deal tactics Archives - The NegotiationThe Negotiation

Want to end the back and forth? Draw the line!

November 14, 2016

I recently was negotiating a settlement on behalf of a client. There was an issue that came up and the escrow money that was being held was now frozen. My client offered $5k “go away money”, the opposing side wanted $300K, then after much going back and forth demanded $60K.

My client was still outraged and was staring in the face of a long drawn out litigation that could cost tens of thousands of dollars. I suggested that the other side was looking at the same costs and it was time to show them the line.

We gave them till 5PM on Friday (48 hours) to accept $5,500 or they should file suit. They agreed at 4:30pm in the 47th hour.

The strategy of drawing the line is a dangerous one. But sometimes effective as it was in this case. Going up $500 when they were demanding tens or thousands more showed them a few things. One, we were making a move and acknowledging their move to $60k from the ridiculous $300k. The other messages were that we had reached our maximum and other attempts to have up increase our settlement would result in mere pennies.

Drawing the line

We added the deadline tactic and between the two resolved the issue quickly after weeks and weeks of back and forth. Again, this is a dangerous game and you need to be ready to act on your threat of what will transpire if the cross the line. And once the line in drawn, you cannot move it or speak to them again.

This time it worked.

Andy Cagnetta owns and operates Transworld Business Advisors www.tworld.com. He joined the company as a sales associate and later purchased it. Transworld is an international franchise business and franchise brokerage, with thousands of businesses for sale and franchisees in the United States and Internationally.

Business Sales, Negotiation

Make them feel important! Because they are!

July 26, 2016

Who’s the most important person in a negotiation? You? Nope….if you feel that way, and they perceive you do not value their position or them as a person, you will most likely lose or not get the sale.

You must make them feel important, and you need to believe that they are. But this is probably another 90/10 rule, as it is much more powerful for your subject/opponent/potential customer to feel important. You believing it is probably less crucial, especially if you are a good actor.

A VP of sales I used to work with was nick named Rambo, because he never lost the deal. He slayed meetings and I couldn’t figure out why. Our corporate psychologist (longer story) clued me in. He said to me “he’s like Eddie Haskel, over complimenting his potential customers”.

Once I was wise to his ways, it was amazing to watch. He was often over the top, spreading compliments out in meetings extremely liberally. Almost sucking up to the point of it being sickening. And in the end…..it worked like magic.

He would goo and gaa over baby pictures, fawn over someones good looks, be amazed at awards on the wall, etc etc. And we would walk out with the order every time.

It’s human nature!

Now I don’t recommend you be exactly like Eddie or Rambo as often they were eventually seen as disingenuous. But it won’t hurt to be generously kind, complimentary, and excited about the subject of your attention’s life, accomplishments, business, etc etc.

And in the end, if you shower them with compliments and positive vibes, you might just get what you are seeking from them.

Try it, they’ll like it!

Negotiation

Authority Tactics

August 18, 2014

In negotiations there are three distinct authority tactic circumstances. No authority, limited authority and full authority. Each comes with assets and liabilities in the negotiation process.

No Authority

If you have no authority to negotiate you may have a great advantage. Say your a salesperson at a company and you are selling something to a potential client. Once you present the value proposition and it is turned down, and if you have no authority to adjust it, you have the ability to probe and ask “what would it take for the proposal/price to be acceptable”. Having no authority to change the proposal is an advantage in there is no pressure to be swayed by the prospective client. “Passing the buck”, “being the good cop”, “blaming a third party” are tools of this circumstance that can be used expertly.

Who me?? I need to ask corporate!

Limited Authority

Just as it is defined, as a manager or person selling for a company, you may have some leeway to give discounts or extend more favorable terms to clients in order to close deals. Again this can be a powerful tool for the salesperson, but it can also be a curse. Many times limited authority leads to just “folding like a cheap chair” very quickly to try to appease clients. (I will talk about discounting in a future post). But limited authority can be a great way to ease a possible bottleneck in a sales chain. It also transfers some of the power and work away from the person that has full authority, which can again relieve some stress on a company’s sales systems.

Full Authority

“The Buck Stops Here”! Your the CEO or President and have full authority to make changes to proposals or prices and your client knows it. I have seen many business owners put Vice President on their business cards just for this reason. I don’t buy that practice, as I have plenty of reasons not to discount my fees. But for this reason I do not like to attend closings. Last minute hitches or expenses can cost a full authority figure lots of money! Be strong business owners/CEOs! Often this can be powerful in multi party negotiations. When the decision finally reaches the top authority’s desk and is rejected, the client may feel satisfied that it was raised to the highest level.

Understand your and your opponent’s authority level in a negotiation and you may be at a distinct advantage to gain insight and leverage!

Negotiation

Escalation or the Haircut – often a negotiation dirty play

July 24, 2014

Often times in a negotiation the leverage changes from one party to another. Think about in business sales or buying a car, once the buyer tips their hand that they have chosen a certain deal, the sell side can sometimes be emboldened into applying what I feel is a dirty trick. Escalation.

What ever the excuse is, the seller (in this case) would raise the price or terms even though the deal had been agreed to. They often use an authority tactic, think about the car salesperson that goes back to the “managers office” and comes back with a slightly elevated monthly payment. Full of apologies that the deal they thought they could offer was expired, or misstated.

