Six Surprising Negotiation Tactics That Get You The Best Deal
If you’ve read my columns, you know I’ve been on a bit of an Adam Grant kick this year. The Wharton professor’s book, Give and Take, has had those of us in the leadership field thinking and talking. It’s made numerous lists of the year’s best business books, as it offers significant, research-based, evidence that disputes many of the influencing practices that we take to be correct.
One of my favorite elements of Grant’s work involves negotiation. Being able to negotiate well impacts so many key factors in our careers. We negotiate for our jobs and salaries, for promotions and resources, with clients, and in sales. And if you’re in a field like law or investment banking, you negotiate non-stop.
Grant, and his colleague Northwestern University professor Adam Galinsky, are well worth the read if you’re trying to bone up on your own negotiation skills. And let’s face it, aren’t we all? Even the best negotiators fall prey to some of the traps that the research indicates simply do not get the best deal.
Here are the recommended best practices from Grant and Galinsky. How do yours compare?
1. Share information.
We often approach negotiation being very guarded and wary of showing our cards. Yet, while we believe this is a smart approach, it has a negative impact on our outcomes and inhibits trust. As Grant points out, people tend to be matchers and “follow the norm of reciprocity, responding in kind to how we treat them.” If we want to be trusted, we must first offer it.
Studies have shown that revealing some information, even when it’s unrelated to the negotiation, increases the outcome. You don’t have to put all of your cards on the table at the outset. Simply putting something of yourself out there – your hobbies, personal concerns, or hopes – can set a positive tone that’s conducive to gaining agreement.
2. Rank order your priorities.
Typically when we negotiate, we know what our key issues are, and we sequence them. For example, if we’re trying to close a new client, we might say that the price is most important, and if we don’t agree, there’s no use to continue.
Grant recommends another approach called rank ordering. His research shows that you are able to achieve better outcomes by ranking and leaving all the issues on the table and being transparent about it. That way both parties can compare their rankings and determine what the full set of options really are.
In the above example, perhaps you could make trade-offs in scope or travel requirements if the client can’t get to your price.
3. Go in knowing your target price and your walkaway terms.
Galinsky calls your walkaway price (or terms) your reservation price. Your target price is what you’re hoping for. Often we go into negotiations with one or the other – or let our partner start the bidding. This puts us at a huge disadvantage.
It’s critical to do the research ahead of time here. You need your research to be based on firm data, as not only will it provide more confidence and power to you, but it also reduces the chance that you’ll throw something crazy out there. By knowing your own range, it will help you make better decisions in the moment, and be clear about your limits.
4. Make the first offer.
This is one piece of advice that clearly defies conventional wisdom. In negotiations, information is often equated with power. We believe it’s best to extract as much as possible from the other person before tipping our own hand.
Grant and Galinsky both agree that the research is clear on this point: people who make first offers get better terms that are closer to their target price. The reason is the psychological principle of anchoring. Whatever the first number is on the table, both parties begin to work around it. It sets the stage.
Often we are reluctant to go first because we may be way off, and disengage the other party. But Galinksy notes that this does not play out in the research. He said that most people make first offers that aren’t aggressive enough.
There’s a reason we have the adage, “you get what you pay for.” Higher prices make the buyer focus on the positives, while lower ones invite focus on the downsides. In other words, we find data that supports this anchor. (Consider real estate: a high-priced home makes us look at all the desirable qualities, while a below-market offering brings up a bad location or needed repairs.)
Galinsky says that ideally the best first offer is one that’s just outside your partner’s reservation price, but not so far that they have sticker shock.
5. Don’t counter too low.
If you aren’t able to make the first offer, then you need to also protect yourself against the anchoring effect. Caution: most people go too low, too quickly. Your counter should be based on the same information you would have used if you’d made the first offer, Galinsky says.
You may also want to consider re-anchoring, as Grant puts it. Let the other person know that their offer is way off, and go back in with a new reset. It also may be helpful to call out what you’re observing to redirect the conversation, i.e. you may be trying to test my thinking with that first offer, but here’s more of what I had in mind.
6. Counter offers make both parties more satisfied.
Every buyer wants to feel that they got a good deal; every seller wants to feel as if they drove a hard bargain. Parties are most satisfied on both fronts if there was some back and forth. This may come as a surprise if you’re someone who abhors negotiation.
Galinsky even advises that you shouldn’t take the first offer, even if it meets your needs. By going back and asking for concessions you can ensure that you got the best deal, and increase your partner’s satisfaction as well. More satisfied partners are more likely to work harder and be more committed to the end result, which is the ideal outcome from the start.
What do you think of these negotiation tactics? Comment here or @kristihedges.