Does toughness in a negotiation pay off?
Does being cold and indifferent in a one-off negotiation get you the best deal?
There are two schools of thought on how to approach one off negotiations where price is the main variable and where you never see the other party again.
One side believes that you should take a firm, cold and arrogant approach when negotiating over price as this would give you the best deal. It is believed that this approach makes the other party feel uncomfortable and they are then more likely to concede as people are not comfortable with uncomfortable situations.
The other approach is the warmer approach, building rapport but still being tough, sincere and challenging on the issues however warm on the people. The important point to make here is that just because you are warm on people does not mean that you can’t push hard to get the best deal.
At Octalo we support the second approach for several reasons. While this is a one-off transaction and you technically never see the other party again, you never know what the future brings and there could be the chance that you might need the other party again. Secondly, negotiation is a people’s business and people deal with people. Research has shown that people tend to be more likely to make a deal with people they like; so do you think you get a better deal by being cold, tough and arrogant or by being more collaborative? I will leave that up to you to decide but here is a story that recently happened to me.
I recently bought a second hand car from a dealer. It was a one-off transaction and at the end we haggled over price. I did not need to buy the car at this particular dealership as there were a lot of alternatives around.
Before the negotiation, I did my research and devised a strategy. I set my maximum acceptance point, meaning the absolute maximum I would want to pay and lined up my BATNAs, my alternatives. I was ready to negotiate. Before I went into the negotiation I decided to take the second approach, being tough and sincere on the issues but building rapport with the people. The intention of my approach was to build rapport, so I could get the best deal.
On my way to the car dealership, I thought through possible negotiation scenarios and statements and what their responses could be.
The car was advertised for $25,500. I went in and gave them my offer of $17,546. I deliberately used an un-round number to make it look like as if I had thought about my offer long and hard and calculated every cent and dollar I had. The car sales agent looked at me and said ‘that is too far off’.
I looked at him and said nothing because I had nothing else to say. He then said, ‘look I can do 23,500$ that is the best I can do’. He conceded 2,000$ in the first 5 minutes, which indicated to me that there was definitively more room.
My approach was to built rapport, so I told him what I needed the car for weekend trips I had planned and somehow we ended up talking about The Yarra Valley and red wine. I then gave him my next offer of $18,754. He then said that he really liked to sell me the car but he can’t do it for under $21,000.
I then said if he throws roof racks in I offer $19,728 and a bottle of Shiraz from a particular winery in the Yarra Valley. And then there was silence again and it was uncomfortable for both parties.
It seemed like an eternity when he broke the silence and said that he will need to speak to his boss.
He disappeared into the office and came back after 5 minutes telling me that he can’t go below $21,000. I thanked him for his effort and said that I am not in a hurry and he could give me a call if the car hasn’t sold at the end of the month. I demonstrated that I was not desperate to buy the car, I had time up my sleeve.
A couple of days later I got a phone call from the car dealer, he asked me if I am still looking for a car. I told him that I am still interested in the car plus roof racks and that my offer of $19,728 plus a bottle of red still stands.
After some more back and forth we did come to a deal. I got the car and a set of roof racks thrown in which cost me all up $19,728 plus a bottle of red.
I left the car dealership being very content with my deal and the car dealer was happy to receive the bottle of wine as a deal sweetener. Over the course of the negotiation, we developed rapport and a relationship despite me being firm on my offer. Being tough on the issue does not mean that you have to be tough on the people.
A couple of weeks later I jumped in the car and realised that the battery of the car was dead, it was due to be replaced, something I should have done already but did not get around to it. I was stuck, so I rang the guy who sold me the car and told him that I had a flat battery and said to him that I would be delighted if he could do me a quick favour and come over to jump start the car. Since he was only ten minutes away he had no problems coming over and helping me out.
If I had taken the dismissive, arrogant and tough approach when purchasing the car, we would not have had a relationship and I doubt he would have wanted to help me out.
In negotiations, we deal with people and people like to deal with people who they like, it pays off to build rapport and get the other party on site.