Folks, let’s be honest with each other,….PERCEPTION IS EVERYTHING! Especially in negotiation. And, raising your perceived value is critical to negotiating good deals. What do I mean by perceived value? How you value your service or product and how a buyer values your service or product may be two completely different things. You may think that your product is the best thing since sliced bread and that people would be fools not to buy it, but a buyer may perceive it as a bad product, second tier, lower grade, or worse …not necessary. This is a key stumbling block that life insurance and financial sales folk have. Try to convince someone that something that they’ve never even thought of before is critical and worth paying for. Tough to do. Even if someone is willing to buy your product, are they willing to buy it at the price you want to sell it for? Can you raise the perceived value of what you are selling so that the buyer is willing to fork over hard earned cash to buy your product? Or, if you’re buying something, can you reduce how valuable the seller perceives their product to be so you can get it for cheaper?
A key principle that I use often to either raise the perceived value or reduce the perceived value of something is called “conditioning”. How do you condition (change the perception of the other side) that what they are offering is less valuable than they think or what you are offering is more valuable?
Note: Conditioning is a, generally speaking, a long term negotiating play on something that generally has a long contact to close cycle. Conditioning takes a long time and it’s only strengthened by repetitive contact.
Think about when you apply for a job. When they ask you how much money you want as a salary, you ask for more than what you expect. This raises YOUR perceived value in the mind of the person hiring. This is why you always ask for more than you expect to get (well it’s not the only reason, but it’s an important one).
No matter what you’re selling, whether it be yourself in an interview, or a product or service that you sell, you should always be trying to raise that product/service’s perceived value. The same goes for buying. Raise your perceived value as a buyer and try to reduce the perceived value in the product the seller is selling. This kind of mental conditioning of the other party over a series of meetings can generate huge results because you’re basically convincing the other party to give you a better deal without even asking for one. A boss I used to have used to do this all the time, sending out negative economic news to his employees to try to condition them not to ask for raises or bonuses. Terrible, but true.
Think of it this way: If you’re a seller, and you can reduce the perceived value of all the alternatives (competition) to the product that you’re selling in the mind of the buyer, while at the same time raising your product’s perceived value, how much more likely is it that the buyer will buy your product? Probably a lot more likely. Good negotiators will try to minimize the value and manipulate your perception of the value of your alternatives all the time. If you have not properly prepared, you might be easily persuaded. The first thing I do in a negotiation after I have assessed your best alternatives correctly is to try minimize them. Perception is everything. If you think you have no options or alternatives, I own the negotiation.
The value of your product, if you’re selling something, or the alternatives you’re considering, if you’re buying something, should only be affected by fact and objective research. They should never be affected by someone telling you how invaluable your alternatives are. Think about how teens use peer pressure. If your buddy, when you were a teen wanted you to do something, this is how the conversation usually went:
“What!?!, you don’t smoke/drink/do drugs/[insert rebellious activity here]. Dude, that’s ridiculous. It’s awesome! When you smoke/drink/do drugs/[insert rebellious activity here] it gives you the best feeling in the world! All the cool kids are doing it. Jenny even does it (the not so cool girl that is always trying to be in the cool group). Here, try some…”
Let’s break down this conversation. First of all, the teen is actively surprised and likely has a sharp physical reaction to their friend who doesn’t smoke/drink/do drugs/[insert rebellious activity here]. This is called flinching. When you flinch, you create a negative perception in the mind of the person making you’re talking to that they’re not making you very happy and will likely have to change their approach if they want your approval. And what do teens (and all of us) desperately crave? That’s right, the approval of others, but more than that, they don’t want their friend’s disapproval.
Then the teen tells their friend that their decision not to drink is ridiculous, again minimizing their friends alternatives and increasing the perceived value of smoking/drinking/doing drugs.
The teen then follows with some features and benefits of smoking/drinking/doing drugs, and tells you that all the cool kids are doing it. Again, raising the perceived value of what they are offering. Even the uncool girl Jenny is doing it. Which basically means if you’re not doing it, you’re less cool than Jenny. Then the teen makes the offer,…and it’s a free trial. Offering something on a free or low cost trial is a yet another great way to increase the perceived value of what you’re selling because it again makes the buyer think that if the seller is willing to offer it for free, then the seller must be really confident in the product.
Now let’s use the same example, but replace the language with a product/service that you’re selling. Let’s use life insurance.
“Oh, you don’t have life insurance?!? (said with genuine shock and surprise). Don’t you think that may be a poor financial decision? (implying that without having life insurance they are continuing to make poor financial decisions). You know, life insurance helps to provide for your family so they won’t go poor if you die. The smart financial people I know have a financial plans that begin with the strong foundation of life insurance. Even if you don’t have a financial plan, you should have life insurance. Why don’t I show a few really low cost options that will help secure the financial future of your family.”
Do you see now? Do you see how your alternative (of not having life insurance) is being minimized and the value of having life insurance has been raised to the point of a “must have”. These are fairly advanced negotiating tactics, but it’s so important that you’re aware of them, because even if you don’t use them, you need to be able to recognize them so that your perception of your offerings or alternatives don’t get minimized. And so the question naturally becomes, how do you stop the other party from minimizing the perceived value of your offerings or alternatives?
Write down your offering and you best alternative on a piece of paper and carry it in your pocket before you go into a negotiation. If you feel like you’re getting persuaded and that your perceived value of what you are offering or considering as alternatives are being reduced, call a timeout/bathroom break, walk out the room and check the paper and remind yourself of what you came in for. Seriously. I’m not kidding. I’ve done this. It works.
You can condition another party (generally over a series of meetings) to believe that what they are offering or the alternatives they they are considering is less valuable than they believe. At the same time, you can also raise the perceived value of what it is you’re offering in the mind of the other party. I wouldn’t recommend trying this without some coaching first, but at least now you’ll be able to recognize it when it happens.