Silence
Silence can be a very effective tactic indeed. We discussed silence in the section on gathering information, but there is more to using and defending against silence during the course of a negotiation.
Dealing with silence can be tough. In our society, we are not really comfortable with silence, so you need to evaluate your own reaction to it. If the other person is silent, will you rush in to fill the gap? Even perhaps making concessions just to make sure that there is some noise in the room?
Silence comes in three forms: silence contests, noisy silence, and pauses.
Silence Contests: The tricky thing about a silence contest is that nobody announces, “OK, I’m going to start a silence contest.” It’s just that somebody says something or asks a question and then there is silence. And the silence continues and it continues and before you know it, there is a silence contest going on. The person initiating the contest hopes the other party will get uncomfortable and blurt out useful information, make a big concession, or even close the deal right then and there for what the initiator wanted.
Here are some statements that you might use to initiate a silence contest:
• “What do you think of that ...?”
• “That’s interesting ...”
• “Well...”
• “Hummmm...”
In each case, you just let your voice trail off into silence and wait to see what the other person will do. Be patient and be prepared to wait a bit to see if they will start talking.
Now, what do you do if the other person starts a silence contest? Some people say that the first person to talk loses. I’m not so sure that that is the best way to look at it because if you buy into that idea, it puts huge pressure on you to win the silence contest, perhaps at even the expense of other, more important things.
So once you recognize that the other person has started a silence contest, I suggest going into denial. The goal is to send a message that we just had a thoughtful moment rather than a silence contest. You can restart the conversation by saying:
• “Now that I’ve had a chance to think about that...”
• “Well, that’s an interesting idea and here is what I propose...”
You can do the same thing if you were the one who started the silence contest and it isn’t working and the other person is not talking. That way you simply deny that you were even using the silence contest tactic.
I once encountered an extreme situation with a buyer who, midway through our conversation, stopped talking and simply wouldn’t say anything no matter what I said. Since I wasn’t getting anywhere, I decided to call his bluff. I put my materials away, thanked him and walked out the door. He caught up with me in the hall and said that he really did want to talk to me. We went back into his office and continued in a much more reasonable manner.
Noisy Silence: I also like to use something I call noisy silence. What this means is that you use continuation phrases without really saying anything. When the other person pauses for a moment, rather than remain totally silent, here are some continuation phrases you can use:
• “Really...”
• “Are you serious...?”
• “Tell me more.”
• “How would that work?”
The idea is simply to keep the other person talking and hopefully spilling out concessions or more of the information that you need.
Pauses: The other way to use silence, which I do all the time, is to leave long pauses in my speech. Put in an extra long pause…Make sure…that you don’t…answer…your own question… . Wait and hold your breath... while the other person…is thinking about making a concession…and just starting to talk about it. Have that little hesitation…before answering any questions…so that maybe the other party will rush in…and answer it themselves.
Leave bits and pieces of silence lying around throughout the negotiation. You will be astonished to see how often people will jump in to fill the silence.
Anger
Never negotiate when you are truly angry. You simply can’t think clearly and you will inevitably make mistakes. At best, you will say something that you will regret. At worst, you could completely wreck the negotiation. That does not mean that you should never show anger in a negotiation. But make sure you do so when you have your emotions under control.
When someone is displaying anger toward you, you need to understand where it is directed. There are three possibilities. They could actually be angry at you for something that you did, they could be angry at someone in your organization, or they could be using anger as a tactic. The best way to sort this out quickly is to ask a very specific question:
• “Are you angry at me, personally, for something that I’ve done?”
With an emphasis on the word personally, this question tends to sort things out pretty quickly. If they really are angry at you, they may tell you so:
• “Yes, in fact I’m really upset that you promised to personally resolve any delivery problems we had, but you simply haven’t followed through.”
Now maybe you’re wondering why you ever asked the question. However, if you had realized that your customer was angry about this earlier, you would have dealt with it. Better to clear the air now and deal with it. Here are some things you shouldn’t say in response, even if they are true:
• “I never promised that. I said I would look into any problems that arose and I’ve done that.”
• “I’ve done the best I could, but I’m busy, too, and I can’t be everywhere at once.”
If you are defensive or combative, your customer is likely to respond in kind and you’ll never get anywhere. Instead, go in the other direction.
