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NEGOTIATING OUTLINE

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Negotiating

Rule: Don’t negotiate until you’ve created value and created a unique, differential competitive advantage.

Rule: Don’t discuss price until you’re read to negotiate and close.

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The Five Elements in the Negotiating and Closing

Process1. Your Negotiating Approach

a. Information-BasedI. Information about your customers and their

competitors

II. Information about your competitors

III. Information about the other side’s cultural background

IV. The attitudes and tactics of the other side

b. Relationship-Basedc. Ethicald. Flexible

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2. Preparationa. Assess the Situation

I. Balanced concerns

II. Relationships

III. Transactions

IV. Tacit coordination

b. Assess Negotiating StylesI. Competitors *

II. Accommodators

III. Conflict Avoiders

IV. Problem Solvers

V. Cooperators *

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Rule: Match the other side’s style (cooperative or competitive)

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c. Identify Interests, Set Objectives and Determine Targets

I. Identify both side’s interests.

II. Set MADCUD objectives (Measurable, Attainable, Demanding, Consistent with company goals, Under control of the individual and Deadlined).

Rule: When selling a perishable product, always set a deadline on your offers.

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III. Determine Targets

Rule: Make a commitment to your objectives and targets, write them down and tell someone about them.

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d. Assess LeverageI. BATNAs

Rule: Always go into a negotiation with a BATNA.

II. Tit-for-tat

Rule: Use-tit-for-tat to teach the other side to cooperate.

Rule: Don’t use tit-for-tat if the other side is much more powerful. Stick to your principles humbly.

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III. Warning

Rule: Never threaten; politely warn instead.

IV. Bluffs

Rule: If you bluff, use a mixed strategy and occasionally bluff on a random basis. (bluffing is for experts only.)

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e. Estimate the Ballpark, commit to Walk-Always and Set AnchorsI. Estimate the ballpark

II. Determine walk-aways

III. Set anchors (first offer)

Rule: Most settlements are close to the mid-point.

Rule: Always go into every negotiation with a commitment to your walk-aways.

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Rule: Always have a a well-thought-out anchor.

Rule: During negotiations, you must focus on your highest legitimate expectations (HLE),not your walk-aways.

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f. Determining Bargaining TacticsI. Acceptable: Auction, cherry-pick, crunch,

flinch, good guy/bad guy, limited authority, nibble, price tag, red herring, silence, split the difference, take-it-or-leave-it and throw-aways.

II. Unacceptable: Big Bait, blackmail, change of pace, deliver garbage, renege, starvation, threats and walk-outs.

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RULE: Never split the difference when it is in the other side’s favor or is not close to your HLE. Have patience and continue negotiating.

RULE: When faced with unacceptable or unethical bargaining tactics, name the tactics and tell the other side the names so the other side knows you are not fooled.

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Rule: Never respond emotionally. Respond calmly, politely and firmly.

3. Maneuvering for Dominance and Control

Rule: The other side only has the power you give it.

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a. Tactics to get you frustrated, angered: Interruptions, hurry-up, delay, keep-you-waiting and bring in the boss.

Rule: Check your ego at the door and don’t let your fear or anger get the better of you. Patience always wins.

Rule: Whoever controls the negotiating agenda, controls the outcome.

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Rule: In order to avoid negotiating on each element individually, package all the elements in a deal so the prices of the individual elements always add up to more than the package price.

Rule: Negotiate only after you’ve created value, early in a customer’s planning cycle and well before your imposed deadline.

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Rule: Negotiate at the highest level possible – only with the buying decision maker.

Rule: Don’t negotiate with your boss present if you can avoid it.

Rule: Negotiate on your own turf if possible.

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Rule: Negotiate face-to-face whenever possible.

Rule: If you have to negotiate on the phone, you be the caller.

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4. Bargaininga. Warm-up

Rule: Listen and get information 66 percent of the time, give information 33 percent of the time.

Rule: Get the other side to state what they want at the beginning, and tell them what your issues are – get everything on the table.

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b. OpenI. Open first?

Rule: Open first to set an anchor, except when you don’t know the other side.

II. Open optimistically or realistically?

Rule: When in doubt, open optimistically and have room to come down.

