September/October 1996
Negotiating is a part of daily life—at home as well as in the office—so it’s important to know how to do it well. These tips can help you learn to be a power negotiator and improve your chances to successfully bargain for what you want.
By Roger Dawson
Roger Dawson is an expert in negotiations, sales, and management. His firm, Roger Dawson Productions, is based in City of Industry, Calif., and can be reached at 800/YDAWSON.
You may not realize it, but you negotiate every day—whenever you need to reach an agreement with another person. You negotiate with family members, coworkers, and employees, as well as whenever you buy or sell something, handle complaints from customers, borrow money from a bank, and so on.
Given the daily importance of negotiating, learning to be an effective negotiator—a power negotiator—can be the highest and best use of your time. In fact, you can’t make money faster than you can when you’re negotiating. Consider this: If you make $50,000 a year, that’s about $25 an hour. When you’re negotiating a purchase or sale, however, you can potentially make much more—perhaps $25 a minute, even $25 a second.
The most basic rule to power negotiating is to devalue the importance of the bargaining chip by never letting the other person know you’re eager. Your attitude must be that you would like to do business, but only if the terms are right; otherwise, you can easily do without or deal with someone else.
This is just the tip of the iceberg to effective negotiation. Here are some other tips to help you hone your skills.
Don’t Jump at Offers
One mark of a good power negotiator is the ability to make the other side feel that it didn’t make a mistake, that it won the negotiations—whether it did or not.
With this in mind, be careful not to say yes too quickly in the negotiation process because that automatically makes the other party think that he or she could have done better (and resolve to do so next time) and that something must be wrong. In fact, if you jump at people’s first proposals—ones they perhaps didn’t think you’d accept—they may become wary and want to check you out further before going ahead.
And this isn’t an issue limited to accepting first offers. Similar problems can arise whenever you accept any offer too readily. There’s a real danger of this happening, for instance, when you expect a negotiation to be much tougher than it actually turns out to be.
Let’s say, for instance, you’re negotiating with a contracting firm on the price of an improvement to your facility. You feel that this firm is the only one that can do the job right, but due to its busy schedule, you feel you’ll be lucky to persuade it to take on your project. The company offers an initial estimate of $16,000 for the job. Just to see what will happen, you say you can only afford $12,000, hoping to net a counteroffer of $15,000. But when the contractor comes back at $14,000, you’re so surprised and pleased that you make the mistake of saying yes too quickly.
The lesson here is to always go through the negotiation process, even if the first offer or counteroffer is perfectly acceptable. You may get more if you bargain for it.
Nibble for Success
In negotiating, there’s a practice called nibbling that involves getting to your final or complete goal by attacking it bit by bit, using one success to get to the next. In other words, you’re building momentum throughout the negotiation process to gain concessions in the end that you couldn’t get earlier.
This is the kind of strategy former Secretary of State James Baker used when he reached an impasse in Mideast peace negotiations. When the Israelis refused to come to a peace conference, he sidestepped the major issue—in this case, giving up land—and attempted to build momentum by resolving smaller issues like the location of the meeting and the makeup of the Palestinian delegation.
This gambit can work for you as well. Take this example: You’re negotiating a pay raise with your boss. In addition to more money, you’d like your company car to be upgraded to a Cadillac.
“You know how tight things are right now,” your boss says. “You’ll have to make do with your present car for another year.”
Instead of panicking, you decide to try a little nibbling. After agreeing on your salary increase, you say, “Could we take another look at upgrading my car? It would only add $150 a month to the lease payment, and it’s really important for us to impress our clients.”
After pondering for a moment, your boss replies, “Well, all right, if you think it’s that important, sure, let’s go ahead.”
Your nibbling was successful, proving that you should always go back and make a second effort on something that you couldn’t achieve earlier.
But just as this practice can work for you, it can work against you. So it’s important to be on the lookout for people nibbling on you.
Suppose you’re selling an old piece of equipment, and you’ve finally found a buyer. You’re feeling good because the negotiation went so well and you secured a reasonable price. As the buyer is filling out the check, however, he looks up and says, “That includes transportation to my operation, doesn’t it?”
He’s nibbling on you at your most vulnerable point in the transaction—the point when you think negotiations are over. You’re feeling good because you just cinched a sale, and it’s common when you feel good to give things away that you otherwise wouldn’t. Plus, you don’t want to run the risk of having to go back to the start, renegotiate everything, and risk losing the buyer completely. “Maybe I’d be better off to concede this point,” you tell yourself.
Don’t do it.
