I'm sure you've seen Good Guy/Bad Guy used in the old police movies.
Good Guy/Bad Guy is one of the best-known negotiating gambits.
Officers bring a suspect into the police station for questioning, and the first detective to interrogate him is a rough, tough, mean-looking guy. He threatens the suspect with all kinds of things that they're going to do to him.
Then he's mysteriously called away to take a phone call, and the second detective, who's brought in to look after the prisoner while the first detective is away, is the warmest, nicest guy in the entire world. He sits down and makes friends with the prisoner. He gives him a cigarette and says, "Listen kid, it's really not as bad as all that. I've taken a liking to you. I know the ropes around here. Why don't you let me see what I can do for you?" It's a real temptation to think that the Good Guy's on your side when, of course, he really isn't.
Then the Good Guy would go ahead and close on what salespeople would recognize as a minor point close. "All I think the detectives really need to know," he tells the prisoner, "is where did you buy the gun?" What he really wants to know is, "Where did you hide the body?"
Start out with a minor point and then work up from there.
A car salesperson says to you, "If you did invest in this car, would you get the blue or the gray? Would you want the vinyl upholstery or the leather?"
Little decisions lead to big ones.
A real estate salesperson says, "If you did invest in this home, how would you arrange the furniture in the living room?" or "Which of these bedrooms would be the nursery for your new baby?"
Little decisions grow to big decisions.
People use Good Guy/Bad Guy on you much more than you might believe. Look out for it anytime you find yourself dealing with two people. Chances are you'll see it being used on you in one form or another.
Watch for the Good Guy / Bad Guy counter gambit to be posted shortly. Know how to handle someone when this gambit is used on you!
Thursday, January 27, 2011
Tuesday, January 25, 2011
A Client's Experience Negotiating with the Vise Gambit
A client recently called me up after a Secrets of Power Negotiating seminar that I had conducted for their managers and told me,
"I thought you might like to know that we just made $14,000 using one of the gambits that you taught us. We are having new equipment put into our head office. Our standard procedure has been to get bids from three qualified vendors and then take the lowest bid. So I was sitting here going over the bids and was just about to okay the one I'd decided to accept. Then I remembered what you taught me about the Vise technique. So I thought, 'What have I got to lose?' and scrawled across it, 'You'll have to do better than this,' and mailed it back to them. Soon their counterproposal came back $14,000 less than the proposal that I was prepared to accept."
You may be thinking, "You didn't tell me whether that was a $50,000 proposal, in which case it would have been a huge concession, or a multimillion-dollar proposal, in which case it wouldn't have been that big a deal." Don't fall into the trap of negotiating percentages when you should be negotiating dollars.
The point was that he made $14,000 in the two minutes that it took him to scrawl that counterproposal across the bid. This meant that while he was doing it, he was generating $420,000 per hour of bottom-line profits.
That's pretty good money, isn't it?
"I thought you might like to know that we just made $14,000 using one of the gambits that you taught us. We are having new equipment put into our head office. Our standard procedure has been to get bids from three qualified vendors and then take the lowest bid. So I was sitting here going over the bids and was just about to okay the one I'd decided to accept. Then I remembered what you taught me about the Vise technique. So I thought, 'What have I got to lose?' and scrawled across it, 'You'll have to do better than this,' and mailed it back to them. Soon their counterproposal came back $14,000 less than the proposal that I was prepared to accept."
You may be thinking, "You didn't tell me whether that was a $50,000 proposal, in which case it would have been a huge concession, or a multimillion-dollar proposal, in which case it wouldn't have been that big a deal." Don't fall into the trap of negotiating percentages when you should be negotiating dollars.
The point was that he made $14,000 in the two minutes that it took him to scrawl that counterproposal across the bid. This meant that while he was doing it, he was generating $420,000 per hour of bottom-line profits.
That's pretty good money, isn't it?
Monday, January 24, 2011
Negotiate as a Reluctant Seller to Squeeze the Negotiating Range
Imagine for a moment that you own a sailboat, and you're desperate to sell it. It was fun when you first got it, but now you hardly ever use it, and the maintenance and slip fees are eating you alive.
