Home > The Monday Musings Column > on negotiation, part three

on negotiation, part three

One of the things I talked about last time was avoiding painting yourself into a corner because you need to keep at least one exit route available to you: Once you are trapped you are going to have to take whatever the other side offers. But whilst you want to avoid boxing yourself in it is to your advantage to help the other side doing it to themselves.
I once had a masterclass in this when a contract that I had negotiated went wrong. The client was a nightmare with no working processes on their side of the interface with us and would not allow us to help them put that right. Six months into the contract we were encountering a raft of issues, losing money and the client would not even let us help them at our own expense, but there were some serious politics around the contract, some with a capital P and we could not be seen to walk away or to sue for breach of contract even though we had grounds to do so. My boss told me to get the client in and he and so we met the head honcho. I had been told to not speak unless my boss asked me to and he also played the silent card for over an hour, just gently prompting the client along a path that led him to have no option but to give us three months’ notice of termination as set out in the contract. As the client said it I could see no realisation on his face that he had been trapped; he had just come to deliver another bollocking, but had been neatly guided into sacking us. My boss dictated acceptance of the notice to his secretary and she typed it up for him to sign and hand to the client on the spot and I don’t know whether the client realised that he had been manipulated.
Mixing up giveaways, concessions and deal-breakers is a great way to get what you want. The other side will always feel that they have done well if they have got you to concede points and if you can get to a deal only having given way on things that you were either not concerned about or were prepared to concede anyway you will have done well with both parties happy.
I once was involved in buying some equipment from a supplier who was the market leader and with a reputation for not discounting. We would have been a good account for them, but had always bought this equipment from one or other of the market leader’s two main competitors. This time we wanted a lot of product and delivery was required over a twelve-month period. The whole life costing suggested that we would be better off buying from the market leader even at their standard price and so I was told to try and get a deal from them if I could.
On paper we had no real negotiating position; we wanted their product and in quantities that would have fitted into their production schedule over the year that we wanted delivery, but whilst we were an attractive account and they did want both the work and us as a customer they were not dependant on our order and their attitude to our initial enquiry was very much “That’s the price. Take it or leave it”. They had the No Deal option ready and could walk away if they wanted to, so we needed leverage of some sort.
The similar equipment that we had bought in the past was often customised slightly, although here that was a straw issue and we were happy to accept standard production units, but we decided to make much play of wanting various bespoke features including having the units painted in our corporate colours. We also could have accepted a much shorter delivery period, especially if we were filling a hole in production, but preferred to phase delivery over the twelve months. Looking at our preferred options they fitted too well with what the supplier would want and so we decided to lead with some of the things that, whilst we could have accepted them, we would happily have waived them. What we took to the table was a requirement for delivery over four months and the same level of customisation that we had asked the other suppliers for in the past. We pitched it that we really wanted to buy from them, but that we did not think that they could meet our requirements.
The supplier worked hard to show us that we could have the items much cheaper if we took standard units over a longer period, revealing their cost breakdown in the process and we worked on that breakdown to a deal in which we had been able to secure a reasonable discount. By not showing our true hand and leading with cards that we were happy to sacrifice we had got them talking and that is crucial in negotiation. Had we just gone in with what we really wanted there would have been little opportunity for debate on price, but by taking an alternative position we ended up where we wanted to go.
Next week I’ll look at the No Deal option and bring in another case study.

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