Compromise is touted as a tactic that is a normal part of the negotiation process. It’s a “negotiation-saver.” When you reach an impasse, it’s as simple as compromise, and the deal is done. But it couldn’t be further from the truth. Allan Tsang shares his thoughts on the topic in an episode of Negotiations Ninja.
Myth: Any deal is better than no deal
Let’s say you want to sell a widget at $100. Your cost of goods is $50. You know you can give a customer a 25% discount—but that means you have to sell twice as much. You have to work harder to make less. Where’s the win there? A bad deal is much worse than no deal. If you’re losing money, you’re losing money faster than you were before. It doesn’t make sense, and it’s faulty thinking.
This mentality is usually paired with quotas. Allan points out that when you have quotas to hit, you feel pressured to compromise. You want to hit your numbers, so you make a few deals at the lowest possible amount to hit your quota. But salespeople are making false promises. Their customers are getting ticked off. The salesperson has moved on, but the customers are upset and suing the company. The company now has to hire people to put in new features and placate their angry customers.
Myth: You have to concede on price to get the deal
One of Allan’s students bought a poor service. So he called them and said that they didn’t deliver what they promised. The first thing he was told was, “What if I gave you a 20% discount and we can continue?” But he still isn’t getting what he wants! You’d rather pay more to get something that works, right?
Another of Allan’s clients had a project worth millions that failed—it didn’t deliver what his customer hoped it would. Some of the blame fell on him, but a lot of the blame went to the customer making demands. They had to part ways. But Allan’s client had to show the value of what he did and the role the customer had in the failure.
The client came back and demanded to continue and added ridiculous terms to their contract. They said they wouldn’t pay the whole amount of the renegotiated terms and would reserve a certain percentage to pay them once the results were complete. Of course, Allan’s client wasn’t going to accept. But instead of walking away, they renegotiated with terms acceptable to Allan’s client. They weren’t stuck with a bad deal. They didn’t concede on price and stuck to what they were worth.
Myth: Compromise is a good thing
I believe it takes two parties to compromise. Both have to give something up for it to be a compromise. If only one side is giving something up, it’s a concession. Allan had always seen it as unilateral, that “compromise” and “concession” could be used interchangeably.
Compromising on the whole deal—where both parties have to make a ton of concessions to agree—doesn’t make a ton of sense. That’s why Allan has his clients define a mission and purpose for their company. It gives them something to refer back to and say, “Am I compromising on my mission? Is taking less money compromising my mission?” By conceding on terms, are you jeopardizing your mission and purpose? If you are, you can’t do it. You can’t concede.
If it’s a small part of a negotiation that both parties have to concede to get a bigger deal done, it may be worth it. Maybe neither party is happy about it, but it gets the whole deal to work. But you shouldn’t have to compromise on the whole deal to make it work. Compromise can be useful, but it’s a myth that it’s a good thing. Compromise sounds good. It sounds fair. But when you dive into it, it doesn’t make sense.
What are some other negotiation myths that have no place in the practice? Why is it so important that you clearly define and understand what terminology actually means? Learn more from Allan Tsang in episode #207 of the Negotiations Ninja podcast!