It's early Sunday morning, and you've given up a chance to play golf with your friends because you need to be down at the marina cleaning your boat. You're scrubbing away and cursing your stupidity for ever having bought the boat. Just as you're thinking "I'm going to give this turkey away to the next person who comes along," you look up and see an expensively dressed man with a young girl on his arm coming down the dock. He's wearing Gucci loafers, white slacks, and a blue Burberry's blazer topped off with a silk cravat. His young girlfriend is wearing high heels, a silk sheath dress, big sunglasses, and huge diamond earrings.
They stop at your boat and the man says, "That's a finelooking boat. By any chance is it for sale?" His girlfriend snuggles up to him and says, "Oh, let's buy it. We'll have so much fun."
You feel your heart start to burst with joy and your mind is singing "Thank you, Lord! Thank you, Lord!" Expressing that sentiment is not going to get you the best price for your boat, is it?
How are you going to get the best price? By playing Reluctant Seller.
You keep on scrubbing and say, "You're welcome to come aboard, although I hadn't thought of selling the boat."
You give them a tour of the boat, and at every step of the way you tell them how much you love the boat and how much fun you have sailing her.
Finally you tell them, "I can see how perfect this boat would be for you and how much fun you'd have with it, but I really don't think I could ever bear to part with it. However, just to be fair to you, what is the very best price you would
give me?"
Power Negotiators know that this Reluctant Seller technique squeezes the negotiating range before the negotiating even starts. If you've done a good job of building the other person's desire to own the boat, he will have formed a negotiating range in his mind.
He may be thinking "I'd be willing to go to $30,000, $25,000 would be a fair deal, and $20,000 would be a bargain." So, his negotiating range is from $20,000 to $30,000. Just by playing Reluctant Seller, you will have moved him up through that range. If you had appeared eager to sell, he may have offered you only $20,000.
By playing Reluctant Seller you may move him to the midpoint or even the high point of his negotiating range before the negotiations even start.
It's early Sunday morning, and you've given up a chance to play golf with your friends because you need to be down at the marina cleaning your boat. You're scrubbing away and cursing your stupidity for ever having bought the boat. Just as you're thinking "I'm going to give this turkey away to the next person who comes along," you look up and see an expensively dressed man with a young girl on his arm coming down the dock. He's wearing Gucci loafers, white slacks, and a blue Burberry's blazer topped off with a silk cravat. His young girlfriend is wearing high heels, a silk sheath dress, big sunglasses, and huge diamond earrings.
They stop at your boat and the man says, "That's a finelooking boat. By any chance is it for sale?" His girlfriend snuggles up to him and says, "Oh, let's buy it. We'll have so much fun."
You feel your heart start to burst with joy and your mind is singing "Thank you, Lord! Thank you, Lord!" Expressing that sentiment is not going to get you the best price for your boat, is it?
How are you going to get the best price? By playing Reluctant Seller.
You keep on scrubbing and say, "You're welcome to come aboard, although I hadn't thought of selling the boat."
You give them a tour of the boat, and at every step of the way you tell them how much you love the boat and how much fun you have sailing her.
Finally you tell them, "I can see how perfect this boat would be for you and how much fun you'd have with it, but I really don't think I could ever bear to part with it. However, just to be fair to you, what is the very best price you would
give me?"
Power Negotiators know that this Reluctant Seller technique squeezes the negotiating range before the negotiating even starts. If you've done a good job of building the other person's desire to own the boat, he will have formed a negotiating range in his mind.
He may be thinking "I'd be willing to go to $30,000, $25,000 would be a fair deal, and $20,000 would be a bargain." So, his negotiating range is from $20,000 to $30,000. Just by playing Reluctant Seller, you will have moved him up through that range. If you had appeared eager to sell, he may have offered you only $20,000.
By playing Reluctant Seller you may move him to the midpoint or even the high point of his negotiating range before the negotiations even start.
Friday, January 21, 2011
Do Better Negotiations with Bracketing
Whether you're negotiating for an increase in pay or trying to get the rock-bottom price for a new car, you'll do better if you use a technique that negotiators call Bracketing.