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Rule: You never get anything you don’t ask for, so ask for more than you hope to get.

Rule: Get bad news out of the way early.

Rule: Don’t include most of the other side’s requests in your initial offer.

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c. Frames

Rule: Always frame all of your offers appropriately.

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Framing

Frame all of your offers. Framing emphasizes the value of your offer. Framing provides justification for the other side to make

concessions. “Just pennies a day” frames an offer.

To those who like to win, frame as a gain, a win – emphasize benefits.

For those who are afraid to lose (losses loom larger than gains to many), frame as a possible loss – emphasize the pain and shame of losing.

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Framing Example Group I

1 If Program A is adopted, 200 people will be saved.2 If Program B is adopted, 1/3 probability that all

will be saved, 2/3 probability that none will be saved.

Group II1 If Program A is adopted, 400 people will die.2 If Program B is adopted, 1/3 probability that all

will be saved, 2/3 probability that none will be saved.

76% in Group I chose Program A, only 12% in Group II chose Program A.

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d. Signaling Leverage

Rule: Confidence is everything; whoever blinks first wins.

Rule: If you have leverage, use it gently, but use it.

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e. Making Concessions

Rule: Never begin with a major concession.

Rule: Don’t just concede, try to trade. If you give up something, always try to get something in return.

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Rule: Give the first concession on an unimportant issue, and get a concession from the other side.

Rule: The other side’s first concession is in its least important area.

Rule: Make the other side work hard for everything, they will appreciate it more.

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I. Develop an effective concession pattern that signals when you get close to your walk-away.

Which tactic is best?

1. 25% 25% 25% 25%2. 0 50 % 0 50% 3. 0 0 0 100%4. 100% 0 0 05. 10% 20% 30% 40%6. 30% 20% 10% 5%

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f. Building Agreement

Rule: Summarize agreements and restate the other side’s position on a regular basis.

Rule: Be patient – with patience and hard work in exploring alternatives, you can make the deal better for both sides.

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II. Closing and Gaining Commitment

Rule: Expect to close.

Rule: When you walk-away, always leave the door open.

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A. Trial Closes: The Direct Close, the Assumption Close, the Summary Close, the Silent Close, the Pin-Down Close and the T-Account Close.

Rule: Use trial closes throughout the negotiating process.

B. Choice Closes: The Choice Close and the Minor Point Close.

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C. Clincher Close (have a concession in your back pocket and use it at the end to clinch the deal).

D. Last-Resort Closes: The “Make-Me-An-Offer” Close, the “What-Will-It-Take” Close and the “What-Did-I-Do-Wrong” Close.

E. Bad, Never-Use Closes: The Poor-Me Close, Now-You-See-It-Now-You-Don’t Close and the For-You-Only Close.

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Rule: Don’t close too aggressively; always keep the relationship in mind.

Rule: When closing, confidence is vital – you cannot signal your fear of losing or your need to close fast.

Rule: Have confidence that you can give the other side a “good deal” – their definition of a good deal.

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Confidence Gives You Power Have confidence that the buyer will never be

forgiven for not asking for a lower price (or better deal), but will always be forgiven for not getting it.

Recognizing negotiating tactics gives you confidence.

Accuse the other side of not being fair – flinch – gives you confidence

Take reasonable risks – equate risk with a positive outcome.

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F. Types of Good Deals: Got a low price Got something someone else wanted Got high quality and a low price Got the last one Got a warranty or guarantee Low risk of dissatisfaction Got a discount Got something else thrown in Got good results from advertising Got a good deal compared to other media

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G. Get Commitment: Social Ritual Public Announcement Accountability (contract) Simultaneous Exchange

Rule: Once you get commitment, say ”thank you,” shut up and leave quickly.

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III. Putting It All Together: Creating a Negotiating and Closing Plan

Rule: Always rehearse your negotiating and closing plan.

Rule: After every negotiating, debrief.

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Further Study

Read Media Selling, 4th edition, Chapter 12 (“Negotiating and Closing”) available at www.charleswarner.us/media_selling.html

Download, read and study the “Negotiating and Closing Outline” available at www.charleswarner.us/indexppr.html.

Download, read and study the “Negotiating Styles and Patterns” available at www.charleswarner.us/artindex.html