negotiation skills
DESCRIPTION
Negotiation Skills April 5, 2013TRANSCRIPT
Tune Up Your Negotiation SkillsTactics and Strategies
Andrew L. Urich, J.D.Puterbaugh Professor of
Ethics & Legal StudiesSpears School of Business
Oklahoma State University 405.744.8619
www.andrewurich.com
The World’s Greatest Car Salesman
• We like, trust, and believe people who like us.
Making a Connection
Overcoming Fear
Nikita KhrushchevMy Sales Philosophy
“When you are skinning your customers, you should leave some skin on,
to grow again so you can skin them again.”
Making a Connection
Showing Respect
Showing Respect
Small Software Co. vs. Massive Industrial Powerhouse, Inc.
“This product is provided subject to an evaluation condition. In the event that the software is deemed unacceptable by the buyer for any reason, at the sole discretion of the buyer, the buyer shall incur no obligation to make the final payment as described in the above payment schedule.”
Making a Connection
What We Need To Know
Strategies focus on what makes things happen. They help bring about desired outcomes as a result of particular actions.
Tactics are processes and techniques you implement to:
Get more.Pay less.Reach agreement more quickly.Maintain a positive relationship.
Program Introduction & Goals
What We Need To Know
1. What is the essence of negotiation? (Not what everyone seems to think)
2. Which negotiation variable has the highest correlation with “winning” negotiations?
3. How do I plan for a negotiation?
Program Introduction & Goals
What We Need To Know
4. How can I adopt a win/win (more/more) focus without becoming Pollyanna?
5. Appreciate the vital importance of “no.”
6. How can I increase my bargaining power?
Program Introduction & Goals
Negotiation of a Movie Contract
On a scale of 1 to 10 please note yoursatisfaction level when you finish
1 = dissatisfied 10 = extremely happy
1
dissatisfied
10
extremely happy
5
Exercise
Group #
First Offer Agent First Offer Representative Agreed Price
Satisfaction
Agent Representative
1 10 6 7 8 9
2 3 3 3 10 10
3 6 4.3 4.4 10 8
4 8 5 7 10 10
5 2 2 2 9 9
6 5 3 3.5 9 8
7 9.5 8 9 5 3
8 2 .5 1.2 7 7
9 6 1.2 4 7 10
10 8 3.5 4.75 7 7
11 7.5 2 5 7.5 7
12 2.5 2 2.5 7 7
13 15 7 8.5 8 7
14
“Negotiation is an inefficient waste of time. Can’t we quit messing around and get to the bottom line?”
•Saturn•Winner’s curse•The box or the curtain
Change Your “Mental Model” of Negotiation
Have you ever heard anyone say this?
Change Your “Mental Model”
• Completely new focus: It's the experience, not the terms, that will provide satisfaction to the other party.
• Don't look at negotiation as a necessary evil.
A) It's an opportunity to discover their bottom line.
B) And an opportunity to demonstrate the FAIRNESS of your position.
Change Your “Mental Model” of Negotiation
Which provides more satisfaction?
A) a bad deal mistakenly considered to be a good deal.
B) a good deal mistakenly considered to be a bad deal.
Change Your “Mental Model” of Negotiation
What Does it Mean to “Win?”
The Bargaining Area
$200,000 $215,000 $235,000 $250,000
Buyer
Seller
Bargaining
Area
Program Introduction & Goals
What matters most?
Which of these factors are most highly correlated with successful negotiation outcomes?
• Bargaining power
• Aspiration level
• Skill of the negotiator
Research on Aspiration Level
• High aspirants beat low aspirants without regard to skill or power.
• Skilled negotiators without power lowered their aspirations.
High Aspirations
Power of High Aspirations
• Reciprocity and Anchoring• Boy Scout circus• Giant teddy bear• Barbeque restaurant
• Analysis that does not improve decision making tends to be a waste
• Wife’s shoes• Selling up harder than selling down• Pick your clothes dryer
• You will not exceed your aspiration.• First offer makes a huge impact.
• Who should make the first offer?
High Aspirations
Factors Restraining High Aspirations
• Fear of offending
• Time constraints
• Fear of failure: A culture averse to failure stifles exploration, experimentation and discovery
• It’s more work
High Aspirations
Make the Pie BiggerInstead of Arguing About How to Slice It
• Win/win is an attitude. (Fixed Pie Fallacy)
• 62% buy into the fixed pie fallacy.
• Pay close attention to their concerns.
• Increase their “value.” Make it easier for them to buy from you.
• Reduce their opportunity cost (because if they deal with you they aren’t dealing with someone else)
• Use creativity, diligence and enthusiasm to identify new options – Stephen Covey’s “Third Alternative.”
