“You cannot have two coins.”
“One big one then!”
The little pixie negotiator already knew how to pattern her concessions, without having been taught by anyone! She conceded as little as possible to maximize her outcome.
Suppose you are a buyer negotiating to purchase an item. You are prepared to pay up to $1,000 more than your initial offer. How should you pattern your concessions?
First of all, don’t offer a concession right away. If you appear too willing to give concessions, your negotiating partner will assume you will give more as the negotiation progresses. Make your partner work for it. The harder he works, the more he values the result.
Secondly, label your concessions. Make it clear with each concession that you are giving up something of value that requires reciprocation. Do not allow your concessions to be dismissed as minor. If you do not seem to be giving up much when conceding, the other party may not think much of it either. Value is largely subjective, so encourage the perception of value.
Thirdly, do not offer a large portion of your $1,000 at once. That also signals that more concessions are on the way. Start with a modest concession, with later concessions of diminishing size. By making your concessions smaller, less frequent, and less easily given, you are signaling to your counterpart that you are approaching your bottom line.
Another reason that supports breaking up concessions into smaller pieces comes from research. Most people prefer to receive bad news all at once, like ripping off a bandage. But we derive more appreciation from receiving good news in multiple installments rather than all at once.* This suggests that the same concession will be received more favorably if it is broken into installments.
Finally, avoid giving a concession without getting one in return. If you are asked for a concession, ask for something in exchange on the spot. Make your concession contingent on receiving one from them. For example, you could say “I could do X for you if you will do Y for me.” If you do find yourself making a unilateral concession to get a stalled negotiation moving again, make sure you don’t give another one until your counterpart concedes something to you. If you give two concessions in a row, your counterpart will ask for a third, and a fourth, and a fifth. If he understands that you will expect something in return for every concession you make, he will not be so quick to try his luck and ask for more. If he does ask, you might infer that it is important to him and consider whether you can agree to it (but don’t forget to make it contingent on getting something in return).
Influence guru Robert Cialdini describes a persuasion technique he calls rejection-then-retreat.* It works because it is based on the concession principle.
First, make an excessive but not outrageous demand you fully believe your counterpart will reject. Your counterpart will almost certainly reject it. Then retreat to a more moderate position, which is what you actually wanted all along. By moderating your demand, you appear to be making a concession, which may very well result in a reciprocal concession in the form of compliance with your modified request. This compliance technique is very hard to detect. I have heard it summarized like this: If you want a puppy, don’t ask for a puppy—ask for a pony!
To summarize: Make your concessions sparingly, label them as having high value, break them into chunks, taper them as the negotiation progresses, and always ask for something in return for every concession you give.
Some negotiators believe you should never offer a currency or make a concession without getting something in return. Others believe that offering a unilateral concession can help advance a stalled negotiation. The first approach is sounder. If you feel tempted to make a concession to overcome an impasse, offer the concession in exchange for something else, for example, “I would be willing to offer X in exchange for Y.”
If you do make a unilateral concession, do not make another concession without getting one in return. Two in a row will signal your counterpart to ask for more. Even small concessions have value and should not be given away freely.
OTHER TIPS FOR MAKING OFFERS AND COUNTER-OFFERS
• Do not appear too eager for a deal. If the other party senses you want it badly, she will make you pay a high price for it.
• Do not get emotional about the subject of the negotiation, for example, a house or a car. Remember, there are plenty of fish in the sea. Focus on your objective of getting what you want at a fair price and on good terms.
• Do not make a counter-offer too quickly. A counter-offer is a rejection of the previous offer. People take rejection personally. When the rejection is immediate and seemingly without careful consideration, it can be taken as a sign of disrespect. Take some time to think about every offer, especially when it is a complicated proposal rather than a simple price. People like their ideas to be taken seriously.
• Give reasons when making a counter-offer. Tell the other party what you like about their offer and what you would like to change, and why. People like to know why.
• Be prepared for any response, and control your reaction. You never know what the other party might say or do. Whatever the response, maintain your composure. Wear your poker face.
• Get offers and counter-offers in writing. Putting it in writing makes your offer seem more official and persuasive. People take written words and figures more seriously than spoken ones. Writing also protects against memory lapses, genuine or otherwise.
THE FLINCH
The flinch is another classic maneuver that we all expect. When done well, it works—even when we know the tactic is being used!
The flinch, or wince, is when you express shock or surprise at an offer. The intent is to send a message that the offer is shockingly unreasonable, in the hope that the offeror will retract his extreme offer and replace it with a more reasonable one. In this way, you get an immediate concession without making one yourself.
A flinch
• causes the offeror to have second thoughts about the fairness of his first offer;
• can help prevent an anchor from being set; and
• may cause the offeror to improve his offer before you respond.
