One of the most underrated skills in negotiating is gambling.
There's no reward without risk. The strongest position to negotiate from is one where you don't care if you get the deal or not. This gives the person on the other side of the table little or no power over you. Unfortunately most of us can't afford to be this cavalier as the deal is nearly always important, if not vital, to us. As such the art of gambling can be difficult to master, but it's still a powerful tool for any good negotiator.
There are many moments in a negotiation where a calculated risk is advisable. Here are just a few:
1 Stick to your guns. Bad negotiators constantly fail at this point in the process and it inevitably leads to them getting less. Any good buyer will push for a better deal. Even the village idiot knows how to make a counter-offer. It's imperative that you stick to your guns and justify your position at least once. Doing this gives you valuable intel about how badly the other person wants what they've asked for. It also shows them that you're serious about what you've pitched, and that it's hard for you to reduce your price / offering. It's amazing how often this one simple act of gambling leads to the deal getting done. Many buyers will push once, then fold.
2 Pitch hard. Always ask for more than you think you’ll get. Negotiating is a game. Admittedly some games are more serious than others depending on what's being negotiated, but don't fool yourself into thinking that both parties aren't using tactics to try and get what they want. One of the biggest mistakes rookie negotiators make is to take what the other person is saying as God's own truth. For starters there's rarely such a thing as truth, only perspective. Even the most amateur negotiator will fudge the truth in order to get what they want. When a buyer walks into a car dealership with $20,000 in their pocket and the salesperson asks what their budget is, they'll always say $15,000 (or thereabouts). This is hard wired into our brains. For some reason even the most honest person will lowball this number when asked. It's just how the game is played. If you don't see it as a game, and fail to recognise the tactics being employed by the other person, you'll lose your shirt. So if we know the buyer is going to push for the lowest price, it makes sense that our first offer needs to be strong, otherwise any 'wriggle room' you may have possessed is gone before you even start (before everyone piles on and accuses me of advocating price gouging, that isn't what I'm saying. My advice is that you should pitch hard, or put another way, present the best product/package/offering you can as your first salvo. You don't put your prices up. You don't offer them something they don't need. You simply pitch the best thing for their particular set of circumstances, as opposed to offering the cheapest, nastiest, but most easily digestible thing on the menu).
3 Walk away. Sometimes it's necessary to walk away from a sale (for a time). If the client is making unrealistic demands sometimes you need to show that you’re serious by downing tools and giving the client time to think everything through. Negotiating is emotional, especially if you're not getting what you want. So sometimes a break to take the heat out of things isn't a bad idea. Walking away is one of the most dramatic forms of gambling and not something I'd suggest for a rookie, but sometimes it's the best option. Regardless it is important that all sellers have a clear understanding of what is and isn't acceptable. Regularly closing bad deals is a slippery pole that leads to bankruptcy / unemployment. In addition to that, some clients are just bad news. Imagine how much work you could get done, and good new clients you could woo, if you weren't constantly in a state of damage control with that one client that pays you peanuts and monopolises your resources?
4. Ask for something in return. This is a negotiating tactic that must be employed every time the buyer asks for something. Asking for something in return lets you know how serious the buyer is about what they've asked for, and improves the deal for both of you (win/win). So if they want a discount, ask for payment up-front. If they want leather seats ask them to sign on the dotted line then and there. If they want a longer settlement period ask them for a bigger deposit. Whatever the situation, asking for something in return should be your default position. It's gambling, but fairly low impact and the risk is usually small, yet the rewards can be significant. The simple act of asking for something in return regularly provides you with valuable intel, or leads to a significant step forward in the negotiation.
Good negotiators are good gamblers. They understand that negotiating is a game, and that (in most cases) lives aren't on the line. They also understand that to be in a game, yet not understand that it is a game (or what any of the rules are) is a great way to get fleeced.
Next time we'll continue talking about negotiating tactics and how to improve your outcomes. In the meantime drop me a line at firstname.lastname@example.org if you'd like to know more about this subject or any of the previous articles I've written. If you're in business and would like to discuss any aspect of marketing or sales please get in touch. If you're interested in digital marketing you can also take advantage of Kingfisher's current promotion - we're offering a free Google Health report so that you can find out where your site currently ranks, which keywords your prospects are searching for and how effective your website is. Check it out here.