Instead, counter the buyer’s nibbling by gently making him feel cheap. With a big grin in your voice, you say, “Come on! You got a super buy on the machine. Don’t ask me to also cover the transportation costs. Fair enough?”
Go for the Flinch
Another invaluable tool in negotiating is the ability to physically react—such as by flinching—whenever the other side makes a proposal. To use this tactic, when faced with an offer, assume that the other party is only throwing it out on the table to see what your reaction will be. And let him have it.
When a salesperson asks you to pay up front for, say, a big equipment order, she may not think for a moment that you’ll go along with it. She just threw it out to see how you’d react, so if you don’t appear too surprised or dismayed, she may think, “Well, that didn’t seem to shock him too much, maybe I will get him to pay me in full now. I’m going to hang in there and be a tough negotiator.”
Or take this case: When a buyer offers you an incredibly low price for a particular load of scrap, he may not think for a moment that you’ll accept it. He’s simply fishing for your reaction. And if his offer doesn’t shock you too much, he immediately starts thinking he has a chance of getting you to go along with it.
So be prepared to flinch at the other side’s proposal. Slap your cheek, gasp, and say, “You want us to ship you this material for what?” And you don’t have to be negotiating in person to make this work. Phone flinches can be very effective too.
If you don’t exhibit a strong reaction to the other party’s offer, it can change the dynamic of the entire negotiation. I’ve seen this happen time and time again in seminars. One side makes a proposal it thinks is absolutely outrageous. The group expects to get laughed out of the room the minute the proposal is presented. But to its surprise, the other side doesn’t seem too shocked. Suddenly the negotiation changes. What a moment ago was an outrageous proposal becomes achievable.
Make Trade-Offs
Negotiating is a give-and-take process, so whenever the other side asks for a concession, get in the habit of asking for something in return.
Let’s say a mill is expecting a rush delivery of scrap, and you’ve just found out there’s a holdup on your end. Just as you’re about to call to deliver the bad news, the phone rings and it’s the mill’s representative calling to postpone the shipment. Since you already have to delay delivery by necessity, you may be tempted to say, “Sure, that would work out fine. No problem.”
But resist the temptation.
Take advantage of such opportunities and always ask for something in return. “Well, that could be tough,” you say. “Let me talk with my people and be sure it’s not already on its way. But let me ask you this: If we can do that for you, what can you do for us?”
There are several benefits to this approach. For one thing, you might get the consumer to make an additional concession. And, even if you don’t, you elevate the value of your concession. Why just give something away? You may need it for another trade-off later. For instance, you might be able to say later, “You know how much trouble we had to go through over that delayed delivery? We did that for you, so don’t hold up the final payment.”
What’s more, this strategy prevents the other party from grinding away at you by asking for subsequent concessions. If the other side knows that every time it asks for something, you’ll ask for something in return, it is discouraged from constantly coming back for more.
Position for Easy Acceptance
When dealing with people who pride themselves on their negotiating ability, there’s a danger the negotiations will deadlock at the last moment. That’s because the other person’s ego could get in the way and quash your hard-fought negotiations.
Imagine, for instance, you’re talking to a contracting firm about updating your storm water collection and treatment system, but you’re $1,000 apart on the price. You can’t believe your agreement is falling apart over a discrepancy of a mere $1,000. The problem is that the ego of the other person, as a negotiator, is confounding the deal. Perhaps the person you’re dealing with at the contractor’s office said to her boss, “You just watch me negotiate with this client. I won’t have any trouble getting him up in price.” Now she’s not doing as well as she expected, and she’s having a difficult time conceding any ground to you in the negotiation.
Your job, at this point, is to make her feel good about striking a deal with you. You can do this by making a concession to her at the last moment. The size of the concession doesn’t matter. It can be ridiculously small and still be effective. It’s the timing that’s critical.
So you say, “Look, we can’t budge on the price, but go along with that, and I’ll guarantee that you get paid in full the day you complete the work.” Perhaps you were planning to do that anyway, but now you’ve been courteous enough to position her to feel that she didn’t lose to you, but simply traded something off. Now she can say, with pride intact, “All right, if you’ll do that for me, we’ll go along with the price.”
By using this positioning technique along with the previous tips, you can improve your chances of negotiating successfully for what you want in both business and personal situations. And, in the long run, you too may earn the title of power negotiator. •
Editor’s note: This article is adapted in part from the author’s new book, Roger Dawson’s Secrets of Power Negotiating, published by Career Press.
Negotiating is a part of daily life—at home as well as in the office—so it’s important to know how to do it well. These tips can help you learn to be a power negotiator and improve your chances to successfully bargain for what you want.