The Trading Game

Negotiation

The Trading Game
by Bernard Zick



If I increase the size of my order, how much will you reduce the cost per unit? You have probably been asked questions like that in any negotiation. When you give something, you expect to get something in return. Asking for (and getting) trade-offs is part of the negotiation process; it is the third and final step in the Target Negotiation model. If you want to be successful in your negotiations, you have to understand, practice, and become proficient in trading concessions.

Speak the Right Language

Asking or demanding that you get more of what the other side has, whether money or goods or services, is usually met with resistance. The stronger the demand, the greater the resistance-even if you are giving up products or cash. Most people spend most of their time concentrating on what they can do to benefit themselves. So, if you want to get their attention, you have to speak a "language" they understand.

In other words, translate your request for more of anything in terms of how your request benefits them. For example, instead of asking for credit or extended payment terms just because your company needs the money, why not mention the additional credit will allow you to buy more of their products. Or you could share the fact that a lower price would allow you to bid on another job, which would require another order, sooner than expected.

Whatever you ask for: 1) have a reason and 2) state your request in terms of benefits for the person or company you are negotiating with. Otherwise, the other side may ignore your request. Most of us hear too much of what somebody else wants from us everyday. People will listen to what you want to give them. When you describe the benefits they will receive, you are speaking their language.

Facing Tough Demands

Sometimes you face difficult or economically unfeasible demands from the other side. For example, they may demand a 25% price reduction due to competition. Rather than categorically refusing such a request, determine more precisely their real needs.

Companies frequently modify product specifications, such as leaving off nice-to-have features that aren't necessary for some customers. You can redesign services, too. When companies have a limited budget, we pare down our two-day presentation to a one-day workshop. Be prepared to spot a bold attempt from the other side to get a better deal, instead of legitimate competitive pressures or actual limitations. Sometimes a friendly, half-serious comment from you, such as, "How much lower quality do you want?" puts the deal back in perspective. Find out the real concerns and don't hesitate to use humor to dismiss unreasonable demands.

If you still can't budge the other person from a difficult or impossible request, make one yourself. Go ahead and demand something you know they cannot afford to give you. This technique will help rebalance the negotiations and help you evaluate their priorities. It also lets them know you will not make the major concession they want without a reciprocal concession. If you are unable to match competitive pricing, you still have several choices. Assure the customer that they received the lowest price available, or as low as you offer to anyone else. Review the buyer's objectives with him/her. Get their commitment to each buying objective. Then (and only then) match the benefits of your product or service to this list. Show them choosing you as a supplier best meets their needs. Reinforce the decision by offering endorsements or testimonials from satisfied customers. Make sure they value the concessions you have already offered.

Red or Green?

You will see better results from your negotiations if you always offer the other side a choice. "Do you want the red or the green widget?" Borrowed from the retail sales business, this approach focuses the person's attention on making a choice between two alternatives-both favorable to you-rather than a yes/no decision. One of my favorites is to offer a seller a low cash price or a higher price with installment terms or an agreement with several contingencies. Sometimes, you may not care which alternative they choose. You win either way.

Particularly effective in real estate sales, the multiple-choice offering increases your chances of getting what you want. Caution: don't offer a smorgasbord of choices. Too many choices are confusing. Limit the alternatives to two or three. Two works best.

Timing

What you gave the other party last week, last year or even the last time you met is history. Don't expect to get any consideration for what you already gave up. Similarly, never make a concession thinking your efforts will be appreciated in the future. The first rule is never give away anything without receiving some reciprocal contribution from the other person. However, the reverse is not necessary. Just because you receive a price break or better terms, or any benefit, doesn't mean you have to give up anything. Although, the other side may expect something. If they don't ask, don't offer.

When you must make a concession, start small and get one in return. Concessions don't have to be of equal value. Remember, what you value the other side may not and vice versa. Training, product support, sharing research and development data, warranties or product service frequently are more valuable to the buyer and, sometimes, are taken for granted by the seller. Companies have different cost-accounting centers. So, an account executive who offers additional service or support may not have to place a dollar value on it. Whether you are selling or buying, attribute the appropriate value for all you offer in the transaction-especially for price buyers (those that only say they want to compare price). Offer to give up what the other side values and you don't; ask for more of what you value.

The People Side

Trading concessions is an important part of satisfying the people needs in a negotiation. Don't give your best offer and then use a "take it or leave it" approach. You may think it's more than fair, and it might be, but it won't appear that way to the other side. Negotiation is building and maintaining a relationship as well as exchanging concessions. Of particular importance in the trading-off phase is the need to keep personalities and the subject of the negotiation separate. You frequently see attorneys illustrate this key principle. They argue over a point, zealously advancing their clients' interests, then go have a friendly lunch together.

Don't attribute the other side's offers or rejections to the person, only to their cause. Don't be offended when your customer tells you the competition offered them a lower price, or when they imply you are making excessive profits. Regardless of how heated a negotiation session may become, preserve the communication channel so that you may continue to negotiate effectively. Interject humor to keep exchanges friendly. If necessary, substitute negotiators so the negotiation doesn't suffer when a personal relationship deteriorates.

Putting It Together

If you always couch your requests in terms of benefits for the other side, offer alternatives, assign values to your concessions and keep the personal relationship between negotiators strong, you will win the trading game.


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Deal-Maker" Bernard Zick, a top Business Growth Expert, has spoken to over 250,000 top leaders in America. His expertise is widely recognized, and he is considered a master negotiator. You can contact "Deal-Maker" Zick at www.zick.com. His best-selling bo