"The Behavior of Successful Negotiators"

In "The Behavior of Successful Negotiators" by Neil Rackham we learn specific characteristics of successful negotiators.

Forty-eight successful negotiators were studied over 102 separate negotiating sessions. Their approach and behavior was recorded and compared to a similar sample size of negotiators considered average.

Here are some of the characteristics the Huthwaite Research Group, Ltd. found in successful negotiators:

• In planning, successful negotiators gave over three times as much attention to common ground areas rather than conflict areas.

• The skilled negotiator showed twice as many comments on long term concerns rather than short term.

• Skilled negotiators were more likely to set upper and lower limits while average negotiators were more likely to plan around a fixed point.

• ".....skilled negotiators made immediate counter - proposals much less frequently than average negotiators."

• "The researchers found that skilled negotiators tended to give an advanced indication of the class of behavior they were about to use, instead of just asking, "How many units are there?" They would say, "Can I ask you a question? -- How many units are there?" giving a warning that a question was coming."

So there are a few ideas, and perhaps a good checklist for you to evaluate your negotiating behavior.

Jim Sauerwein

Price and Perceived Value

I imagine everyone has heard, "You get what you pay for." In the world of negotiating, we worry about real versus perceptual value. We wonder, "Do people feel better if they pay more?"

The person responsible for pricing at a large California winery once told me, "In the absence of their ability to evaluate quality, people will pay a higher price to insure quality!" Almost everyone has compared two similar items and has chosen the more expensive one so as not to make a mistake. Valid or not? We'll never know!

In the world of the consumer, we have an amazing example of this perception: the hamburger. Years ago, McDonald's decided to capture a larger market share by reducing the price of their hamburger from $0.99 to $0.49 in a special promotion. What happened? They didn't sell any hamburgers. People became suspicious of the product. McDonald's had reduced nothing but the perception of the value of the product.

There is a new hamburger war going on now that is exactly the opposite of McDonald's approach.

2002: DB Bistro Moderne in New York introduced a $29 hamburger. They sold about 200 per day.

2003: Old Homestead Steakhouse in New York introduced a kobe beef hamburger for $41.

Later in 2003: DB Bistro introduced as $50 version with truffles.

2007: A hotel in Jakarta, Indonesia added a $110 Kobe beef hamburger to its menu.

Ok, this is a little silly, but, each of these restaurants sells a bunch of hamburgers each day. Why? There is more to the buying motive than satisfying the needs of form, fit and function. People buy for a lot of reasons we will never be able to measure.

This provides a large "BEWARE!" when we negotiate on the buying side of the desk. There is a war between evaluating Total Cost and Psychological Gratification!

Jim Sauerwein

Price vs. Total Cost

In the May edition of Purchasing magazine there is a study of how buyers rated distributor's performance in 2005. The study reports an interesting correlation between price and the performance rating.

From the article: "Buyers who typically place orders with suppliers based on lowest price are less likely to give distributor suppliers good grades for performance in the past 12 months. Those who negotiate competitive prices and consider total cost when entering into an agreement with a distributor may view the suppliers in a different light."

The data in the study shows that Quality and Availability take precedence over price in evaluating distributor's overall rating. The weight of Total Cost has risen significantly while the weighting on Price, Service, Technical Assistance, Reputation and Inventory Carried have all gone down.

Buy smart, not cheap; sell on total cost! Negotiate the best agreement for both parties in the long term!

Jim Sauerwein

Mark Twain on Negotiating

Back to the subject of helping the other party earn their outcome:

In The Adventures of Tom Sawyer, Mark Twain tells us of Tom getting his reluctant friends to paint Aunt Polly's fence.

You all know the story, so I'll just remind you of the lesson it teaches. In Twain's words, "He had discovered a great law of human action, .....namely, that in order to make a man or a boy covet a thing, it is only necessary to make the thing difficult to attain."

Quick and easy negotiations often sow discontent in the mind of the other party. Satisfaction is what we are seeking!

Jim Sauerwein

Outnumbered?

I suspect every experienced negotiator has been caught by surprise when the other party turned out to outnumber them significantly. An attempt to intimidate is the usual reason we suspect for the imbalance in numbers.

Let's look at some of the reasons for being outnumbered that actually work to our advantage:

• This negotiation is extremely important to the other party.

• The other party is unprepared.

• The outcome affects multiple departments in the other party's organization.

• They are all present to protect individual parochial interests.

• It takes eight of them to make a decision.

• You have them scared.

• You will become a mentor during the negotiation; they are here to learn from you.

• You buy a good lunch.

Each of those reasons provides you the opportunity to say, "Oh boy! Look at all of them; how great for me!"

Jim Sauerwein