The Most Important Question in Any Negotiation
Negotiations, you either love’em, or they inspire such awkward dread that you curl into the fetal position and simply give up before ever actually advocating for yourself.
There’s something unique about the American perspective on negotiations. In most other places around the globe, haggling is the norm.
In fact, for many people, it’s all part of the fun.
That’s right: Negotiations can be fun.
That is, if you go into them with the right mindset.
In this article we’ll lay out the winning mindset you must adopt if you want to successfully negotiate life, love, and everything between.
At the end, I’ll even sweeten the deal by giving you a couple prompting questions you can ask to ease your way into the boiling water of negotiations.
So in order to get your mind right, it’s imperative you understand a few key things about the world.
First, everything has a price.
Second, that price is rarely the one you see listed.
An item’s listed price is irrelevant. It does not matter. It could just as well be (and in many cases is) a random number slapped on a tag and pushed out the door.
The question you must ask (and the most important question in any negotiation) is this:
What is this item’s true value?
How you answer this question determines exactly what that item is worth, and that is always the price you must operate from.
Now, you could just say, “This item is worth such and such and I refuse to pay a penny more!”
But this isn’t a terribly effective strategy if the person or business on the other side of the transaction deems the item to be worth more.
Taking this sort of Win-Lose mentality might result in the occasional phenomenal deal as you find people truly desperate for the sale, but not only are you burning some bridges, you’re doing some major karmic damage.
Tread lightly, my friend.
People talk. People remember.
And as a general rule, if you steamroll somebody in one negotiation (especially within the business world), people will find yourself quickly branded as that guy nobody wants to work with.
Remember: it takes years to forge a good reputation, but only a few seconds to tarnish it.
Go into every negotiation with this in mind and always seek to find the Win-Win.
Deciding Value
To do this, you must examine the question, What is this item’s true value?, from both your perspective and the other person’s perspective.
The most successful negotiators are able to put themselves in the other person’s shoes. With this ability they understand precisely what it is that person truly hopes to get from the exchange.
Let’s talk big box stores for a second. Most items in these stores have huge mark-ups. Jewelry, for example, is often marked up by over 200%. Computers, by comparison, have much slimmer margins.
Knowing an item’s true value gives you a lot of leverage in spinning some great deals.
For instance, getting 30% off that necklace is going to be a whole lot easier than getting 30% off that computer.
You can still get a good deal on the computer, but it means you must look tangentially for increased value.
Perhaps ask if they’d give a bundle discount if you also pick up a printer (a device widely known to be a loss-leader for most companies.)
You might pay full price on that computer, but walking out with a printer 30% off has boosted the value proposition.
This is a Win-Win, because from the shop’s perspective they’ve now provided great customer service, PLUS a device known for needing pricey accessories (ink and paper are worth their weight in gold).
To negotiate effectively, broaden your perspective and think creatively.
Remember, everything is on the table.
It’s up to you to find an agreeable way to split value.
Build Rapport
I’m going to let you in on a little salesman secret:
The key to extraordinary sales begins and ends with your ability to build rapport with the customer.
We buy from people we like. It’s simple psychology.
Any salesman worth their salt is working hard from the moment you walk through the door to make you like them.
The key is that it must feel natural. It’s not hard to peg the sleazy salesman trying to get cozy only for their own gain.
Real skilled sales people mask it. Or, better yet, they actually care about you walking away from the deal happy.
But while this is their strength, it can also be yours.
Allow them to build rapport, and then leverage it during the negotiation phase in the same way they inevitably will.
When the car salesman says, “Ah, my manager will kill me if I go any lower.”
You respond with, “I hear you, I’m in the same situation with my husband. I’ll be on the couch for a month if I pay a penny more than this, and you know I have a bad back. If you wouldn’t mind, maybe you’d save my marriage (and my back) and run this number by your manager?”
Great negotiators are constantly putting the ball back in their partner’s court. They keep putting the decision back on the other person. Makingthem say yes, or no.
Why?
Because humans struggle with making decisions.
The popularity of this article stands as proof of that truth.
Even more than we hate making decision, we hate saying no. It violates the social contract dating back to our Savannah days. The logic goes: I need this person to survive, therefore I should help them so that in the future they’ll help me.
Without this sort of cooperation, we would’ve died off a long time ago.
