Negotiation Tactics and Counter-Tactics, Part III, Flyers
Robert Menard, Certified Purchasing Professional, Certified Professional Purchasing Consultant
Editor’s Note: This is Part 3 in a 5 part series on negotiation tactics and counter-tactics. Part I deals with an overview of negotiation tactics. Part 2 explains the first category of Maneuvers. Part 3 deals with Flyers, Part 4 with Gambits, and Part 5 with Ruses. As we move to Flyers, we can expect these to pop up at almost any time in under any strategy.
Flyers include
- Flinching
- The Hot Potato
- The Do Better
- Silence
A Flinch is a visible reaction that portrays an emotional message. As a boy at summer camp, I enjoyed long gun training. The trick to pull on a new kid was to have him watch the older guys absorb the recoil from shooting 12 gauge shot guns, and then give the tender foot an unloaded weapon. When the trigger clicked, the new guy flinched back in nervous expectation of the explosion reaction he had just witnessed. Business people too are conditioned to anticipate reactions. As a negotiation tactic, buyers often flinch to show displeasure with a seller’s proposal. A particularly effective occasion to practice your flinch is in the price increase negotiation. Price increases are not high up on the favorites list for sales people to do with their customers. It is stressful and unpleasant. Accordingly, many prefer to announce the price increase by impersonal letter, fax, or email. Don’t let them get away with it without a face to face meeting. Call them, expressing an urgent invitation to visit you in person and explain their cost justification. Allow the person to go through their entire presentation. Wear a look of amazement on your face before reacting with a jaw drop, or a stunned look, or some other gesture of disbelief. Even though they may know you are overplaying the part, the discomfort may stimulate some concessionary talk. The price increase is often not fully justified, so the seller is looking for your reaction to judge how they should proceed. Coupled with other tools we have in our tool kit, we may be able to roll back the unjustified portion. Here is how Cost Analysis would be introduced into the price increase negotiation.
Assume that you buy large cardboard boxes from a converter. The converter buys linerboard from the paper mill, die cuts and folds it, slaps your logo on, and straps the finished boxes to a pallet for delivery to you. On the drive home you hear how paper mills have floated a price increase of 20 percent. The radio announcer then says, “And if the price increase sticks…” What does that last quote mean? It means that if buyers are not paying attention, they will accept the price increase. Fortunately, we are in the Cost Analysis mode, so we use this tool to do the heavy lifting of our price increase negotiation. In advance of the meeting, we prepare a simple cost breakdown to share with our converter.
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Cost of Liner Board $1.00
Cost of All Other $1.00
Price of Box $2.00
Upon completion of the supplier’s presentation, we clutch our chest, pausing for effect. Seeking understanding, we ask about the mill’s price increase and how that applies to the anything but the liner board. “Shouldn’t that 20 percent apply to just the liner board,” you ask incredulously? As an after thought, you add, “And suppose that floated price increase doesn’t stick? Why you don’t intend to stick us with that, do you?”
This example might be as overdone as an ad for a dating service, but you get the idea. Note how techniques, tools, and tactics work in harmony. We used the “you” statement liberally here when we had the sales person on the ropes for honest abuse. We used Cost Analysis for its incontrovertible dollars and numbers quantitative support, and we used the flinch.
This brings us to another offshoot tactic of the ‘No’ statement that we call the Hot Potato. This is a very effective tactic, particularly in the hands of sophisticated buyers. A buyer may say to a seller, “In our business, quality, service, and delivery are givens. You wouldn’t be sitting here if you didn’t clear these hurdles. So, it really all comes down to price.” It the seller accepts that tactic, and agrees that it just comes down to price, wow what a score for the buyer. In one fluid motion, the Hot Potato was buttered up, served, and swallowed whole. It is an artful way to minimize and freeze all other cost components but price while congratulating the seller on its admission into this elite class of lowest TCO where only its price matters. Remember that not all of our negotiations will be Win-Win and that this tactic may be better suited for the Win-Lose strategy. In order to counter this Hot Potato, a seller must recognize it, reject it, and return the talk to cost components. Is the buyer entertaining a low price competitor because she feels the low price is on the street? If so, the seller may be able to lower its price in return for concessions on elements of cost that raise the price. If the buyer is not interested in TCO, better to know early on so the seller may adjust its negotiation strategy to suit the buyer. The buyer or seller must challenge the Hot Potato as soon as it appears.
The Do Better tactic has been an accepted part of life since grade school. When faced with the ultimatum that one must do better, the conditioned response is to just do it. It reminds us of that cross second grade teacher who caught us with sloppy incomplete homework. A casual remark in response to a supplier’s question could be, “You’ll have to do better.” This rather open ended comment could apply to price, quality, delivery, and service, or it could be an expression of disbelief. It often spurs a bettering of the offer or a helpful explanation, as was the case with our homework. Skilled sales pros may counter with the question of, “How much better?” This response is another Broadway opening to launch into our Price Analysis and Cost Analysis investigations, much as we did in the case of the “Where do I have to be” question.
The Silence tactic is intimately and explicitly understood as a personal relationship tool between men and women. Leaving that field to the experts, we will move on to the business applications. Silence is unique for its absence of words. Unless we add body language messages, this tactic is completely open to subjective interpretation. I learned the power of the tactic quite by accident. In a routine sales visit, the VP accompanying the National Accounts rep assigned to me summarily took over the meeting and proceeded to dazzle me with an unexpected proposal for a new product. He told me about its markets, the features and benefits, and how it would supplement our current business. I sat in amazement and a bit of amusement as this fellow sped through his presentation and brushed aside signals of his prospect’s confusion. His mission was to get to the closing question. As he sped to the climax of his spiel, he ended expectantly on the price.
I was so taken aback that I truly felt lost for words. As I remained silent, his facial expression betrayed fear and embarrassment. He had ended on the price. I must have been upset by the price. After an uncomfortable eternity of 15 seconds or so, he couldn’t stand it. His next words were to improve the price. He was negotiating with himself! Since this tactic is silence, enough said?