There is no harm in trying the flinch, and it often works. But what should you do if your counterpart flinches in response to your opening offer? How do you counter a flinch? When your counterpart flinches, do not respond with a better offer right away. Instead, explain why you feel your offer is fair. Now you are discussing the offer, which legitimizes it and helps it to take hold as an anchor. Ideally, the other party would make a counteroffer rather than wait for you to unilaterally reduce your initial offer. If you choose to moderate your offer, your counterpart would have worked for it, and perhaps made a concession. You would not have made a unilateral concession.
I was at a neighborhood bazaar and saw a table of business books for sale. I noticed a particular title that I was interested in, and I knew that it cost about $30 in the bookshop. The book appeared pristine, but there was no price stated. I decided that if I could get it for less than $15, I would buy it. I asked the seller how much and he replied, “Five dollars.” I blurted out, “Five dollars!” I was genuinely surprised at how cheap it was, but he thought I was flinching. Responding to my “flinch,” he immediately said, “OK, three.”
This not only illustrates the beauty of the flinch (even though it was unintentional), but also serves as an example of a good time to let the other party make the first offer. The seller did not know the value, so I got my pleasant surprise!
RELUCTANCE
I suggested earlier that you should never appear too eager for a deal. In a casual negotiation it pays to play it cool. When you express reluctance you are essentially playing hard to get. As in love, feigned disinterest often makes the suitor work harder to win you over. However, if it is obvious that the deal is important to you, pretending not to care can undermine your credibility. Show interest, but not desperation.
Imagine you are looking at a house for sale. Do you think the owner will bargain much if you exclai
m, “This is my dream house! How much?” You would be better off explaining that you have seen a few houses that meet your needs and you are interested if the price is right. This implies that you have a Plan B (and you should have one in any serious negotiation) and are making a careful decision. They can’t help you if they don’t know what you want, but you don’t want to appear needy.
THE SQUEEZE
You can often squeeze further concessions out of your counterpart without making a concession yourself simply by responding with a comment such as, “You’ll have to do better than that” or “You need to go back and sharpen your pencil.” You have told them their offer is unacceptable and they might try to improve it, but they do not know how much they must improve it. You’re hoping for a pleasant surprise, that your counterpart may improve his offer beyond your expectations. If not, you can continue the negotiation from there—you haven’t lost anything by trying.
What if your counterpart tries to put the squeeze on you? The counter-tactic to the squeeze is to reply “How much better?” Now, the squeezer is on the spot and needs to commit to a figure. You are not giving him the easy concession he was hoping for, and you are right back in the negotiation.
If you are the squeezer, anticipate the use of this counter-tactic and have a specific figure in mind. If it is not accepted, continue negotiating as before.
GOOD GUY/BAD GUY
You’ve seen this in the movies: the bad cop intimidates the suspect, then the nice cop comes in. The suspect confesses to the nice cop, thinking he will be better off dealing with a “friend.” He focuses on the stylistic and personality differences between the good and bad guys, overlooking the fact that they are both on the same team and have the same objective.
This happens in business negotiations as well. The roles can be played by a team of negotiators, a businessman and his attorney, or even a husband and wife making a major purchase. It is an effective way of pressuring the other side into making bigger concessions.
Suppose a husband and wife are shopping for furniture. It is not practical for one person to be both interested and not interested at the same time, but if the wife is very interested in the dining room set and the husband is not (“Come on honey, let’s look around …”), the team has more flexibility to negotiate with the salesman or walk away.
The counter-tactic to the good guy/bad guy ploy is to expose the culprit. Let them know you are on to them and tell them you don’t want to play games. Just say it in a good-natured way: “Oh, I get it, you’re the good guy and you’re the bad guy, right? Nice act! Now, are you serious about doing this deal?”
TIMING AS A TACTIC
Timing is an important element of any negotiation. Either party can slow down or speed up the pace of the negotiation to his advantage. Most negotiators overestimate their own pressures and weaknesses, while assuming their counterpart has a stronger position than she really does. You may feel that the clock is against you. This is because you are painfully aware of your own deadlines, sales targets, and other pressure points. You may not know what pressures your counterpart is under. Do not assume you have it worse than the other party. They may just be playing it cool—wouldn’t you?
One party might impose a deadline to rush the other party to action. “The 50% off sale ends tonight. Tomorrow, this dining room set will go back to its usual price.”
Or a party may drag his feet, hoping to prompt his counterpart into offering hasty concessions. “Well, I’m not sure, I’d like to think about it …”
Timing is a pretty intuitive matter to employ. You just know when it would serve you to speed things up or slow things down. On the other hand, it is not always easy to see when your counterpart is manipulating the clock, nor is it obvious how to handle it.
Here are a few things you need to know about timing tactics so that you can deal with them effectively:
• Everyone has a deadline, even if you don’t know it. It may not be imminent, but you can’t let any negotiation drag on forever.