This means that your initial proposal should be an equal distance on the other side of your objective as their proposal.
Let me give you some simple examples:
In Little Things
Your son comes to you and says he needs $20 for a fishing trip he's going to take this weekend. You say, "No way. I'm not going to give you $20. Do you realize that when I was your age I got 50 cents a week allowance and had to work for that? I'll give you $10 and not a penny more."
Your son says, "I can't do it for $10, Dad."
Now you have established the negotiating range. He's asking for $20. You're willing to pay $10. See how often you end up at $15.
In Big Things
In 1982, the Americans were negotiating the payoff of a huge international loan with the government of Mexico. They were about to default on an $82 billion loan. Their chief negotiator was Jesus Herzog, their finance minister. Treasury Secretary Donald Regan and Federal Reserve Board Chairman Paul Volker represented the American side.
In a creative solution, the Americans asked Mexico to contribute huge amounts of petroleum to their strategic petroleum reserve, which Herzog agreed to do. That didn't settle it all, however.
The Americans proposed to the Mexicans that they pay them a $100 million negotiating fee, which was a politically acceptable way to pay accrued interest. When President Lopez Portillo heard what the Americans were asking for, he went ballistic.
He said the equivalent of: “You tell Ronald Reagan to drop dead. We're not paying the United States a negotiating fee. Not one peso.” So now the Americans had the negotiating range established. They asked for $100 million. The Mexicans were offering zero.
Guess what they ended up paying? That's right - $50 million.
So often, in little things and in big things, we end up splitting the difference. With Bracketing, Power Negotiators are assured that if that happens, they still get what they want.
To Bracket, you must get the other side to state its position first.
If the other side can get you to state your position first, then it can Bracket you so that, if you end up splitting the difference as so often happens, it ends up getting what it wanted. That's an underlying principle of negotiating: Get the other person to state his or her position first. It may not be as bad as you fear, and it's the only way you can Bracket his or her proposal.
Key Phrase
To get the other person to state his or her position first: If the status quo is fine with you and there is no pressure on you to make a move, be bold enough to say to the other side, "You approached me. The way things are satisfies me. If you want to do this, you'll have to make a proposal to me."
This means that your initial proposal should be an equal distance on the other side of your objective as their proposal.
Let me give you some simple examples:
- You hope that your boss will give you a 10 percent increase in pay. You should ask him for 20 percent.
- The car dealer is asking $25,000 for the car. You want to buy it for $22,000. You should make an opening offer of $19,000.
In Little Things
Your son comes to you and says he needs $20 for a fishing trip he's going to take this weekend. You say, "No way. I'm not going to give you $20. Do you realize that when I was your age I got 50 cents a week allowance and had to work for that? I'll give you $10 and not a penny more."
Your son says, "I can't do it for $10, Dad."
Now you have established the negotiating range. He's asking for $20. You're willing to pay $10. See how often you end up at $15.
In Big Things
In 1982, the Americans were negotiating the payoff of a huge international loan with the government of Mexico. They were about to default on an $82 billion loan. Their chief negotiator was Jesus Herzog, their finance minister. Treasury Secretary Donald Regan and Federal Reserve Board Chairman Paul Volker represented the American side.
In a creative solution, the Americans asked Mexico to contribute huge amounts of petroleum to their strategic petroleum reserve, which Herzog agreed to do. That didn't settle it all, however.
The Americans proposed to the Mexicans that they pay them a $100 million negotiating fee, which was a politically acceptable way to pay accrued interest. When President Lopez Portillo heard what the Americans were asking for, he went ballistic.
He said the equivalent of: “You tell Ronald Reagan to drop dead. We're not paying the United States a negotiating fee. Not one peso.” So now the Americans had the negotiating range established. They asked for $100 million. The Mexicans were offering zero.
Guess what they ended up paying? That's right - $50 million.
So often, in little things and in big things, we end up splitting the difference. With Bracketing, Power Negotiators are assured that if that happens, they still get what they want.
To Bracket, you must get the other side to state its position first.