I’m terribly sorry. I understand your problem and I know that it’s been very frustrating. I promise to redouble my efforts to straighten things out. I’ll develop an action plan and discuss with you how we can track our progress.
It is almost impossible for somebody to remain angry at you when you’re apologizing and offering to fix the problem.
The second possibility is that they are angry at someone in your organization and are unloading on you because you happen to be there. In that case you’ll get a response like:
No, it’s not your fault, but I am so furious at those people in your warehouse. They never seem to get our orders right and when you call them, even though they’re very apologetic and polite, nothing ever gets fixed.
And you respond,
I’m terribly sorry. I understand your problem and I know that it’s been very frustrating. I promise to redouble my efforts to straighten things out. I’ll develop an action plan and discuss with you how we can track our progress.
Same response on your part, but with a slightly different impact. In the first case, it amounts to an apology and a promise to resolve the situation. In the second case the very same words convey a different meaning. You are saying that you are sorry, that the situation has arisen, and that you will work with them as a team to try to resolve the problem with your warehouse. Again this will tend to take some of the steam out of their anger because you are now their ally trying to correct the problem.
The third possibility is that it’s just a tactic. Some folks try to unsettle people by being angry and so they negotiate angrily to see if they can throw you off. In that case, you’re liable to get a response like:
• “No I’m not angry at you, but I’m getting sick and tired of your company’s stonewalling when it comes to giving price reductions to your loyal customers.”
Or
• “Well I’m getting just a little tired of your hard-nosed approach here. Because every time I ask for something you tell me it’s not possible.”
Now you know you’re dealing with tactical anger. You can just move on and totally ignore the anger. Just keep on negotiating. As soon as the other party realizes that you’re not upset by their anger tactic, they will stop using it because a tactic recognized becomes a useless tactic.
Emotions
I am often asked, how do you keep emotions out of the negotiating process? Well, the fact is that you can’t. You can control them, you can manage them, you can hide them, you can ignore them, but you can’t ban them from the process. If you are feeling tense or anxious, try to keep it to yourself. Never let them see you sweat.
If you get really angry at something that they do, it’s usually best to back off and regain your composure, because my experience is that if you negotiate when you are really angry, you’re liable to do something that you will regret later. That’s not to say that you can’t use emotion or anger, but it has to be a controlled use for effect. Just make sure that you are always under control.
That said, it is also true that there are some people who simply won’t believe that you have reached your bottom line unless you show some real emotion. Recently, a client of mine found himself in what I call an ambush negotiation. He had been invited to lunch to meet the new CEO of one of his important customers. The lunch had been billed simply as a “getting to know you” session. But no sooner had they said hello than the new CEO launched into a major attack on my client and the prices that he was charging.
As the attack went on and on, he felt himself getting more and more angry. Finally the CEO concluded and said, “Well?” My client said, “If you’ll excuse me, I need to use the washroom.” Once there, he calmed down and assessed the situation. He decided that he was dealing with a real shark and that although it would be risky, he probably needed to fight fire with fire.
He went back to the table and when he refused to immediately commit to chopping his prices, the new CEO again launched into the attack. This time, as the attack went on, my client seemed to become more visibly agitated, until he finally jumped up and shouted:
“Enough! I don’t need to take this $#@*%& from anybody. If you don’t want me to service your business, fine. But I won’t be treated in this manner.”
He thereupon got up, turned around, and walked out. He knew that he was risking losing the business, but he also knew that he provided fantastic service and that his customer really needed him. He was using emotion to set their expectations that he was not about to be pushed around and that he did not need their business at any cost.
From then on the negotiations were handled by the chief operating officer who played the good guy, with the CEO lurking in the background as the bad guy. He had made his position quite clear and the chief operating officer was much more reasonable in negotiating with him since clearly they did not want to lose him as a supplier. Although he did ultimately have to make some price concessions, he was able to keep the business at a quite profitable level.
Signaling is a very important part of any negotiation. It is a technique to covertly pass along messages without acknowledging that you did it.
Take a look at our graphic for the Settlement Range for software on page 5 that we discussed earlier. Let’s put you in the role of the salesperson. Your Maximum Supportable Position (MSP) is $500 and your Least Acceptable Settlement (LAS) is $400.
At the start of the negotiation, the only thing that the buyer sees is your MSP, in other words, your proposal to sell the software licenses at $500. Now look what happens as the negotiation starts. The buyer says to you:
• “I need you to do better, do you have any flexibility?”
