THE NEW SCHOOL NEGOTIATING OUTLINE

THE NEW SCHOOL 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.

THE NEW SCHOOL The Five Elements in the Negotiating and Closing Process 1. Your Negotiating Approach a. Information-Based I. 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-Based c. Ethical d. Flexible

THE NEW SCHOOL 2. Preparation a. Assess the Situation I. Balanced concerns II. Relationships III. Transactions IV. Tacit coordination b. Assess Negotiating Styles I. Competitors * II. Accommodators III. Conflict Avoiders IV. Problem Solvers V. Cooperators *

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

THE NEW SCHOOL 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.

THE NEW SCHOOL III. Determine Targets Rule: Make a commitment to your objectives and targets, write them down and tell someone about them.

THE NEW SCHOOL d. Assess Leverage I. 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.

THE NEW SCHOOL 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.)

THE NEW SCHOOL e. Estimate the Ballpark, commit to Walk- Always and Set Anchors I. 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.

THE NEW SCHOOL 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.

THE NEW SCHOOL f. Determining Bargaining Tactics I. 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.

THE NEW SCHOOL 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.

THE NEW SCHOOL 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.

THE NEW SCHOOL 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.

THE NEW SCHOOL 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.

THE NEW SCHOOL 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.

THE NEW SCHOOL Rule: Negotiate face-to-face whenever possible. Rule: If you have to negotiate on the phone, you be the caller.

THE NEW SCHOOL 4. Bargaining a. 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.

THE NEW SCHOOL b. Open I. 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.

THE NEW SCHOOL 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.

THE NEW SCHOOL c. Frames Rule: Always frame all of your offers appropriately.

THE NEW SCHOOL 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.

THE NEW SCHOOL 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 II 1 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.

THE NEW SCHOOL d. Signaling Leverage Rule: Confidence is everything; whoever blinks first wins. Rule: If you have leverage, use it gently, but use it.

THE NEW SCHOOL 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.

THE NEW SCHOOL 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.

THE NEW SCHOOL 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% % 0 50% % % % 20% 30% 40% 6. 30% 20% 10% 5%

THE NEW SCHOOL 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.

THE NEW SCHOOL II. Closing and Gaining Commitment Rule: Expect to close. Rule: When you walk-away, always leave the door open.

THE NEW SCHOOL 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.

THE NEW SCHOOL 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.

THE NEW SCHOOL 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.

THE NEW SCHOOL 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.

THE NEW SCHOOL 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

THE NEW SCHOOL G. Get Commitment: Social Ritual Public Announcement Accountability (contract) Simultaneous Exchange Rule: Once you get commitment, say ”thank you,” shut up and leave quickly.

THE NEW SCHOOL III. Putting It All Together: Creating a Negotiating and Closing Plan Rule: Always rehearse your negotiating and closing plan. Rule: After every negotiating, debrief.

THE NEW SCHOOL Further Study Read Media Selling, 4 th edition, Chapter 12 (“Negotiating and Closing”) available at Download, read and study the “ Negotiating and Closing Outline ” available at Download, read and study the “ Negotiating Styles and Patterns ” available at