We recently covered a big topic that no professional negotiator likes to talk about,….FEAR. Fear is the reason that we negotiate with ourselves prior to even going into a negotiation. We concede to fear all the time and ultimately that means we don’t get the great deals that we should. This post will cover the kinds of concessions we all make to fear, prior to a negotiation. It’s going to be a ‘connector’ post (you know the kind – kind of like the middle movie in trilogy, it’s not as cool as the others but it’s necessary for the story to make sense).
The types of concessions we make with ourselves are fairly straightforward. Generally speaking, sales and procurement people make the following four major concessions when negotiating with ourselves prior to a negotiation:
- Price – Before we even go into a negotiation, we decide whether what we are asking for is ‘reasonable’. “They’ll never pay that.”, a salesperson tells themselves. “It’s too low”, a procurement person says. “We’ll need to lower our demands to make them more reasonable”, a salesperson concedes. And they haven’t even met each other yet! And then we collectively feel really great about making the ‘logical’ decision to reduce our requests before we even move into the negotiation. Nothing about that decision is ‘logical’. We’ve conceded before being asked to concede. We reduced our request without even asking for the money from the other party. This may be the biggest lie we tell ourselves in all negotiations. Always Ask for More Than You Expect to Get! This is the golden rule of negotiating.
- Payment Terms – This is so ‘easy’ to give up on, isn’t it? Who cares about payment terms? The truth is, that good payment terms make or break businesses. CASH IS KING. And the sooner you get paid or the longer you can hold on to cash, the better. And yet we give up on them so easily. Most people don’t even think they’re conceding to much on payment terms and have already pre-decided that they’ll ‘let this one go’.
- Warranty – “Let’s go in with a ‘reasonable’ offer/request on warranty.” This is the same as story we tell ourselves as the price conversation. Why would we expose the company to increased financial obligations/financial risk by coming in with a higher/lower warranty than we could or should propose?
- Lead Time – Sorry sales folk, this one is directed to just the sales side. Salespeople commit to ridiculous lead time requests all the time and throw their operations/manufacturing teams right under the bus when they can’t meet them. This is a big failure area in sales. DO NOT COMMIT TO MORE THAN YOUR COMPANY CAN DELIVER IN ORDER TO GET THE SALE. Not only does this ruin the company’s reputation, but it makes salespeople look greasy.
We concede to fear all the time. And the sooner we come to terms with fear being perceived danger rather than danger itself, the sooner we can recognize what we make concessions on and how we make them. Recognition is the first step. And now that you know you concede to fear prior to the negotiation beginning. What are you going to to about it?