If the other side can get you to state your position first, then it can Bracket you so that, if you end up splitting the difference as so often happens, it ends up getting what it wanted. That's an underlying principle of negotiating: Get the other person to state his or her position first. It may not be as bad as you fear, and it's the only way you can Bracket his or her proposal.
Key Phrase
To get the other person to state his or her position first: If the status quo is fine with you and there is no pressure on you to make a move, be bold enough to say to the other side, "You approached me. The way things are satisfies me. If you want to do this, you'll have to make a proposal to me."
Thursday, January 20, 2011
Simple Negotiation Expression: You'll have to do better than that!
The Vise is a very effective negotiating gambit, and what it will do for you will amaze you.
The Vise gambit is the simple little expression:
"You'll have to do better than that."
Here's how Power Negotiators use it:
Let's say that you own a small steel company that sells steel products in bulk. You are calling on a fabricating plant where the buyer has listened to your proposal and your pricing structure. You ignored his insistence that he's happy with his present supplier, and you did a good job of building desire for your product.
Finally, the other person says to you, "I'm really happy with our present vendor, but I guess it wouldn't do any harm to have a backup supplier to keep them on their toes. I'll take one carload if you can get the price down to $1.22 per pound."
You respond with the Vise gambit by calmly saying, "I'm sorry, you'll have to do better than that."
An experienced negotiator will automatically respond with the countergambit, which is, "Exactly how much better than that do I have to do?" trying to pin you down to a specific. However, it will amaze you how often inexperienced negotiators will concede a big chunk of their negotiating range.
What's the next thing that you should do, once you've said, "You'll have to do better than that"? You guessed it. Be quiet! Don't say another word. The other side may just make a concession to you. Salespeople call this the silent close, and they all learn it during the first week that they are in the business. You make your proposal and then shut up. The other person may just say Yes, so it's foolish to say a word until you find out if he or she will or won't.
The Vise gambit is the simple little expression:
"You'll have to do better than that."
Here's how Power Negotiators use it:
Let's say that you own a small steel company that sells steel products in bulk. You are calling on a fabricating plant where the buyer has listened to your proposal and your pricing structure. You ignored his insistence that he's happy with his present supplier, and you did a good job of building desire for your product.
Finally, the other person says to you, "I'm really happy with our present vendor, but I guess it wouldn't do any harm to have a backup supplier to keep them on their toes. I'll take one carload if you can get the price down to $1.22 per pound."
You respond with the Vise gambit by calmly saying, "I'm sorry, you'll have to do better than that."
An experienced negotiator will automatically respond with the countergambit, which is, "Exactly how much better than that do I have to do?" trying to pin you down to a specific. However, it will amaze you how often inexperienced negotiators will concede a big chunk of their negotiating range.
What's the next thing that you should do, once you've said, "You'll have to do better than that"? You guessed it. Be quiet! Don't say another word. The other side may just make a concession to you. Salespeople call this the silent close, and they all learn it during the first week that they are in the business. You make your proposal and then shut up. The other person may just say Yes, so it's foolish to say a word until you find out if he or she will or won't.
Tuesday, January 18, 2011
When Negotiating Think in Real Money Terms but Talk Funny Money
There are all kinds of ways of describing the price of something.
If you went to the Boeing Aircraft Company and asked them what it costs to fly a 747 coast to coast, they wouldn't tell you $52,000. They would tell you 11 cents per passenger mile.
Salespeople call that breaking it down to the ridiculous.
Haven't we all had a real estate salesperson say to us, "Do you realize you're talking 35 cents a day here? You're not going to let 35 cents a day stand between you and your dream home, are you?" It probably didn't occur to you that 35 cents a day over the 30-year life of a real estate mortgage is more than $7,000. Power Negotiators think in real money terms.
When that supplier tells you about a 5-cent increase on an item, it may not seem important enough to spend much time on until you start thinking of how many of those items you buy during a year. Then you find that there's enough money sitting on the table to make it well worth your while to do some Power Negotiating.
I once dated a woman who had very expensive taste. One day she took me to a linen store because she wanted us to buy a new set of sheets. They were beautiful sheets, but when I found out that they were $1,400, I was astonished and told the sales clerk that it was the kind of opulence that caused the peasants to storm the palace gates.