What do you do now? If you say:
• “Yes, sure I do.”
You may have opened the door far wider than you want to. On the other hand, if you say:
• “No, never, absolutely not, don’t even think about it.”
Your acting skills may be so good that you will have convinced the buyer that you aren’t going to negotiate price at all. That’s fine if the buyer’s LAS is equal to your MSP at $500. But what happens when the buyer’s LAS only goes up to $450? This would still be a good sale for you, since your LAS is at $400.
So you need to respond in a way that signals there might be some flexibility, without directly saying so. That’s what signaling is all about. My first response to a question like “Do you have any flexibility?” is often to try to get something in return just for answering that question. What I usually will want, if they haven’t already done so, is to have them put an MSP on the table. And so I might respond with something like:
• “That depends. What did you have in mind?”
If they refuse to put an offer on the table, I might say something like:
• “It’s going to be very hard for me to think about flexibility if I don’t know just what kind of flexibility you’re looking for.”
At which point I will simply shut up, sit there, and wait for them to say something. And it often works. What I am doing is signaling. I didn’t say no, I didn’t say yes, I didn’t even say maybe. What I really said was, “I’ll tell you if you put an offer on the table.”
Now frequently, that signaling is deliberate and intentional and planned, such as what I just illustrated. Other times, however, signals are just blurted out without really being an intentional signaling device. One has to listen carefully for signals, because so often we’re thinking about the next thing that we’re going to say, and a signal like that flies right over our heads. But if you hear it, it can lead you in an interesting direction. For instance, if the buyer grumbles:
• “I couldn’t possibly pay that kind of price when you’re only including six months of free software maintenance.”
You’ve just received a signal, planned or unplanned. The message could well be that the price would be acceptable if 12 months of maintenance were included. It is certainly worth pursuing. My response to the buyer’s statement might be:
• “What were you looking for in terms of free software maintenance?”
If the buyer says:
• “We simply can’t do a deal that doesn’t include at least one full year of maintenance.”
Then I’m going to try to ask if they would pay our price if we threw in a full year of maintenance, and so on.
Other examples of signals might be:
• “Those prices seem pretty high considering that you’re only planning to deliver once every two weeks.”
• “If all you are looking for from us is letters of credit and treasury management services, I’m afraid that there’s not much we can do about our pricing.”
Unpredictability
My experience is that most people are not really good at keeping records of what other people do in their negotiations even when they negotiate with them regularly. They have so much going on in their lives that it just isn’t important enough to end up on their radar screen.
If you have a tactic or approach that works for you with someone, well, if it isn’t broken, don’t fix it. It’s not always bad to fall into a rut if that rut takes you where you want to go. If on the other hand, something that worked in the past suddenly doesn’t work, be prepared to switch. They may have picked up on your pattern and developed a strategy to use it against you. Make sure you have a Plan B.
On the other hand, you do need to keep records and keep track of what different people do in their negotiations, especially when you negotiate with them regularly, because they often fall into very predictable patterns.
One salesperson told me this story. He had recently been hired to cover a fairly compact territory in the Midwest. He was at one of his customers, introducing himself to the buyer. The buyer explained that he needed to place an order for some of the products that our salesperson handled.
So they worked up the purchase order, reached an agreement on the pricing and other things, and the buyer was just about to sign off when he said:
• “I just saw Bruce go by. He is our director of purchasing, and I’d like you to meet him.”
So he went out and brought Bruce back in, introduced him to the salesperson, and then showed him the purchase order. Bruce said,
• “You’re going to pay what? You have to be kidding.”
The salesperson then told me, “He beat up on me like you wouldn’t believe. He said my prices were too high, they’d had all kinds of problems with us, and on and on and on. I was so startled, I’m afraid I gave away the store. I did get the order, but I was lucky to get out of there with a stitch of clothing on.”
A month later, he went back to get another order. They worked up a purchase order, reached an agreement, and he was just about to sign when Bruce just “happened” to walk by again. He proceeded to beat up on the salesperson again, just as before.
Now, however, he had their pattern. He explained to me:
I could really handle their business on the phone if I wanted to. But now I see what they are doing, so I go in with a super high price, I give the buyer a little gift, I give Bruce a little more, and I end up with the most profitable sale that I make all month. They could easily pick up the phone, call my competitors, and get much better pricing than what I’m giving them. But all I have to do is moan and groan a little and act like they’re really taking me to the cleaners, and they think they’re getting a great deal.
