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There are several rules to negotiating but the first one is the most important, the easiest to abide by and the one most frequently broken.
Years ago I had a manager who could never be found in his office. He was always outside smoking. For the two years I reported to him my biggest take alway was to quit smoking and to do it right then and there. Good lord he smoked a lot. I’m happy to report I’ve been smoke free ever since.
While The Marlboro Manager offered a good lesson in health, he also taught me the first lesson in negotiating. One day as I was walking in from lunch, I passed him as he was walking out for yet another cigarette. He asked if one of my deals was coming in (this was his form of a pipeline review). I explained I’d given my contact two options and waiting to hear back from them. Smokey The Bear replied in a very husky voice “he who says a number first loses” and he walked away.
The 1st rule of negotiating: He who says a number first loses.
With that one piece of advice I’d learned the most important rule of negotiation – never say a number (discount) or option (billing terms, shorter contract, etc.) first. Smokey was referring to leverage. If you’ve ever walked into a car dealership, the first thing you’ll be ask is “how much do you want for the trade in?”. The sales person is trained to get the buyer to say a number first. Don’t answer; instead tell them you aren’t sure. The most fun part is the sales person is not trained on what to do if you don’t give a number first.
Think of it as if it were a poker game. One doesn’t want the other player to know what cards are in your hand. As soon as you tell the other person a number, you’re essentially telling them one of your cards. You have now given them leverage. Instead you should find out what’s in their hand first. Here’s how:
When a prospect asks about options, promotions, discounts etc. there are two paths to choose from. The rep can either tell the prospect there are no options, discounts or promotions. The other option is to play ball. Here’s how:
1) Do Not Answer - The are asking you to break the first rule and show your hand and say a number or options firsyt. Hence giving them the leverage.
2) Acknowledge Without Committing - Don’t ignore the question but offer no details. Disarm them, reassure and seem accommodating by saying something generic “I’d be glad to come up with some customized packaging”. You’ve committed to nothing specific at this point.
3) Tipping the Other Hand First - Now get them to show their card and have them say a number or option first “What do you have in mind?”
This is a great way to have a more balanced negotiation. The last thing a rep would want to do is offer a discount when the prospect needed billing installments. Now the rep is stuck having to honor both! Knowledge is leverage and as a sales person you have the tables in your favor.
Stay tuned! Tomorrow's Article:
5 Step Guide to Bombing Pricing Negotiations