Tune Up Your Negotiation Skills

Tactics and Strategies

Andrew L. Urich, J.D.

Associate Professor
Spears School of Business
Oklahoma State University
405.744.8619
aurich@okstate.edu

www.andrewurich.com

Making a Connection

The Worlds Greatest Car Salesman

We like, trust, and believe people who like us.

Making a Connection

Overcoming Fear

Nikita Khrushchev
My Sales Philosophy
When you are skinning your customers,
you should leave some skin on,
to grow again
so you can skin them again.

Making a Connection

Showing Respect & Building Trust

My child choked on a chicken bone

Can you get off on the right foot?

What telemarketers dont want us to know

If they are defensive you may be offensive.

Winston Churchills thoughts on the subject

Showing Respect

Showing Respect

Showing Respect

Making a Connection

Small Software Co. vs. Massive

Industrial Powerhouse, Inc.
This product is provided subject to an
evaluation condition. In the event that the
software is deemed unacceptable by the
buyer for any reason, at the sole discretion
of the buyer, the buyer shall incur no
obligation to make the final payment as
described in the above payment schedule.

Making a Connection
Concept Summary:
1. ABC.Always Be Charming.
1. Show respect and build trust.
1. They are not trying to skin you.
1. The relationship is the most important
thing.

Program Introduction & Goals

What We Need To Know

1. What is the essence of negotiation?
(Not what everyone seems to think)
2. Which negotiation variable has the highest
correlation with winning negotiations?
3. How do I plan for a negotiation?
4. How do I know when to be satisfied with my
negotiation outcome?
5. How do costs and values impact negotiations?

Program Introduction & Goals

What We Need To Know

6. Can I better manage the concessions I make
during a negotiation?
7. How can I adopt a win/win focus without
becoming Pollyanna?
8. Appreciate the vital importance of no.
9. How does bargaining power impact negotiations?
10. How can I increase my bargaining power?

Program Introduction & Goals

Leverage Through Negotiation

Status Quo

Sales 100

Cost of
Goods 90

Profit 10

Program Introduction & Goals

Leverage Through Negotiation

Sales 105

Concerted
Efforts on
Negotiation

Cost of
Goods 85

Profit 20

Program Introduction & Goals

What Does it Mean to Win?

The Bargaining Area
$200,000

$215,000

$235,000

Buyer
Seller

Bargaining
Area

$250,000

Exercise

Negotiation of a Movie Contract

On a scale of 1 to 10 please note your
satisfaction level when you finish
1 = dissatisfied

1
dissatisfied

10 = extremely happy

10
extremely
happy

Change Your Mental Model of Negotiation

Have you ever heard anyone say this?

Negotiation is an inefficient waste
of time. Cant we quit messing
around and get to the bottom
line?
Saturn
Winners curse
The box or the curtain

Change Your Mental Model of Negotiation

Change Your Mental Model

Completely new focus: It's the experience,

not the terms, that will provide satisfaction

to the other party.

Don't look at negotiation as a necessary

evil.

A)
B)

It's an opportunity to discover their

bottom line.
And an opportunity to demonstrate
the FAIRNESS of your position.

Change Your Mental Model of Negotiation

Which provides more satisfaction?

A) a bad deal mistakenly considered to be

a good deal.

B) a good deal mistakenly considered to be

a bad deal.

What matters most?

Which of these factors are most highly correlated
with successful negotiation outcomes?

Bargaining power
Aspiration level
Skill of the negotiator

High Aspirations

Research on Aspiration Level

Persons with higher aspiration levels win

higher awards.

High aspirants beat low aspirants without

regard to skill or power.

Skilled negotiators without power lowered

their aspirations.

High Aspirations

Power of High Aspirations

Reciprocity and Anchoring
Boy Scout circus
Giant teddy bear
Barbeque restaurant
Analysis that does not improve decision making

tends to be a waste

Wifes shoes
Selling up harder than selling down
Pick your clothes dryer

You will not exceed your aspiration.

First offer makes a huge impact.
Who should make the first offer?

High Aspirations

Factors Restraining High Aspirations

Fear of offending
Time constraints
Fear of failure: A culture averse to failure

stifles exploration, experimentation and

discovery

Its more work

Analyze Your Level of Satisfaction

How Do You Know When to be Satisfied?
Are your criteria arbitrary?
Remember, you never get to see the bargaining
area.
Our satisfaction level is based on..
1. Our expectation
2. How we were treated during the negotiation

Are you impacted by how far you moved from

their starting point?
Are you impacted by their pain?

