Julianne Watt is a sales & marketing analyst at RedRover Sales & Marketing Strategy
Editor Note: This is part two in a two-part series.
Suppose you have 10 ounces of red dye and your associate has 10 ounces of yellow dye. The assignment is for each of you to create 10 ounces of the perfect shade of orange. The fair solution: exchange 5 ounces of each color.
Instead, your associate wants your five ounces of red for three ounces of yellow. Not going to happen, right? But negotiations like this happen every day.
According to Tom Parker of Yukon Training, there are several common tactics that negotiators use to get a better deal. Know how to counter them, and you’ll negotiate your way to a mutually beneficial deal.
Red Herrings: This tactic distracts the seller by making statements that will gain concessions. Often it’s made out of nowhere and has little relevance to the current negotiation. “Remember when you were late with that shipment three years ago? That was a big headache for my team.” Becoming either defensive or apologetic can result in a discussion that strays from the current proposal conversation, you giving unwarranted concessions, or you losing the customer all together. Instead, acknowledge their concern then refocus the buyer. “I understand, but let’s set this aside and focus on your current needs for right now. Afterward, we’ll revisit that issue.”
The Counter: Keep your eye on the target, and avoid distractions.
The Bogey: “My budget is tight.” The natural response is of course, “What is your budget?” If you offer a discounted price, you will lose margin. Good luck gaining it back the next time they buy. Instead, counter by outlining the adjusted scope of services you can provide within the buyer's budget. This puts the buyer in a situation where they need to re-evaluate their needs, and it allows you to non-directly ask, “is that budget real or are you just trying to negotiate a lower price?”
The Counter: Define a reduced scope for which the budget allows.
The Squeeze: This strategy is often articulated as: “You will have to do better than that.” The natural response is “How much better?” That's a bad move, as you handed over the reins and let them take control. If they say, "reduce it by $10K," then you’re right back in “The Bogey.” Ask this question instead, “Could you explain who or what we’re being compared to and what comes with that offer?”
The Counter: Never undervalue your services. Back up your price with the benefits and service you bring.
Prepare for the big negotiations. Be aware of these tactics occurring in your everyday negotiations and implement your newly learned counter-tactics. You might not always come out winning in every scenario, but no deal is better than a bad deal.
Julianne Watt can be reached at redrovercompany.com