Who is the real dealmaker: (a) The hit-and-run Hollywood producer who scores a fast profit on a script he options on Tuesday and resells to another studio on Thursday? or (b) The development executive who, instead of turning a fast buck, invests in a writer-director's idea, gathers funding, puts together a crew and stars, negotiates foreign distribution and streaming video rights, and has an option on the writer-director's next two ideas as well? The answer is, both. One is in it for the moment (the deal on the table) while the other is counting on the future (all the deals that may emanate from the deal on the table). Neither is right or wrong. But even if you successfully make several one-time deals, you have to start over each time.
If you pursue deals that have the potential to lead to more deals, your return-on-effort will pay out longer with larger rewards. Studies by Bain & Company, a Boston-based consulting firm, have suggested that a 5 percent increase in customer retention rate could double the profits of a small to midsized business. Bain also found that the average Fortune 500 company could double its revenue growth rate with that same 5 percent increase in customer retention.
If you deal as if there's no tomorrow—classic win–lose—your deals won't lead to more deals. If you burn bridges, destroy the other side, squeeze the last buck out, “take no prisoners,” you can't expect the other party to want to do business with you again. They'll run from the negotiating table, let alone consider returning to it. That's why so many hit-and-run negotiators have conveniently adopted the philosophy that each deal is a one-time event. Go in, score, get out.
On the other hand, if you follow the principles of WIN–win—if you set out to get most of what you want by helping the other side get some of what they want—you'll build relationships that can spawn additional deals, ad infinitum. As a matter of fact, people are willing to work through more difficult negotiations and even pay more where there is an existing relationship and trust. That's getting the highest return on effort. That's getting the most from the Power of Nice.
Every negotiation takes place in an environment. That doesn't just mean the physical setting, the conference room, or the office. It means the feelings, sensitivities, tensions, fears, and hopes that comprise the atmosphere of the negotiation. They make up the environment as much, or more so, than the four walls, table, and chairs. Bonding—finding what you have in common with the other party, rather than where you're at odds—can create a more positive negotiating environment and help build a relationship where there has been none previously.
Just as negotiation is a process, not an event, so is bonding. Bonds are built. You find a link that leads to conversation, that leads to another link, and more conversation. Pretty soon, you have a chain that stretches from one party to the other, like a bridge. The more you travel it, the more familiar with it you become. After enough travel, your bond becomes a shared set of experiences—a relationship.
When you reach an impasse with someone you don't like or simply don't know, you're more likely to let the impasse stand. When the same situation occurs with someone you've come to know, understand, and even like, you're going to look for ways to get past the deadlock. It's just human nature. A good negotiating environment can carry you past bad negotiating moments.
The value of relationships is immeasurable. Ask a manufacturer who's been under the gun to deliver by a date certain, who turned to the supplier they can always count on to help meet that delivery deadline. Ask the giant developer who gets three bids on every set of drawings but one bid is always from the builder that took a chance on his company when it was starting up. Ask the stockbroker whose clients swear her word is the Dow Jones gospel.
Relationships can accomplish what acquaintances can't. Relationships make for not just one deal, but deals that lead to deals, repeated deals, subdeals, offshoot deals, renewing deals. Why make only one deal when you can make several?
The opposite of the hit-and-run style is meet-and-bond. When you encounter the party with whom you'll be negotiating, instead of focusing on your differences, look for connectors…and you are bonding. Purposely search for things you may have in common, shared interests. After all, you already have a pretty good idea of where the two of you will be opposed. Whatever your asking price, they're likely to want a lower one. If you want cash terms, chances are good they'll want to stretch out the payments. The deal itself is bound to be full of push and pull. To minimize animosity and to appreciate each of your points of view, it helps to see each other as people, not just positions.
Bonding is finding links between two parties. The link may be familial, social, business, political, or recreational. It's anything you and the other person share, from the most common ones such as both having young children, to the most specific, such as being collectors of vintage French wines. The bonds you discover may have to do with the deal directly, indirectly, or, seemingly, not at all. Both of you may have been charged by your respective CEOs to come back with deals that will impress the board of directors, not cost much, have low risk, and high return—all goals in which you can sympathize with each other's pressures. The bond may appear to have nothing to do with the deal and yet everything to do with getting it done. Perhaps you both do have young children and you've both promised your families a vacation if you can get the deal done by spring break. In either case, if you don't bond, you'll never know what you might share.
Remember the Prepare phase of negotiation? Before you actually meet with the other side, look back at the research you did on them. Chances are, within that data are cues about the background, interests, and habits of the person or people you're facing. Look through social media profiles, biographies on company websites, interviews, articles or blog entries, or countless other resources available online. Chances are, you have something in common. Where did they grow up? Where did they go to college? Were they part of a fraternity or sorority? What are their hobbies? When you do come face to face, you already have a base of bonding information on which to build.