Win/win
Show Respect & Build Trust Win/Win Attitude
Win/win
•Ka-shing
Listen First
• Are you projecting?--Listen for something unexpected.
• “They” know everything you want to know.
• Listen for opportunities to make the pie bigger?
• Identify their problems before you sell a solution.
• Take notes.
• Listen twice as much as speaking.
Win/Win
How Do You Know When to be Satisfied?
• Are your criteria arbitrary?• Remember, you never get to see the bargaining
area.
• Our satisfaction level is based on…..1. Our expectation
2. How we were treated during the negotiation• Are you impacted by how far you moved from
their starting point?• Are you impacted by their pain?
Analyze Your Level of Satisfaction
“NO” Induces Trauma
• Develop a positive “NO.”
• Being ready, willing, and able to say “no” gives you power.
• Knowing when to say “no” gives you power.• Setting Priorities: Risk-adjusted present value of
opportunities relative to resources consumed (such as scarce talent or capital)
The Power of “No”
A lot of problems are caused by people who say “yes” when they should say “no.”
• Southwest Airlines: The King of “No!”• No food• No choice of planes• No assigned seats• No extra baggage• No first class• No shared reservation system• No expensive equipment
• Why we need a Sales Manager
• Failure to say “no” leads to disaster
The Power of “No”
Concept Summary
1. “No” is the key to success.2. Practice your “no!”3. Slow down
1. Hmmmm….4. Focus on the relationship not the terms.
1. Manage emotions2. Show respect
5. Manage their response to your “no.”1. Fear2. Guilt
6. You don’t want to win them all.
The Power of “No”
Understanding Bargaining Power
• Don’t underestimate your power.
• Don’t dwell on your weaknesses.
• The illusion of power
• The power of competition
• The power of legitimacy
Evaluating and Building Bargaining Power
Landlord - Tenant Exercise
Paving the Parking Lot and Utilities• Landlord Paving the Parking Lot: • You pay 0• Split it 50/50 2000• Tenant pays 5000
• Tenant Paving the Parking Lot:• You pay 0• Split it 50/50 1000• Landlord pays 2000
• Landlord Paying Utilities • You pay 0• Split it 50/50 1000• Tenant pays 2000
• Tenant Paying Utilities• You pay 0• Split it 50/50 2000• Landlord pays 5000
Win/Win
Landlord Paving 5000Utilities 0
Tenant Paving 0________ Utilities 5000_____Total 10000
Split it
Landlord Paving 2000Utilities 1000
Tenant Paving 1000________ Utilities 2000_____Total 6000
Landlord - Tenant Exercise
Exercise Summary
• Win/Win Paving and Utilities• Who made the first offer? High Aspirations?• You both wanted the same thing
• Listening advantage• Satisfaction trap
• Anyone leave pie in the plate?• Fairness? Trouble saying no?• Any lapses in trust?
Landlord - Tenant Exercise
References• Ailes, Roger. You Are the Message. New York. Doubleday, 1988.• Bazerman, Max H. Smart Money Decisions, Wiley & Sons, 1999• Cialdini, Robert B. Influence: The Psychology of Persuasion, Harper Collins, 2007• Cohen, Herb. You Can Negotiate Anything. Secaucus, N.J.: Lyle Stuart, 1980• Covey, Stephen R. The 7 Habits of Highly Effective People. New York: Simon &
Schuster, 1989.• Dayton, Doug. Selling Microsoft. Holbrook, MA., Adams Media Corporation, 1997.• Fisher, Roger and William Ury. Getting to Yes. New York: Viking Penguin, Inc.,
1981.• Forsyth, Patrick. The Negotiator's Pocketbook. London: Alresford Press Ltd., 1993.• Johnson, Spencer. The One Minute Sales Person. William Morrow, N.Y, 1984.• Karrass, Chester L. Give and Take. New York: Harper Collins, 1993.• Karrass, Chester L. The Negotiating Game. New York: Harper Collins, 1992.• Koch, Charles G., The Science of Success, Wiley & Sons, 2007.• Kozicki, Stephen. The Creative Negotiator. Pyrmont, Australia: Gower, 1993.• Lewicki, Roy J., et.al. Negotiation. 2nd Edition., Irwin, 1994.• Lewicki, Roy J., et. Al. Essential of Negotiation, 4th Ed. McGraw Hill, 2007• Nierenberg, Gerald 1. The Art of Negotiating. New York: Barnes & Noble, 1995.• Paul, Richard. Critical Thinking. Santa Rosa, CA: Foundation for Critical Thinking,
1993.• Schoonmaker, Alan N. Negotiate to Win: Gaining the Psychological Edge.
Englewood Cliffs, N.J.: Prentice Hall, 1989.