I had a conversation with my friend the other day about how frustrating negotiation could be for entrepreneurs.
Every entrepreneur must know that negotiation is a necessary part of doing business. In fact, I can’t imagine how any entrepreneurs would survive without negotiating their way out of problems or into opportunities.
If you are an entrepreneur or have aspirations of becoming one, it is only a matter of time before you are faced with the daunting task of negotiating. Whether it be for your new business partnership, finding investors, hiring employees, or even buying supplies from suppliers such as food and housing – negotiations will happen.
For this reason, it’s important for every entrepreneur to know what these 5 dangerous negotiation strategies are so they don’t get frustrated or accidentally hurt themselves in the process of trying to make life better.
This post will cover those five strategies: Cherry Picking, Anchoring, Electric Shock, Split the Difference, and Tick Tock Boom.
Let’s get started!
Cherry Picking (Negotiation Fork)
Business people are always looking for a way to get something they want. With a cherry-pick, you get what you want and let them keep the solution that is not important to your business.
What makes this strategy so successful? It’s simple: when you pick only a few items from a list bundled offer, your counterpart feels they are offering you less. Hence, they are obliged to accept your offer.
But in reality, you are getting everything you need!
For instance, a company wants to offer you a full brand identity pack for $200, You unbundle all the contents of the pack which contents the logo, animation, and 7 other assets, assign a price to each, then select only the logo which is what you want.
Anchoring (Negotiation Hook)
According to recent studies on how negotiations are conducted between buyers and sellers across cultures, one popular tactic among negotiators is anchoring – suggesting an opening figure with which all future discussions will be anchored on.
As the Buyer, simply set a low price and make it seem like your highest budget. You can even go ahead and add “take it or leave it, that’s what we can afford at the moment”. This price becomes what we call the anchor, which is where all other bids will be based for negotiation purposes.
As a skilled seller, a counter-effective technique to use here would be making a very ambitious first offer and make seem like that’s the best value your customer can get. Even if you have to go low, it won’t always be as low you would have gone without using this strategy.
Electric Shock (Negotiation Drama)
“AHHHH! It costs how much?!”
The buyer appears to be shocked or stumped by the price you’ve offered. It could be an orchestrated reaction, rather than a genuine surprise. Watch it! It only means a negotiation strategy is in play.
In some scenarios: The buyer’s eyes widen as they look at the price tag. It could be a ploy to feign surprise, but it seems like a genuine shock when you see their face crumple with disappointment. You watch them for a few seconds more before stepping towards them and asking “is that too much?”
Split the Difference (Negotiation Wand)
I really find this tactic very fascinating.
Have you ever been in a situation where your counterpart is asking you to meet them in the middle – making an offer that seems inconvenient for both parties? It’s often an emotional appeal that works 75% of the time.
For instance, your make an offer of 700,000 for a service and the other party is adamant and sticks to 900,000. Eventually, he offers you meet him in the middle and “Split the difference”, which means you are both agreeing to settle for 800,000.
The first time I received this request, it made me really uncomfortable because we typically like to work out an agreement so both parties are happy with their end result.
However, I’ll recommend you read “Never Plit the Difference” by Chris Voss, Former CIA Negotiator.
Tick Tock Boom (Nogotiation Explosion)
You see the world from a different point of view when your time is limited. That’s why a fast-paced negotiation can make things go smoothly for both parties or it could backfire.
The Tick Tock Boom tactic uses time pressure to get the counterpart to reconsider their price.
A buyer can use this time pressure tactic to get the seller to lower her price because they fear losing a buyer; you hear statements like “we want to get this done today, we have other people we can contact. Are we doing this together or not?”
As a seller, you can also use Tick tock boom tactics without sounding vain, “you know you need me and I’m feeling generous today. By tomorrow I have to get started on a big project and won’t be able to take your job”
The idea of negotiating can be daunting for many, but it doesn’t have to be.
Knowing these 5 dangerous negotiation strategies will help you avoid getting frustrated or hurting yourself in your next conversation with a business partner.
If this blog post has given you some ideas about how to improve your skills as an entrepreneur and negotiator, let’s chat!
I’m always happy to talk about brand strategy. Which one of these five tactics do you think is most likely affecting your negotiations?