Bonding clues will be all around you. If you meet in the other side's office, look at what's on the desk, floor, and walls: vacation pictures, inspirational quotations, those yarn-wrapped pencil holders made by a kid in arts and crafts, running shoes tucked under a credenza, a paperweight made from a sailboat pulley, celebrity photos, family pictures, a doubles team trophy. If you meet in neutral territory, study the other person: style of dress—conservative or bold; jewelry—lots, little, flashy, crafty, or antique; shoes—Italian, sensible, or beat-up boaters; college ring; diver's watch; body type—jock or couch potato.
Ask questions. Make the first gesture. Bonding is the difference between “Hello, here are my five key issues. What are yours?” and “Hi. It looks like you do a little practice putting on the carpet. Are you a golfer too?”
Use the cues and clues you observe to start the conversation that creates bonds:
Once you make the gesture of building the bond, it's likely to build on itself. Ask about a vacation, a child, a college, or a hobby, and you'll get a response. After all, the other person put that picture on their office wall because it's a favorite. You're asking them to tell you about something they like. If you have similar interests, you two may not be archrivals after all. You may be two people who could be friends and just happen to have a job to do. You now have something negotiators need but rarely recognize, empathy. You understand the other person and their personal interests, and they, yours. Once you do, you're both bound to be more open to understanding each other's interests in the deal.
It's easier for strangers to practice win–lose negotiation. Once you've bonded, you have a better chance to achieve WIN–win results.
Here's a bond I built at the eleventh hour, just in time to turn the deal around.
Bonds are like muscles. If you don't keep them active, they weaken. Often people do a great job of bonding right up to the time they close the deal. Once the deal is done and the check has cleared, many people forget the power of bonding. Several years later, when it's time to renew the contract, the customer can't tell the incumbent vendor from the rest of the competition. Bonding was allowed to disintegrate—a true relationship was not established.
Even long-term relationships need to rebond from time to time. Remember, “It's not the sale, it's the relationship that counts.” We make it a practice to keep track of the people with whom we negotiate during the times when we aren't negotiating. A phone call to say hello. A holiday card. An e-mail congratulations on a promotion. The Internet has made maintaining bonds easier than ever. Today, there are countless, simple, and sincere ways to bond once the relationship has been established.
When negotiations break down, or appear that they might, look for opportunities to rebond. Get away from the negotiation table. Do something social. Bring in new parties, spouses, other partners, people who share personal interests, not just business interests. Of course, the best approach is to keep bonds active and they will be strong when you need them most.
Here's a situation where I literally went out of my way to rebond with the other party.
There's a very important point to make about bonding. It's not a ploy. It's real. You can't pretend to share something with the other person. First of all, it's likely to blow up in your face. If you don't really love Persian cats, don't know the first thing about Greek cooking, or never hiked the north face of the Rockies, you're bound to give yourself away. Secondly, the whole idea of bonding is to genuinely invest in the relationship. Find the link, don't fake it.
There's a sequence in the movie Used Car, where a salesman attempts to bond with every customer. It goes something like this: A shopper walks onto the lot and the salesman strides over, sticks his hand out and says, “What's your name?”
The innocent shopper says, “Mr. Polanski. I'm looking for a Buick.”
The salesman breaks into a mile-wide smile and says, “Really? My name is Kowalski and I sell Buicks.” Wow! They're both Polish. Who says you can't trust a used car salesman? Coincidentally, when the next customer is Swedish, Spanish, Irish, Scottish, or Jewish, the salesman will be whatever “ish” is called for.
Don't pretend to be what you aren't, like what you don't like, or play what you don't play. Look for the real link. Look for the true common interest. And, if you don't do it early in the negotiation, which is better, do it late, which is better than never.
Three Bonding Rules to Keep in Mind
A participant in one of our seminars came up to us during a break to talk to my cofacilitator. She was in business in the United States, but wasn't American, and most of her customers were younger. She was older and she was Spanish. Therefore, she didn't know American television shows or movies, didn't follow American sports, couldn't share growing up stories, had no family here, and would seem to have no connections with any of her customers except business. She asked how she could bond with customers with virtually no links available. The facilitator and she engaged in a bonding exercise right then and there.
I can't stress enough the values, both measurable and intangible, of building relationships (instead of just making deals one at a time). Nor can I overemphasize that you never know what the long-term benefit of a relationship will be. Few stories drive home the importance of building relationships more poignantly than this one. Trust, grounded in a relationship, encourages new deal opportunities and helps overcome seemingly intractable obstacles.
Negotiations that build relationships provide you with a return-on-effort by increasing the retention rate of current deals, as well as making more future deals, and, in turn, increasing revenues and profits.
No “faux bonding”: Pretending you have a shared interest when you don't will backfire.
Rules of Bonding
Practice Makes Bonding (Exercise)
How to Bond