James offers Zabel a measly $2 per share. “Under these conditions”, starts off James, “… [James and co] are prepared to risk $2 a share”.
“2 bucks?”, questions Zabel, breaking out in a nervous laughter shocked by the ridiculously low offer. “You're out of your mind. The stock was trading at 79 a month ago. Our building alone is worth more than 2 bucks a share. My board will never accept this. There is no way I'm going to sell for 2 bucks a share.”
The government representative steps in to back up James, telling Zabel that the government could never justify a high price for his firm and that he has no other option. If he doesn’t sell then he faces bankruptcy.
But Zabel remains unmoved. “I'll take my chances in bankruptcy court before I sell to that barracuda” angrily responds Zabel.
A blanket of silence falls over the room. It looks like the deal is off. Neither party is willing to pay the price the other is wanting.
The Defining Moment
Realising that the negotiation has reached stalemate, James decides to do something completely unexpected. While he really wants to buy Zabel’s firm and knows he is getting a great deal, he decides to walk away.
“Then we have nothing more to talk about” says James as he gets up out of his chair and turns to walk away.
But just as James reaches the door, Zabel calls out "6". It’s a counter offer.
“3 and that's it” responds James.
“5”
“3”
“Alright, we'll call it an even 4. So we don't look so god damn pathetic.”
James pauses for a moment, looks at his colleague for confirmation, who nods back at him in agreement, before taking a step forward. “3, and not a dime more,” says James and locks in the deal.
There are two key negotiation techniques used in the scene above.
Negotiation Technique 1: Use Anchoring and Adjustment
James started at $2 and Zabel started at $6. In what is called Anchoring and Adjustment (see Those Clever People at Wikipedia and a little phenomenon called anchoring) initial values, regardless of how extreme, have a strong affect on final values. In this case, James used a $2 anchor, not because he thought he would get it for such a low price but because he knew it would get Zabel to start thinking low values. To counter that effect, Zabel used a $6 counter anchor to get James to start thinking higher values.
If you are selling, start by asking a high price. If you are buying, start with a low price. The technique will subtly but strongly influence the figure the other party has in their mind, therefore allowing you to get the best price.
Despite the effectiveness of the technique, however, many people will not feel comfortable asking for an excessively high or low figure because they don't want to appear unreasonable. That is, they don’t want to risk the Zabellian response, ‘are you out of your mind?’
For those people, negotiation technique two provides for a more comfortable approach.
Negotiation Technique 2: Walk Away
Who wins in a negotiation? The one who is willing to walk away.
Guess what? Be willing to walk away. Even if you are willing to pay the asking price, pretend like you can walk away. This technique is especially useful for people who don’t see themselves as hard line negotiators.
Why? Because you do not have to haggle, you do not have to offer unreasonable figures, and you do not have to have a big mouth to use this technique. All it requires is that you risk not making the purchase on that very day, which, for most purchases worth negotiating for, is worth risking for.
Here’s How You Do It:
Next time you are negotiating with a business supplier, nicely tell the person:
“Thanks for your help but the price you’re offering is beyond my budget” (or whatever reason you want to give).
“But I’ll tell you what I’ll do. I’ll leave you my name and number and if you can do me a better deal, then give me a call and we can take it from there."
Now if that is the best price the salesperson can do then you probably will not get a phone call, in which case you can just go back the next day or so and buy the product. But if they can do you a better deal then they will call you. After all, you have already proved to them that you are not willing to pay their asking price.
What is more, 9 times out of 10 you will not even have to come back. If the salesperson is able to do a better deal, they will usually offer it to you on the spot. It will probably be along the lines of, “alright let me try asking my manager again and see if we can do you a better deal”.
Having been on both sides of the negotiation table (as a salesperson and as a buyer), I have seen this technique work over and over for all deals great and small. It is not only one of the most powerful negotiation techniques, but also one of the easiest and comfortable to use, which makes it all the more useful in securing yourself the best deal.
I had a kind of funny realization, and this relates to yesterday’s post on selling information: a lot of the time, the people who are complaining that I’m selling something aren’t my buyer.
I’m Not Selling to You
I’m not selling to Geoff Livingston. I’m not selling to Danny Brown. I’m not selling to all the people whose panties are all in a bunch because I’ve chosen to sell information on how to use Google+ for your business. You’re not my buyer.
There are lots of people who are very interested in just learning a system. They will go into Google+ and look around, click some buttons, and figure it out just fine on their own. Lots of them do what I do for a living, in some form or another. Lots of them even do what I do better than me.
But I’m not selling to you.
My Buyer For a Product Like This
My buyer for a product like Learn Google+ For Business and Networking is someone who only recently felt comfortable getting on Twitter or Facebook, and who feels a bit frustrated that yet another social network came along. My buyer is a business professional who smells that there’s something cool going on with Google Plus and they want to participate, but they’d like a little hand-holding. My buyer is someone who feels comfortable with the platform, maybe, but who wants a few tips and tricks that maybe they’ve yet to figure out themselves. (I had someone on Twitter ask a very reasonable question about privacy settings and how Google indexes or doesn’t index certain posts).
The Arguments Are All Interesting
I’ve seen dozens of comments and posts and blogs saying “How someone can claim to be an expert after 250 hours is laughable.” What’s laughable is that I’m not saying I’m an expert. I’m saying that I’ve used the service a lot and I’ve got some ideas that I think are worth your time and some money.
By the way, most of the people making this angry comment are the people who sell their consulting, presumably for money. They’re just mad that I’m selling Google+ information because it’s too new, so I can’t possibly know anything.
It’s Okay. You Don’t Have to Buy
The funny part is that people spend time and calories complaining about this. They complain about every new educational thing that comes along and helps people better understand something they already know how to do. See where this is funny? It’s okay if you know how to do it, people complaining. I’m not selling to you. You don’t owe me a single cent. (Also funny is that you all subscribe to my blog and read it fairly consistently, if only to make yourself feel better about how much more noble you are, or some such.)
I’m not selling to you.
You, However
You, however, are welcome to check out Google+ for Business and Networking. I think it’s going to be a blast.
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