Might seem a pretty Machiavellian way to view favors, but it’s unfortunately the underlying truth of our psychology.
You can use this quirk of behavior by constantly putting the other person in the decision seat. Eventually they’ll start capitulating if for no other reason than the sheer discomfort of consistently saying no.
Negotiate with the right person
In the example with the car salesman, I alluded to something when I asked the salesperson to run the offer past their manager.
See, many negotiations fail only because you weren’t actually negotiating with the right person.
The 20-year old working the floor at Best Buy has zero ability to cut deals. You’re barking up the wrong tree asking him for a special.
Can the Assistant Manager make such a deal? Possibly?
How about the Store Manager? Definitely.
Work your way up the totem pole until you find the real decision makers, the people with the power to actually work with you.
Everything up until that moment is wasted breath.
Play the loyalty card
This is particularly effective when negotiating with places that have high customer acquisition costs. Internet, phone, and insurance companies being some obvious examples.
These types of businesses pay a premium to acquire and keep customers. The price of losing (and thus replacing) you is so high, they will almost always cut a deal to keep you onboard.
Use this to your advantage and contact, let’s say, you’re phone provider. Let them know you’ve been a loyal customer for *however long it is you’ve actually been there*, and that you’d like to stay with them, but the monthly premium is simply too much.
Finish by asking, “What can you do to help bring that monthly bill down?”
Subtle Point: It’s imperative in these types of negotiations that you ask open ended questions.
Notice how I asked, “What can you do…” and not “Is there anything you can do…”
As a general rule, the more they have to explain themselves, the more likely they will talk themselves into giving you something more.
One of these can easily be answered with no, whereas the other requires a longer explanation.
In the majority of conversations of this nature the sales representative might play the I don’t have the power to make that decision card. Politely counter this by asking to speak with somebody who is.
Then wait and ask all the same questions again.
Eventually you’ll find somebody willing to cut you a deal. It might take the form of a 20% discount for the next six months as part of a promotion, but it’s more than nothing, and well worth the time spent waiting on the phone.
Be prepared to walk-out
I have a general rule when it comes to buying new things.
Wait at least one week between the moment I deice Iwant the item, and the moment I go to buy the item.
During this time I research the item to find the best deal while also deep diving into the question: What is this item’s value?
Once armed with this knowledge, I am able to negotiate effectively with any salesperson because I understand two key things:
First, I know what the item is worth in the marketplace.
Second, I know what the item is worth to me.
Twenty years ago it was difficult to really know what an item was worth in the market place. Sellers hoarded all the information. They were resident experts and we had no choice but to trust them.
Daniel Pink in his book, To Sell is Human, points out how the digital landscape has lead to information parity.
Simply put, we as the consumer can know just as much about the item’s worth as the salesperson.
Thus, when we negotiate, we are no longer on uneven playing fields.
With equality comes great power for the buyer.
Because now I can confidently walk away. If I’m confident in my assessment of the item’s true value, then I can afford to shop around until I find the salesperson willing to share my viewpoint of value.
But here’s the thing…you won’t actually do much walking out.
Salespeople don’t want you walking out the door.
Customer acquisition is enormously costly to any company. So, once you’re in the door, they damned well want to make sure they make the sale before you walk out.
That gives you, the consumer, almost all the power.
Use it.
Three Questions Worth Asking To Start Saving Today
“What can we do to get the cost down?”
This is a great question because it’s phrased collaboratively. It is no longer you vs me.
It’s we.
We’re in this together, searching for a Win-Win.
“What if I pay cash right now?”
Cash is king and most places (especially on big ticket items) are willing to cut a cash-on-spot discount if they think you‘re truly serious about purchasing right now.
“How about free shipping or installation?”
This is such an easy one and it ties into thinking about your negotiations tangentially.
There are so many ways to boost value without ever touching the sales price of the item.
The people finding the best deals are the ones thinking outside of the box to ask for just a little bit more.
Remember, the price you see on the tag is not the item’s true value.
It’s a number determined by means which might as well be voodoo. They don’t matter. The company selling such and such item decided they wanted 40% margins and structured the price accordingly.
Almost always the price is arrived at by arbitrary means. As such, you shouldn’t shy away from setting your own price based on the value the item has to you.
Take this mindset into your next negotiation and start making deals you never thought possible.
