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Want to Increase Your Take in Negotiations? Find Your Opponent's Achilles' Heel

March 9, 2017

 

Before you enter the negotiating room, there are a number of steps you need to take if you want to leave the table with the biggest possible slice of the pie.

Here is a checklist of the types of questions you’ll want to work through heading in. The first set relates to preparation required to solidify your position and the second relates to information essential to understanding that of your opponent.

 

Your Position:

·        What are your objectives?

·        What are your must-haves and non-negotiables?

·        What is your economic walk-away (or bottom line) position?

·        Who are your key stakeholders?

·        What is your BATNA (best alternative to a negotiated agreement)? [1]

 

Your Opponent’s:

·        Who are their essential stakeholders and who is/are the decision-maker(s)?

·        What are their wants/interests/motivations?

·        Will they care about your issue? If not, how will you make them care?

·        What are the dependencies you need to surmount?

·        Do you have both a reset and exit plan if things go south?

 

What’s more? Find out their weaknesses. By identifying the other side’s Achilles’ heel, you strengthen your hand and chart a course for hitting or exceeding your deal goals.

 

Finding and properly using weakness or an Achilles’ heel of your opponent is value creation at its finest. It’s not unseemly, and you can be sure your adversary is searching for similar vulnerabilities in your position. Consider these brief illustrations. In a real estate transaction, you might be looking to hire a realtor as your listing broker for the sale of your home. There are two competing brokers who list virtually all of the homes in your extended neighborhood. Within the first ten minutes of meeting one of the brokers it is clear he is motivated perhaps more than anything by not losing the listing to the other broker. It is entirely within reason – and frankly rational – for you to test and, yes, exploit that fact. The presence of the other broker lurking in the background may serve as the eager broker’s Achilles’ heel, and may lead to his acceptance of a reduced commission from 6% to 4% and the term of the exclusive listing cut from six to three months. Your priorities in the transaction - securing value and a speedy sale – have been maximized by knowing and using the competitive landscape between the local brokers to your advantage.               

  

In another example, you may be working on a corporate deal with a new supplier. You want to establish a fixed price over a five-year term with no minimum volume commitments. They counter, demanding a minimum commitment schedule containing escalating penalties in the event of volume shortfalls. You reach impasse. Your preparation, however, reveals that the supplier is experiencing extreme cash flow pressure. While their cash situation is likely to stabilize by the end of year one, an unanticipated shortfall from a cancelled order puts the supplier’s business in distress. So much so that they might consider paying a premium (i.e., willing to consider otherwise non-negotiable concessions) in exchange for more cash up front. Knowing this gives you the opportunity to structure a deal to your liking by front-loading the year-one payment, with savings on the back end and no unit commitment. A path forward for a good deal and a job well done. 

 

How to Position Their Achilles’ Heel:

 

It’s not necessary or advisable to rub your opponent’s nose in your strengths or their weaknesses. Overplaying your hand may end up chasing them from the table. Be measured and treat it as you would other factors that objectively validate your overall valuation for the deal.

With that said, you shouldn’t gloss over it or be hesitant to use it. In fact, extensive research serves as a guide here as to how you should position your counterpart’s vulnerability in a deal. The concept of “loss aversion” teaches us that there is a distinct human preference for avoiding potential losses over gaining benefits. In one study, consumers were pitched on the value of insulating their homes as a way to improve energy efficiency. Half of the consumers received pitch #1 and the other half pitch #2:

  1. If you insulate your home, you will save x dollars per day;

  2. If you fail to insulate your home, you will lose x dollars per day.

Results showed that the pitch #2 group were dramatically more likely to pay for the insulation services than those in group #1. [2] This reminded me of a reality TV show I saw recently about a realtor trying to close a deal with a couple looking to buy a home. After trying everything to sell the home’s value: location, desirable school district, a recent kitchen renovation, etc., he switched to a different tact. He asked if the couple could see themselves raising their family in the home. When they both said yes, he then asked: How would you feel if you lost it then? (spoiler alert - they bought the house).

 

These approaches can be extremely helpful in aiding us in the vital task of selling our proposal and the vulnerabilities and weaknesses of the other side. Consider our Achilles’ heel examples, above. Loss aversion may lead us to structure our message as follows:

 

Ø Realtor: If you don’t accept a 4% commission and three-month exclusivity period, you likely will lose the listing to [Realtor B].

 

Ø Supplier: If you don’t eliminate the requirement of a minimum volume commitment, you will lose the heavily front-loaded year 1 payment that I have proposed.

 

Athletes often talk about hating to lose more than loving to win. That’s true of many folks wired for competition. Use that to your advantage. In your next negotiation spend the time you need to identify weakness and vulnerability in the other side. Importantly, take a page out of the behavioral preferences we discussed, and practice adjusting your message to emphasize for your opponent why doing a deal with you will help them overcome avoidable consequences and loss. Done effectively, you’ll end up with a much bigger and better slice of the deal pie.   

 

If you liked this article, please share it with others. And please comment with your approaches for expanding the pie in your deals.

 

[Nick Psyhogeos is the CEO of Global Negotiations, LLC and author of Confessions of a Global Negotiator: A Quick Guide to the 5 Rules Business Development Professionals Need to Close Great Deals – to be published by Authority Publishing in early March 2017].      

 

[1] The term BATNA was developed by Roger Fisher and William Ury in their classic book Getting to Yes. Your BATNA is what you determine to be your best option if you can’t close your desired deal. In a dispute, it could be you litigate or go to mediation to try and settle. It can also mean you don’t do a deal at all or turn instead to seek a deal with the next most appealing party. See Getting to Yes, Fisher and Ury (1981) at page 102.  

 

[2] The Power of Persuasion, Robert Cialdini (2003) at pages 18-27.

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