Dirty tactics include escalation or haircuts

We also see the haircut tactic employed by the buy side. Imagine a buyer of a business under a contract that has a due diligence period contingency. The buyer then spends a couple of weeks crunching the numbers and announces they will not move forward due to some unforeseen liability or risk. They then renegotiate the price or terms. Sometimes an escalation or haircut can be legit. Often demand could change for a deal or a unforeseen risk could pop up unbeknownst to either party.

However, in my experience I often see this tactic used in bad faith and planned way in advance. I have even seen it used POST closing. Such as when people use an item and return it, taking advantage of retailers generous return policy. Or buyers that will refuse to pay earn-outs or notes just in order to renegotiate.

The best defense for this tactic is to have options. Be ready to walk from a deal at anytime. And to defend against post closing haircuts, have good paperwork and documentation in any deal! And have good legal and intermediary team.

Andy Cagnetta owns and operates Transworld Business Advisors. He joined the company as a sales associate and later purchased it. Transworld is an international franchise business and franchise brokerage, with thousands of businesses for sale and franchisees in the United States and Internationally.

Negotiation

Negotiation – Let’s start here

May 24, 2014

I started off my negotiation specific blogs with one of my favorite tactics, the flinch. I really should have started at the beginning. Studying negotiation has been a fascination for me, and in my business, it is a subject not to be taken lightly. Sure, we can have some fun along the way when we make our deals, but many times serious issues and big money is at stake. Therefore I will try to keep this blog light to entertain, but I do understand that we often negotiate serious issues in business and personal lives.

That is why I have committed myself to the subject. I watch and note different styles, tactics, how they are applied, and the subsequent results. Many of my lessons and teachings have come from the masters, so understand you may have seen some of this information before. But I hope to add some context and humor to the quick snippets to add to your knowledge of negotiation.

First step in a negotiation is understanding your role and context. YOU DON’T MATTER! Once you can grasp that your negotiation partner/opponent most often does not give a hoot about you or your objectives, you can get to work…and with a huge advantage!

It’s not about you!

In the beginning it is all about gathering and understanding your opponent’s needs and wants. (I will use opponent in the context that this is not always a competition and sometimes it could be working with someone with similar goals, like in a partnership. But I will be consistent with saying the person is your opponent).

We will use this information to start to shape our strategic plans in our quest to reach our goals. Next time we will take about gathering information.

Negotiation

Negotiation Tactic – The Flinch

May 18, 2014

WHAT???!!!! OH MY!!! THAT’S UNBELIEVABLE!

You know the flinch! People do it all the time, kids are masters at it. When a kid wants something, a flinch could turn into a tantrum. Say like wanting a piece of candy in the check out line at a store. The child starts with a whine that escalates into a writhing spasm on the floor….and often people acquiesce and give them what they want.

As adults in a professional setting we can’t throw tantrums. But we can flinch, and as a negotiation tactic, it is a wonderful tool. And you need to know how to use it, deliver it, and how to deflect it when used on you.

The basic concept is when a value proposition is rendered by someone for your consideration, you flinch as if struck by a bolt of lightning. Since the vast majority of people have empathy for others, the proposer may quickly relent or try to ease your pain. Tony Robbins talks a lot about pain avoidance as a tool to create success and habit change. People don’t like pain and will do anything to avoid it, even empathetic pain.

The flinch can be outrageous and bombastic, such as waiving arms, shrieking, trembling hands, stomping a foot, etc…or it can be subtle, perhaps a sigh, eye roll, tsking, or shaking of your head. Whatever physical or verbal signs you use, and it could depend on the situation and surrounding, the flinch works. Try it out.

I do it instinctively now. I was once getting a part for my dryer at the direction of a friend who owned a laundry. I was going to buy a new dryer, but my friend said for a $15 kit, I could repair my dryer. So off to the dryer part store I went. I was at the counter and asked for the appropriate kit, and the store clerk retrieved it and said it was $35. I exclaimed, I guess a tad loudly and with a flinch, $35???!!! He immediately panicked and said “why, how much did you think it was?”. I told him $15. He concernedly asked where did I see that price. I didn’t want to say “my friend told me”, so I said “the internet, I guess” He went running to his computer and proceeded to look for a matching price online. Even after I told him $35 was fine (I needed to get home and bail out my wife with two babies creating multiple loads of laundry…hourly) he insisted on doing more research. He finally said he found a site that had a price of $23 and could match it.

The savings wasn’t very exciting, but watching the psychology of the effect of a simple flinch was. And trust me the flinch works in a professional setting as well. You need to learn how to deliver it professionally, effectively and sincerely. And it doesn’t have to be disingenuous. If you are uncomfortable with a proposition or offer, you just need to verbally and physically communicate that to the person delivering the offer via a flinch.

The flinch is all about communicating pain and discomfort.

If the flinch is used on you, you should react accordingly. Either the subject is really pained by your offer, or they are feigning to be, either way it indicates you have some work to do. You could also flinch back. And if the flinching escalates back and forth…I think that is called an argument. Again, an indication you have some work to do.

It’s most effective to flinch in person, but you can do it on the phone, or even in writing. Be careful of email/text flinching as it is very difficult to communicate flinches in writing and maintain a professional or nonthreatening tone.

Remember, using negotiation tactics takes practice. So try some flinching on some of your next transactions. Also watch for others using the tactic on you. Happy deal making!