Negotiating for Success -- Part One
Have you ever been involved in a business transaction of some significance where you felt just a little bit uncomfortable? You couldn't quite put your finger on the source of your discomfort it was just there. No, it wasn't the person on the other side of the deal. And you weren't uncomfortable about the object of the transaction. You were just uncomfortable.One of two things happened in this case:
1) You completed the transaction without resolving that "feeling," which may have left you even more unsettled;
2) Your discomfort was so strong that you broke off the transaction before it was finished, which also left you discombobulated.
If this has ever happened to you, and if you didn't figure out what caused your discomfort, let me offer my opinion: I think you were dealing with someone who was a more sophisticated negotiator than you. You were uncomfortable because you weren't holding your own in the negotiation, but you didn't know that.
Don't feel badly. It has happened to me, too. Even the best negotiators will eventually meet a better one. And believe it or not, you don't have to be the best negotiator in the room to come out on top. BUT, you do have to be able to recognize what's happening.
There is an old adage in poker circles, "When you are sitting at a poker table if you don't know who the mullet is, you're the mullet." A "mullet," in this case, is the one who leaves the game without his money, AND without a clue as to what happened.
What I want to focus on in this article is not necessarily how to make you a better negotiator than your next opponent. That's a worthy goal, and it can happen if you practice. But first, we want to make sure that you're not the mullet. And the best way I can keep you from impersonating this feckless fish is to introduce you to some negotiating fundamentals that my friend, Roger Volkema, calls "Common Negotiating Tactics" in his book, The Negotiation Tool Kit.
Below you will find a few of Roger's tactics and countermeasures, followed by my thoughts on each one. And remember, more on negotiating for success next week.
The Exaggerated First Offer
This tactic is as old as negotiating, and one you probably recognize easily. If you are selling, you offer high. If you're buying, you offer low. This tactic is used to test the water, so to speak, to find out how motivated the other party is, and how savvy they are about the relative value of the object of the negotiation. The challenge is to make the offer high or low enough to get a reaction that you can work with, but not so far out of reason that it irritates the other party to the extent that they discontinue the negotiations.
Countermeasure: Roger says the best countermeasure is to be the first one to use this tactic. If you miss that opportunity, your move is to be appropriately indignant by such a ridiculous offer so as not to indicate how motivated you are.
The Speed-up
This tactic happens in two primary circumstances:
1) When the party speeding up is trying to put pressure on the other party, like establishing a deadline beyond which the deal is off.
2) When one party is desperate to do the deal, and tries to hurry the other party to complete the deal in conflict with that party's comfort level.
Countermeasure: The first example is an aggressive, but often effective move. If you are receiving the pressure, your challenge is to find out whether it's real or a bluff. If you see the second situation in the other party, you probably have the advantage. If you are the desperate one, good luck.
There is a principle I have adopted that has served me well when faced with the Speed-up tactic. I tell myself, "If it's a good deal today, it will be a good deal tomorrow." I have found that this principle is true much more often than not. I usually get my best deals after I sleep on them, especially in deals with a desperate Speed-up.
The Delay
This is a passive-aggressive form of negotiating: Pressure is applied by actually doing nothing. As in most tactics, it's used to identify the level of motivation of the other party. The challenge, however, is to only delay enough to accomplish your goals, without causing the other party to disengage.
Countermeasure: The best way to call the bluff of a Delay is to disengage, or at least bluff disengagement. If you find out that the delay is not a bluff -- that the other person doesn't want to invest the time in the negotiation -- stop bluffing and disengage. Remember this: You will never know how good a deal you can get until you are prepared to walk away.
Every participant in the marketplace has to strive to become an effective negotiator, but especially small business owners. The best way to accomplish this goal is to study negotiating methods, tactics, and behavior, practice by negotiating early and often, and PAY ATTENTION to what's going on around you when you are in a negotiation.
Write this on a rock... When you are sitting at a negotiation table, if you don't know who the mullet is, you're the mullet.