Analyze Your Level of Satisfaction

How Do You Know When to be Satisfied?
Inaccurate measurement can create a false

sense of confidence.

Koch examples of Measures & Benchmarking

Energy consumption should be measured
against some ideal not a budget.
Southwest Airlines studied NASCAR pit crews
to speed up turnarounds not other airlines.

Exercise

..No Talking Please!

$10,000 has been designated for you to

share with another department head.

Person A writes a number on a piece of

paper and passes it to Person B.

Person B writes Yes or No and passes it

back.

Mental Model & Satisfaction Level

Concept Summary:
1. Raise your aspirations.
2. Its not the terms that make them happy

its the negotiation experience.

3. Avoid the winners curse.

4. When they see the fairness they say yes.
1. Being satisfied is a trap

Adopt a Value Focus

All Values Are Subjective

Values differ between all customers/clients.
Nothing has inherent value.
PEOPLE value things.
Value will vary from person to person.

Adopt a Value Focus

Bases of Subjective Value

Specific situation
Time
Uses for the product
Personal preference
Alternatives

Adopt a Value Focus

Bargaining Area Redefined by MBM

PRICE

COST

VALUE

The Power of No

NO Induces Trauma
Develop a positive NO.
Being ready, willing, and able to say no

gives you power.

Knowing when to say no gives you power.

Setting Priorities: Risk-adjusted present value
of opportunities relative to resources consumed
(such as scarce talent or capital)

The Power of No

Rigorously Explore All Alternatives

Harvards Methodology: Have you identified

your BATNA (Best Alternative to Negotiated

agreement)?

Have you fully explored and analyzed your

BATNA?

Confidence soars
Identify alternatives so you will feel able
to say no.

The Power of No
A lot of problems in the world are caused by a person who
said yes when they should have said no.
Southwest Airlines: The King of No!

No
No
No
No
No
No
No

food
choice of planes
assigned seats
extra baggage
first class
shared reservation system
expensive equipment

Why we need a Sales Manager

Failure to say no leads to disaster

The Power of No

Purchasing Managers Favorite Trick

How to say no when they tell you your

competitor will say yes.

They are testing you

Your competitor is over promising
You will lose focus
With a good relationship, they will get over it

The Power of No
Concept Summary
1. No is the key to success.
2. Practice your no!
3. Slow down
1. Hmmmm.

4. Focus on the relationship not the terms.

1. Manage emotions
2. Show respect

5. Manage their response to your no.

1. Fear
2. Guilt

6. They are testing you.

7. Remember Southwest Airlines.
8. You dont want to win them all.

Win/win

Make the Pie Bigger

Instead of Arguing About How to Slice It

Win/win is an attitude. (Fixed Pie Fallacy)

62% buy into the fixed pie fallacy.
Pay close attention to their concerns.

Increase their value. Make it easier for

them to buy from you.

Reduce their opportunity cost (because if they deal

with you they arent dealing with someone else)

Use creativity, diligence and enthusiasm to

identify new options Stephen Coveys Third

Alternative.

Win/Win

Listen First
Are you projecting?--Listen for something

unexpected.

They know everything you want to know.

Listen for opportunities to make the pie bigger?
Identify their problems before you sell a solution.
Take notes.
Listen twice as much as speaking.
Become an active listener.

Win/win

Concept Summary:
1. Win/win is an attitude.
1. Listen!!
1. The goal is to increase the value for both

sides of the transaction.

1. Cooperation is better than competition.

Evaluating and Building Bargaining Power

Understanding Bargaining Power

Dont underestimate your power.
Dont dwell on your weaknesses.
The illusion of power
The power of competition
The power of legitimacy

Landlord - Tenant Exercise

Conclusion and Summary

The Ten Most Important Things to Remember
1. The most important thingmake a connection

Its not about termsthey want a fair deal.

2. The other most important thing
high aspirations.
3. Your satisfaction criteria are arbitrary?
4. You are trading valuescost is irrelevant.
5. Listen first.

Conclusion and Summary

The Ten Most Important Things to Remember
6. All concessions send messages whether youre
aware of it or not.
7. You always have more power than you think
you do. 20% of the power is missing.
8. No!!!!!!
9. Whos skinning who?
10. Look for Win/Win opportunities.

Thank You
I appreciate your time and attention.
Please keep in touch.
Andrew Urich
405.744.8619
www.andrewurich.com
aurich@okstate.edu

References

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