Casemore’s Critical Links June 11th, 2012 edition.

Why negotiations are more than just “win-win.”

Have you determined your preferred negotiation style? More importantly, have you been able to identify the style being applied by others?

This week I want to dispel the notion that a “win-win” negotiation is always the best possible outcome. The reality is there are times when the negotiation is an all-or-nothing event, and other times when you may be willing to sacrifice your position or needs in order to reach an agreement.

During my twenty years of professional negotiating, I have identified three different negotiation outcomes that can be applied depending on the circumstances and desired outcomes.

1. Give to get.

I recently wanted to upgrade my iPhone; however, since I was under an extended service plan, the penalty to leave Bell and move to another service provider would have been nearly $500. Not significant, but if I could avoid the cost and reach my intended outcome of an upgraded phone, why not? After escalating the issue within the customer service department at Bell, I found a supervisor who agreed to waive the cancellation fees and provide me with “new customer pricing” towards the purchase of a new iPhone ($99 purchase price). In turn I signed up for a new three-year agreement. In some circumstances, if reaching an agreement is absolutely necessary, prepare in advance by identifying what your specific needs are, and what you are willing to provide in return (be prepared to convince the other of the value of what you are offering)!

2. Don’t move.

After dropping my car off for service, the garage called me to advise that they could not complete the brake service as my brakes required replacement. I told the dealership to skip the brake service and complete the balance of service. After the dealership’s numerous failed attempts at convincing me that I needed a $960 brake job, they called me back to confirm that they could in fact proceed with the brake service, as I could likely get another 10,000 kms out of the existing brakes. In some circumstances, we have little to loose, and therefore maintaining our position (or standing our ground) can only lead to a positive outcome.

3. Open mind. 

The last negotiation approach is what I call the “open” negotiation. In these circumstances we are often in a position of letting ourselves be convinced that the outcome is actually necessary. We are not maintaining a position, but judging the circumstances based on the information presented at the time of negotiation. More often than not the outcome of this type of negotiation is what you may call an “impulse buy.” Think about the last time you went to a car dealership and ended up walking away with the car. In fact, I enjoy open-ended negotiations so much that my wife won’t let me stop by dealerships anymore!

Supply Strategy Quiz:

Situation: You have made the decision to purchase a new piece of equipment to improve your productivity. The equipment is custom, but not unique. Despite your ability to get along without the equipment, financing rates are low and your credit line is available. Understanding that your greatest negotiation leverage exists when you are maintaining a “position” or “open,” how might you best prepare to achieve the lowest possible price for the equipment?

Your options are:

1. Research and identify alternate sources of similar equipment that will meet your requirements (although they may not be optimal) in order to leverage price and provide options in the event that you are unsuccessful in reaching  a “deal” in the purchase of your preferred equipment.
2. Be prepared to accept the best possible price you are offered, as you are not willing to sacrifice this piece of equipment. You have decided this is exactly what you need, and the current owner is the only option you have found so far.
3. Get out your cheque book and negotiate solely on price. Be prepared to write a cheque on the spot or walk away.

Think about the situation carefully, and we will review the best option next week!

© Shawn Casemore 2012. All rights reserved.