Good Guy/Bad Guy
The essence of the good guy/bad guy strategy is to try to con you into making concessions to the good guy in return for the psychic comfort of not having to deal with the bad guy.
Sometimes the bad guy role can be pretty obvious:
With all due respect, you have a completely unreasonable idea as to what this technology is worth. The 15 percent royalty rate that you’re asking for is not in the realm of possibility. You are not in the ballpark, you are not in the parking lot, and in fact you’re not even on the right road. Five percent is what you’re going to get. Be happy with it and let’s move on.
Or the bad guy can be a bit more subtle:
I know that you’ve worked terribly hard in creating this technology. I really respect that. But I’m afraid that you underestimate what it takes to get something like this to market. I know that the 15 percent royalty rate that you’re asking for seems reasonable to you, but the problem is that you’ve simply not considered all the factors we have to look at in this process. When you take all of those factors into account, you will realize that 5 percent is actually a very generous offer on our part.
Soon thereafter, good guy pulls you aside and she says,
It’s okay, he’s always like that. I’ve gotten pretty good at working with him. His bark is always worse than his bite. I think if we work together we can assemble a package that you can live with and that I can get him to accept.
The hardest part of dealing with good guy/bad guy, as is true with many tactics, is diagnosing it. The behavior that you are observing could be a tactic or it might not be. If that just happens to be his real position on the matter and it’s not a tactic at all, if you say something like:
• “Boy that’s one of the best good/guy bad guys I’ve ever seen.”
You’re going to end up offending people. On the other hand, if it is a tactic, their conversation prior to the negotiation probably went something like this:
These guys want a royalty rate of 15 percent. I agree, this technology they have is really quite remarkable. However, 15 percent is too high. The way I’ve worked the figures, the best we could conceivably agree to would be 12 percent. And, I think that we can push them a lot lower, and if we can, it would really have a major positive impact on our bottom line for this deal.
I tell you what, you be the bad guy and soften them up, and then I’ll be the good guy and work as their ally to help them get the deal through. Who knows, they might really come down a lot just to avoid having to deal with you anymore.
Thus, you are placed in something of a quandary. On the one hand, you always want to have a good guy on your side in the other side’s organization. On the other hand, you don’t want to fall into the good guy/bad guy trap. Since it is often difficult at first to tell whether this is a tactic or not, the best approach is to choose a strategy that protects you either way.
One of the best ways to do that is to take the good guy at face value and start feeding her tons of information that she can use as ammunition with the bad guy:
I have a lot of information that will help us here. I think that he is overestimating how difficult this will be to bring to market. Let’s go over the spreadsheets one by one in some detail and see if we can’t hammer out something that will really make sense to him.
Obviously the good guy is still part of their organization and she does want to get the best royalty rate possible. However, if she really is on your side in this case and thinks that the bad guy is being unreasonable, her top priority is to make the deal and perhaps the royalty rate is less critical to her. Maybe she will be the project manager for bringing the technology to market and she really wants to make it go. If she really is the good guy, she will vacuum up all the information you’re giving her and push you for more. On the other hand, if this is just a good guy/bad guy tactic, you are more likely to get as response like:
Yes, yes, we understand all that. I’m afraid, though, that the only thing that’s going to really make this work for him is a more realistic royalty rate. I know it’s hard for you, but if you can see your way clear to playing in his ballpark and give me something that is more realistic, I think I’ll have a good shot at selling it to him.
Here the good guy offers to be the intermediary between you and the bad guy. This makes it much more likely that you are facing a tactic and you are almost always better off actually conducting the negotiation with the bad guy. Make it perfectly clear that you would be delighted to deal with the bad guy at any time.
I think we should just do this all together. I fully understand his position even if I don’t agree with it. However, there is far less chance for misunderstanding if we try to put this together with all of us in the room face-to-face.
If the good guy absolutely insists on being the messenger, then treat the whole situation like an authority limits tactic and let her be the messenger. Just don’t ever give anything away in return for the psychic comfort of not having to deal with the bad guy.
Of course, you can use the good guy/bad guy tactic yourself. For example, let’s say you and your boss are going together to try to close a sale. You could plan in advance for a good guy/bad guy.
