January 8, 2024

CONCESSION STRATEGY

Throughout the course of the negotiation process you are bound to grant the other party concessions. When you grant a concession, the response you get can be impacted by the concession you just gave. For example, if you make a large concession, instead of being satisfied, the other party often reacts by making greater demands. They think, “Wow, if I just got that much, there is a lot more to be had.”

Consider giving small concessions to get what you want. Most of us want to be fair. If I make four concessions to you, you will feel obligated to make at least one to me. The central question in negotiation is not whether I made four and you made one, but whether your one was more valuable than my four. Many a negotiator has done well by making a series of minor concessions and then saying, “Now, what are you going to do for me?” That’s the one point that really matters.

In negotiations, everything we do or say affects, and is in turn affected by, what the other party does or says. It’s like a chain reaction!

Where does all this lead us? You have to think through the effect each of your concessions will have on the other person. Ask yourself,

• “If I make this concession, how are they likely to react?”
• “What should I do next?”
• “If I make this concession, is there anything I can ask for in return?”
• “How is this concession going to bring us closer to agreement?”
• “Is there anything I can give that they will highly value, but really costs me little?”

Little questions like these help me see my concession from the other person’s viewpoint. This helps me develop my concession strategy.

Let’s Split the Difference.

Splitting the difference is a quick way to reach agreement. But be careful, it can seduce you. After all, people are used to giving and getting equal shares at home, at restaurants, and at birthday parties. Splitting in the middle is simple. Not splitting in the middle is full of problems. It brings up a tough question: “If not in the middle, where else?”

The question “Where else?” is interesting. Things that are equal are not necessarily equitable. Splitting the difference is equal. It may be a fast way to reach an agreement. But it may not be equitable, or fair.

I know a buyer who does well using the split approach. He makes a very low starting offer, raises it only slightly, and then says, “Okay, let’s split the difference.” The buyer knows that it’s hard for a salesperson to say no to such a reasonable request. The salesperson who gets sucked into the split finds he or she is giving too much away.

The next time somebody says, “Let’s split the difference,” try saying, “No, I can’t. And here’s why.” Then provide a good explanation as to what is equitable. You will be surprised at how often you get more than half.

Your concession making should provide satisfaction to the other party and lead you to an agreement. However, some concessions have the potential of doing just the opposite. Take some time before your negotiation to plan a concession strategy. It really helps!