Chapter 9 -
Bargaining For You
Crucial Facts
Chris fell in love, and was obsessed, with a Salsa Red Pearl Toyota 4Runner. He searched the dealers in metropolitan Washington, D.C., but there was only one dealer in the area who had that color.
He went to the dealer and was assisted by a salesman named Stan. Stan offered Chris the vehicle’s sticker price of $36,000, then Chris haggled for $30,000. Chris used calibrated questions and threw in the multiple “no” technique. After three attempts, Chris got the deal. Two days later, he drove off in his Salsa Red Pearl Toyota 4Runner.
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Bargaining is the part of the negotiation that causes the most anxiety and unfocused aggression, which explains why this is also the most mishandled. Those who are skilled in bargaining recognize the need to understand the psychological currents that influence offers, counteroffers, and closing moves.
Our negotiation style is a product of our childhood, education, family, culture, and other variables. Knowing what our style is allows us to recognize and understand our negotiating strengths and weaknesses and tweak our mindset and strategies accordingly.
There is a wide array of behavioral profiles of people who you are bound to encounter in a negotiation, and they can be grouped into three broad categories: Assertive, Accommodators, and Analysts. There is no single best profile, but to become effective, a negotiator would benefit from a combination of elements from all three categories.
A successful bargaining style would require you to be yourself at the bargaining table. Develop your own style and add to your strengths instead of replacing them.
Below are the profiles of the three categories.
Analyst
Characteristics/Traits
How to Handle
If You Are An Analyst, How to Deal with Others
Accommodator
Characteristics/Traits
How to Handle
If You Are An Accomodator, How to Deal with Others
Assertive
Characteristics/Traits
How to Handle
If You Are An Assertive, How to Deal with Others
The three types differ in the way they view time and silence, communicate, and prepare. It is not surprising that they negotiate differently as well. The key is to recognize in which category the other party belongs so you can tweak your bargaining approach accordingly. Treat your counterparts the way they want to be treated.
When offered an extreme anchor, successful negotiators would often say “no” in ways that were discussed in the previous chapter or deflect the anchor with calibrated questions. These are ways to get out of the compromise trap and refocus your counterpart.
Another technique is to pivot to non-monetary terms, which means you direct the conversation to the non-monetary issues that would make the final price work.
If you are pushed to name your price first, do not name your price. Instead, refer to a high number that someone else might charge or offer.
When a negotiation seems to be going too slow and no immediate resolution is seen, strong moves may be used to shake up the counterpart. This kind of situation requires you to be assertive.
Following are some practical ways to assert yourself:
Real anger, threats without anger, and strategic umbrage
Anger, when used properly, can help convince the other side to accept less. However, when your anger intensifies the other side’s sensitivity to danger and fear, they may end up making bad concessions that cause implementation problems.
Do not fake anger; it might backfire, leading to a loss of trust and unnegotiable demands. Keep your anger under control.
Threats delivered without anger but with confidence and self-control work best. When you are made an offer that angers you, take a deep breath, and channel only a little anger at the proposal, and not the person. Say, "I'm sorry, but I do not see how that would work."
“Why?”
Earlier, we have established that “why” makes people defensive. There is an effective way of asking “Why?” The goal is to get the other side to defend your position by using the defensiveness triggered by the question.
For example: when you want to win a client to your side, you may ask: “Why would you want to do business with me? Your current provider is great!”
“I” Message
Using “I” is another helpful way of setting a boundary without getting into a confrontation. When you want to neutralize an unproductive statement that your counterpart delivered, you may use an “I” statement. For example: “I feel frustrated when you rush me into a decision because I need to have more information to assess the situation.” Be mindful of your tone when you deliver an “I” statement.
It is important to maintain a collaborative relationship even as we set boundaries. Do not express objections with anger or hatred. Instead, make strong, empathic statements.
Never look at your counterpart as an enemy. Focus on the issue. If you sense that emotions are about to get out of control, suggest a time-out and re-gain the rapport that might have been lost during the heated discussion.
Occasionally, you will be forced to go into intense bargaining with tough hagglers who are used to getting their way, and you would need tools to live through this kind of bargaining. One such tool is the Ackerman bargaining model, designed by Mike Ackerman, an ex-CIA operative who established a kidnap-for-ransom consulting company.
The model is an offer-counteroffer method composed of simple steps:
Step One : Set your target price
Step Two : Set your first offer at 65% of your target price. This offer sets an extreme anchor that will induce a fight-or-flight reaction, except in seasoned negotiators, and push them into impulsive actions.
Step Three : Calculate three raises of decreasing increments (from 65% to 85, 95, and 100). This approach, coupled with a few calibrated questions, can bait your counterpart into bidding against themselves. The progressive offer creates reciprocity and motivates your counterpart to make a concession. The diminishing increments convinces your counterpart that they are squeezing you tight enough to reach your limit.
Step Four : Generate empathy and employ the various ways of saying “no” to get the counterpart to make a counteroffer before increasing your offer.
Step Five : Use precise, non-round numbers to give credibility and weight. For example, use $23,479 instead of $24,000.
Step Six : On your final number, throw in a non-monetary item to indicate that you have reached your limit.
Key Lessons
Negotiation requires a certain degree of conflict management skills, especially when face-to-face with a fierce bargainer. The situation need not be unpleasant. Seasoned negotiators embrace conflict because it often leads to great deals. When you find yourself in that situation, keep in mind the following lessons:
Learning Activity
When a family member or friend asks you to do something, ask them, “Why?” Observe their reaction. Wait for their answer before you explain that it was just an experiment. You do not want to damage your relationship with them.
Ask them how they felt when you asked them the questions. Record details in your learning journal.
Try asking the effective "Why?" Experiment with your boss, your client, or your co-worker. Write on your journal the question you asked and how they responded to it.
Document their reaction. If you are comfortable, ask what caused their reaction and delve deeper into it.