In such a situation, what the customer would expect is that you are panting to make the sale and your boss is the bad guy. The trouble with that is that it is expected. So sometimes try the reverse. Let your boss be the good guy and you be the bad guy. For example, when they steer the conversation around to your boss and push for a big price concession, you might have the boss turn to you and say:
• “You’re closer to the situation. Can we do that, all things considered?”
• “Boy that would really be tough. That’s going to take us way outside of our price guidelines and I’m not sure that we can do that.”
Since this type of behavior is outside of the manager/sales rep stereotype, it will be unexpected, and therefore have more credibility.
As a society, we tend to put a lot of importance on being fair and logical. Because of this, it is important to make sure that you have fair and logical rationales for what you do and propose. For example, your MSP has to be in some way logically supported, or you end up on the defensive, looking foolish and lacking credibility.
It is sometimes possible to put the other party on the defensive when they say or do things that appear to be either illogical or unfair. When the other side makes a proposal that is simply ludicrous, they often expect you to react, maybe even emotionally, and then try to counter it. If you do react this way, you’ve fallen into the trap. Instead, consider using fair and logical statements and questions:
Given the very low rental rate that you want, could you please explain to me how it would be fair to ask us to also put in carpeting and recessed lighting for you at no cost?
Please explain to me why we should give you worldwide rights when you don’t even have a sales team or any presence at all in Europe or Asia Pacific.
I can see how that would be wonderful for you, but I just don’t think it’s fair to us.
When you use these types of statements and questions instead of making a counteroffer or getting upset, the other party is often not sure what to do. Now they are put into the position of having to explain the unexplainable. Using these types of statements and questions can sometimes produce big dividends.
Unfortunately, some people have simply become so calloused that they just don’t care anymore. They are put under such pressures by their companies that they have given up trying to pretend to be fair and logical.
When faced with the unfair and/or seemingly illogical negotiator who simply does not care, it is critical to keep your cool. Don’t get mad, don’t panic, and once you recognize what they’re doing, stop trying to be logical yourself and stop trying to get them to give you a logical explanation.
Fair and logical can also be a useful tool to help manage the other party’s perception of your LAS. Go back to the case of the supplier who wanted a three-year contract with an annual 3 percent increase.
Perhaps his real LAS, because he really wants a contract extension and the business is extremely profitable, would be no increase at all for the three years. However, he is pretty sure that the customer would be willing to pay the 3 percent annual increase and wants to use the fair and logical approach to manage the customer’s perception that he really has to have that increase.
My wages go up, my utilities go up, health insurance goes through the roof, my suppliers charge more, it’s just not fair to expect me to eat all of the increases.
If you don’t like 3 percent, then you tell me what you think is fair. I would be happy to use the Consumer Price Index or some other reasonable index. That way if the cost of living is less than 3 percent, you will come out ahead, and if it is more than 3 percent it’s fair to me.
I would be happy to listen to any logical explanation of why I should be the only one not getting an increase when everything is becoming more expensive.
Face Saving
Everybody needs to save face. Everybody needs to feel as if they did the best possible job. And they especially need to make sure that other people in their organization who know about the negotiation feel that they did a good job. That’s why it is so important to make them feel that it was a real win-win and that they reached an agreement at or close to your LAS. So do what you need to do make them feel good about the deal they have negotiated. In fact, the better you actually did, the more important it is to make them feel like they did a great job.
I’m really surprised at how much you know about our business. I guess it’s a good news/bad news situation. It makes it much tougher to negotiate with you, but on the other hand, it makes it much more likely that we’ll have a very effective partnership.
I must admit that I’d hoped you would be able to be a bit more forthcoming here. However, I think we can live with this.
The only thing is, don’t be too obvious about this. When someone says to me, “Oh, you’re such a good negotiator, I really didn’t have anything left to give you,” I began to worry that I didn’t do such a good job after all. So be cool about it, but always make sure that the other side is able to save face.
Also make sure that in your contacts with other people in the organization, you drop those little signals that suggest the person you were negotiating with was really tough and took all you had to give.
You certainly put together an effective bargaining team and Bob is a very good team leader. He’s very fair and ethical, but he’s tough. I’m glad we were able to reach agreement. I think I’ve have enough of facing him on the other side of the negotiating table for a while.