counter the “What if……”
Very good listening skills are needed to recognise the dangers in a “What if….” question. Some “What ifs……” are genuine. The salesperson needs to respond to the “What if……” e.g. with a commitment-seeking question
Customer: “What if we ordered 2,000 instead of 500?”
Salesperson: “If I can give you better terms on that sort of quantity, will you give me an order for 2,000?”
The salesperson’s commitment-seeking response to the “What if……” is designed to test it. The customer will know the ploy has been spotted and can always lie, but the customer’s next response will usually indicate whether the “What if……” is genuine.
Negotiation tactics – Methods used by salespeople
“Yes, we agree to what you are now demanding, but we have this other problem that we must get out of the way before we can agree to everything.” The “other problem” is a new issue not raised, up to that point.
|Customer:||“We want a 10% settlement discount for payment within 2 weeks of invoice.”|
|Salesperson:||“If you accept a surcharge on payment received after 2 weeks we can consider a 10% settlement discount for payment within 2 weeks”|
|Customer:||“We want a penalty clause for any orders delivered after the due date.”|
|Salesperson:||“If we receive a premium for orders placed late we could consider a penalty clause for delivery after the due date”.|
The Hawk and Dove
When 2 people represent the selling side, the tough “Hawk” takes a hard line, while the softer “Dove” puts forward a more reasonable approach. The purpose of this is for the Hawk to establish a high negotiation platform from which the Dove can achieve a satisfactory deal. (Note: The Dove is not a “push-over”.)
“We realise our offer doesn’t meet you on price, but the real gain for you will be the enhanced image you will have by being able to use our brand-name as a component supplier.”
Deadlock – Handling the stalemate
“Deadlock” is the situation which arises when the terms and conditions are still incompatible and both parties will not make any further moves. 1 of 3 things will follow:
- You leave and end the negotiation
- You back down and move on a component
- The customer backs down and moves on a component
From the salesperson’s point of view, option 3 is desirable. Therefore when deadlock occurs, the salesperson needs to be able to help the customer move.
The salesperson needs to understand the customer’s psychological disadvantage. Having said “no”, the customer may find it easier to justify that decision than to change it. The customer may feel that any further movement could appear weak, or indecisive.
There are many examples in politics, labour relations, business and even domestic situations where people have been trapped by their decisions.
Being sensitive to this situation will offer the salesperson an opportunity to find a reason or justification to help the customer to move. In effect, the salesperson has to ‘throw the customer a ladder’ to climb out of the psychological hole. The onus is on the salesperson to find that ‘ladder’.
A number of alternatives can be used by the salesperson to achieve this:
The independent view
Choose an outsider’s view (ACAS is a good example from labour relations).
The parallel view
Recount the story of why someone else in a similar situation changed their mind so the ‘ladder’ from someone else’s story is provided and used.
The negative view
Point out the risks of not moving
The positive view
Summarise all of the benefits, so far agreed which would be available.
Sometimes a ‘cooling off’ period is necessary. It may be tactically sound for the salesperson to allow someone else to take over.
If all else fails, and you are not prepared to make any further concessions, then the very act of ‘packing your bag’ may force some movement from the customer.
‘Deadlock’ should only be used by the salesperson as a last resort, but if it is used by the customer, remember the psychological issues.
The real question you should be asking yourself if you find you are entering into difficult negotiations on a regular basis is – are you selling effectively enough before you reach the negotiation stage? If you have used your questioning process efficiently and drilled down to finds the customer’s needs and wants for your propositions, then presented them in a fashion that gets buy-in to the benefits they will enjoy as a result of your solution, any negotiation is almost a case of a little ‘sport’ rather than a genuine concern for doing business with you.
“Let us never negotiate out of fear. But let us never fear to negotiate.”
John F. Kennedy