Negotiating Your Way Out of a Bad Situation
Excerpted from Principles of Negotiation (Entrepreneur Press)
Negotiating is the lifeblood of all businesses. It is hard to imagine commerce without negotiation. Frequently, our interactions are surprisingly positive. Often, our experiences are benign or indifferent. Other times, we encounter people we hope to never see again. Because negotiating involves people communicating in an attempt to get what they perceive they want or need, the opportunities for negative interactions and difficult moments increase exponentially.
When it comes to business negotiations, size doesn't matter. Large and small businesses encounter and overcome difficulties common to both. The following are some of the most frequent challenges that arise in business negotiations and how clever negotiators deal with them.
The Angry Customer
On a particularly busy Monday morning, a customer approaches you in the cosmetics aisle of your drugstore as you're taking inventory and ordering new stock. You've had a terrible morning; one of your clerks called in sick, you're already short-handed, you have deliveries in the back of the store that need to be stocked, and there's a growing line at the checkout stand. The customer appears agitated and, without introducing herself or waiting for you to finish the entry you're making into your computerized inventory device, she brusquely asks, "Are you the manager?" You reply, "I am. What can I do for you?" She proceeds to berate you about the long line at the checkout stand and the mistakes that were made with filling her prescription. This is an important moment for your business. Your immediate internal reaction is to tell her to go jump in the lake.
But you're managing your internal reaction, and you realize that you need an ongoing relationship with each customer in order for your business to remain profitable and grow. "I'm sorry you've had to wait this morning; we're short-handed. Tell me about your prescription; it's important for me that every customer's order be properly filled." She tells you that this is the third time the pharmacy has confused her name with that of her sister across town, and each time the staff has billed the wrong insurance, which causes the prescription to be rejected by the insurance company. This has resulted in a delay getting the prescription filled in addition to frustrating the customer. You thank the customer for pointing out the problem to you, and you tell her that you will get her name and insurance information and make sure that a special notice is placed at the pharmacy desk to attempt to avoid the problem in the future. "I hope that helps," you might say. The customer seems satisfied and thanks you. You take the extra step of personally taking care of her order at the checkout stand so she doesn't have to wait.
The odds are very good you've saved a customer. You've also discovered a systemic problem with your business that could be upsetting other customers. With some exceptions, the angry customer is experiencing frustrated expectations-the service or product she receives differs from that which she expects. This is a warning bell for the business. Whenever you have an angry customer, go below the line and find out what's happening before you do anything else. You might need to use cooperative negotiating techniques to avoid losing business. Whatever else you do, do not ignore or become angry with the customer before you find out what is going on, as this is how businesses lose customers. Cooperative negotiating techniques keep customers.
The Purchasing Deadline
An equipment, materials, or supplies distributor sales representative may insist that you make your purchase by a certain deadline or you'll lose either a discount or the chance to buy at all. Perhaps the sales representative is being honest with you. More often than not, however, the urgency has to do with pressure being put upon the sales representative to make a specific quota or sales target at that time. Time deadlines are a common sales technique to close deals. If you don't have a pressing need for the equipment, materials, or supplies, you can easily tell the sales representative that you're not ready to order and to check back with you next month.
If, however, you do need to make the purchase, you must respond to the time deadline strategically. For example, you might tell the sales representative that you're looking at some other suppliers who are more flexible on the timing of the purchase. This is responding to a tactic with a tactic. If the time deadline is artificial, the sales representative is likely to respond that his company will work with you on the timing of your order by keeping the discount open or the products available. Another approach is to tell the sales representative that you really like dealing with his company but that the time deadline technique doesn't work with you, and invite a different, more cooperative approach focused on when you need the product. This is responding to a tactic by identifying it and negotiating process.
If, by chance, the time deadline is real, you'll have to make a decision about what to do. Do you buy now or pass? The point is to know what your needs and your time frame are before the negotiation and plan accordingly. Just understand that the time deadline is frequently used as a tactic to impart a sense of urgency, manage expectations, and close deals.
Dealing With Intimidation
You own a retail flower shop. You're preparing an order for 50 arrangements to be delivered to a restaurant for a wedding. You have never worked with this customer before. Three days before the delivery date, the restaurant owner calls you in a panic. He needs the arrangements delivered a day earlier because his clients want to begin advance decorating of the banquet room. These are very wealthy clients, the restaurant owner says, so he assumes you can comply. You cannot, you tell him. You have extra help working with you to meet the existing deadline, and you will deliver the arrangements early on the agreed date. The restaurant owner tells you that if you cannot comply, "I'm not paying you a dime. Understood?"
This is a regrettably common situation for small businesses. What do you do? Remember, think strategically. Do you have something the customer needs? Apparently so, because he's attempting to intimidate you into delivering it early. Thus, although he's not being very nice about it, he has signaled to you that early delivery has value to him. Treat the threat as an invitation to a new negotiation. You should be thinking at this moment: Can I deliver the flowers early and if so, what can I get for doing so? You might then respond, "We've never worked together before, but threatening me is no way to get me to do anything. I would need to stay here all night with my crew and pay them overtime to do this. That means we will need to change the agreed price. If you need these tomorrow, I'll do it, but the price is $X, and I will need it on delivery."
Every crisis presents at least the possibility of an opportunity. That is how successful business owners turn lemons into lemonade when they negotiate.
Responding to Silence
A colleague of ours tells a tale of how a negotiation professional can be outmaneuvered. She was contacted by the manager of a nonprofit organization about conducting a negotiation training course for its employees. Our colleague was grateful for the call. The prospective client asked our colleague how much she charged for a two-day program. Our colleague said, "$2,000 per day." There was silence on the phone. What do you think happened during this pause? Our colleague filled the empty space with talk. "If that's too much for your organization, I can do it for $1,700 per day." Silence. "If that won't work, how about $1,500?" The manager said, "Okay." Our colleague was conducting the training session some months later when the topic of tactics came up. One of the students said that the manager used that tactic all the time, and it was amazing how she got vendors to charge less for their services. Our colleague realized she'd been worked by a professional. She wondered why she was teaching negotiation skills to these people when they were already learning from an expert.
In certain cultures, silence is a sign of respectful and thoughtful consideration of what has been said. Some Native American societies have this view of silence. In some instances, however, silence is being effectively used by experienced negotiators to extract concessions without giving up anything. The key to dealing with silence is silence itself. If the other negotiator grows silent in response to a proposal, be patient and silent. Remember, she who speaks first gives up too much. It may be hard to do this, but self-discipline is essential to strategic negotiating.
Want to learn more techniques to become a master negotiator? Get more tactics in Principles of Negotiation (Entrepreneur Press).