• The party with the least time constraint has an advantage over the one with a tight deadline. If you have a tight deadline, you probably want to keep it to yourself. However, if you are close to a deal, you might let the other party know you have a tight deadline as it may pressure them into reaching an agreement.
Recall our discussion of leverage, or who has the upper hand at a given time (see Chapter 4). Leverage is largely a function of timing. The party who has time on their side has leverage, but the balance of power can change as time goes by—sometimes very quickly. Be aware of who needs a deal more at a given time, and continually reassess the situation as the negotiation progresses.
• Deadlines are usually arbitrary. They are set just to get you to act. You can always negotiate a change in a deadline. Even court and tax filing deadlines can be extended!
• The counter-tactic to a timing tactic is to do the opposite. If you feel pressure from a looming deadline, ask for more time. If your counterpart cites policy, ask to speak with a higher-up colleague. Explain that the negotiation is important, and both parties deserve adequate time to consider the merits. The dining room set will still be there in the morning. If you feel the negotiation is dragging on, impose a deadline yourself. Remind your counterpart that you have other alternatives, and need to decide by such and such a time.
Aside from time deadlines and delays, there are time scheduling issues to consider. You might be more focused in the morning than in the afternoon. You might not feel in the right mood for negotiating on a Monday morning, or you may be distracted by your weekend prospects on Friday afternoon. Your business— or your counterpart’s—might be subject to weekly, monthly, seasonal, or annual cycles that could affect the negotiation. Holidays could also be a factor. Be aware of the impact these time factors could have on your negotiation and plan accordingly.
In many negotiations, most of the progress occurs in the final hours as the deadline approaches. This has two implications:
• Don’t worry if you don’t seem to be making much progress early in the negotiating process. This is normal. Continue asking questions, gathering information, exploring options, and bargaining. Remind yourself that huge divides can be closed in a short time as the clock runs down. It’s all part of the game.
• You can manipulate and use deadlines to bring about progress. If you are in a rut, consider imposing a deadline to add a healthy dose of pressure.
COMPETITION
It’s sometimes a good idea to casually let your counterpart know that you are talking with other parties and considering other alternatives. Let him know that he has competition, and that he will have to win your business. Remember, never appear too eager for a deal.
Competition takes many forms, and they may not be obvious. If you’re looking to buy a car, other dealers are the obvious competition. The not-so-obvious competition might take the form of a bus card, a ride-sharing service, or an electric scooter.
Your counterpart also has alternatives, in the form of your competitors, obvious or not. Remind him of what makes you unique, whether it’s your quality, reputation, experience, or some other differentiating factor. Remind yourself that he is negotiating with you for a reason.
AUTHORITY LIMITS
Whenever you negotiate, it’s always a good idea to limit your authority. Having someone to check with is convenient when the other side is pressuring you for a commitment you may not want to make. Perhaps you are not as well prepared as you thought, or would like more time to think it over.
Car salesmen use this tactic all the time. After hearing your offer, they disappear to “check with their manager,” then return to tell you their “hands are tied.” You never get to see this invisible manager.
Many people let their egos get the better of them during a negotiation. They may say something like: “I’m the boss, I can do whatever I want, I don’t need permission from anybody.” Once you have said that, the other party may press you to agree to a proposal y
ou may be unsure about.
But what if you really are the boss, and the other side knows it? There is no one higher whom you can defer to. So, what can you do? You can defer to someone lower than you. For example, you can say, “I’ll have to check with my accountant before I commit to that figure,” or “I need to run that past my marketing team and get back to you.” As the boss, you delegate certain responsibilities to others you trust for their skill and judgment, and it is only natural to value and rely on their input.
Some negotiators like to ascertain at the beginning of the negotiation that they are dealing with a person with decision-making authority. This is good practice. However, if they try it with you, don’t take the bait. Tell them you have authority to a point, and will need to check with others beyond that point. Do not name a specific person, or they may want to get his approval on the spot. Your higher authority should be a vague entity, such as a committee, management, or “my people.”
Negotiations are unpredictable. Always leave yourself an exit. Even if you don’t use it, you will be more comfortable—and confident—just knowing it’s there.
SILENCE
There’s an old axiom in sales: Whoever talks first loses. This is not always the case, but it usually is. Most people are uncomfortable with silence. During an awkward pause, they say something— anything—to break the tension. This is usually a mistake.
Learn to be comfortable with silence. Let the other party do the talking. She just might say something that is music to your ears.
Suppose your counterpart makes a concession. You remain silent. She is wondering what you’re thinking, and might assume that you feel her concession is inadequate. As the silence becomes uncomfortable, she opens her mouth to speak—and offers you a bigger concession. She is now negotiating with herself.
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