She calmly looked at me and said, "I don't think you understand. A fine set of sheets like this will last you at least five years, so you're really talking about only $280 a year."
Then she whipped out a pocket calculator and frantically started punching in numbers. "That's only $5.38 a week. That's not much for what is probably the finest set of sheets in the world."
I said, "That's ridiculous."
Without cracking a smile, she said, "I'm not through. With a fine set of sheets like this, you obviously would never sleep alone, so we're really talking only 38 cents per day, per person." Now that's really breaking it down to the ridiculous.
Here are some other examples of funny money:
Businesses know that if you don’t have to pull real money out of your purse or pocket, you're inclined to spend more. It's why casinos the world over have you convert your real money to gaming chips. It's why restaurants are happy to let you use a credit card
although they have to pay a percentage to the credit card company.
When I worked for a department store chain, we were constantly pushing our clerks to sign up customers for one of our credit cards because we knew that credit card customers would spend more and also buy better quality merchandise than a cash customer. Our motivation wasn't entirely financial in pushing credit cards. We also knew that because credit card customers would buy better quality merchandise, it would satisfy them more, and they would be more pleased with their purchases.
So when you're negotiating, break the investment down to the ridiculous because it does sound like less money, but learn to think in real money terms. Don't let people use the Funny Money gambit on you.
If you went to the Boeing Aircraft Company and asked them what it costs to fly a 747 coast to coast, they wouldn't tell you $52,000. They would tell you 11 cents per passenger mile.
Salespeople call that breaking it down to the ridiculous.
Haven't we all had a real estate salesperson say to us, "Do you realize you're talking 35 cents a day here? You're not going to let 35 cents a day stand between you and your dream home, are you?" It probably didn't occur to you that 35 cents a day over the 30-year life of a real estate mortgage is more than $7,000. Power Negotiators think in real money terms.
When that supplier tells you about a 5-cent increase on an item, it may not seem important enough to spend much time on until you start thinking of how many of those items you buy during a year. Then you find that there's enough money sitting on the table to make it well worth your while to do some Power Negotiating.
I once dated a woman who had very expensive taste. One day she took me to a linen store because she wanted us to buy a new set of sheets. They were beautiful sheets, but when I found out that they were $1,400, I was astonished and told the sales clerk that it was the kind of opulence that caused the peasants to storm the palace gates.
She calmly looked at me and said, "I don't think you understand. A fine set of sheets like this will last you at least five years, so you're really talking about only $280 a year."
Then she whipped out a pocket calculator and frantically started punching in numbers. "That's only $5.38 a week. That's not much for what is probably the finest set of sheets in the world."
I said, "That's ridiculous."
Without cracking a smile, she said, "I'm not through. With a fine set of sheets like this, you obviously would never sleep alone, so we're really talking only 38 cents per day, per person." Now that's really breaking it down to the ridiculous.
Here are some other examples of funny money:
- Interest rates expressed as a percentage rather than as a dollar amount
- The amount of the monthly payments being emphasized rather than the true cost of the item
- Cost per brick, tile, or square foot rather than the total cost of materials
- An hourly per person pay increase rather than an annual company cost increase
- Insurance premiums expressed as a monthly amount rather than as an annual cost
- The price of land expressed as a monthly payment
Businesses know that if you don’t have to pull real money out of your purse or pocket, you're inclined to spend more. It's why casinos the world over have you convert your real money to gaming chips. It's why restaurants are happy to let you use a credit card
although they have to pay a percentage to the credit card company.
When I worked for a department store chain, we were constantly pushing our clerks to sign up customers for one of our credit cards because we knew that credit card customers would spend more and also buy better quality merchandise than a cash customer. Our motivation wasn't entirely financial in pushing credit cards. We also knew that because credit card customers would buy better quality merchandise, it would satisfy them more, and they would be more pleased with their purchases.
So when you're negotiating, break the investment down to the ridiculous because it does sound like less money, but learn to think in real money terms. Don't let people use the Funny Money gambit on you.
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