bargaining and concession trading

Beware of Buyer’s Props
A common tactic employed by some negotiators is to talk up your competition by implying, or even stating, that they have proposed a better deal. However, when in the role of seller it is important that you are aware of the possibility of the buyer attempting to stage-manage your perception of the state of the competition. It is also important that you recognize ‘buyer’s props’ for what they are and don’t let the other side successfully intimidate you into believing that you are in a weak position.

Using a Principal
It can sometimes help a negotiator to appear to be acting on behalf of a principal. The negotiator can then act as if they have restricted room for maneuver and can only negotiate within the terms of their mandate; which is determined by the principal. For example, they could claim that the mandate detailed a specific upper price limit, and in doing so remove the need to justify it themselves. Another advantage of the mandate approach is that the negotiator can always refer back to their principal - whereupon the limits could conceivably be moved. In doing so the negotiator doesn’t suffer, indeed they may even be viewed as assisting the negotiations by obtaining a change in the mandate conditions. In reality these may have been fictitious all along. Mandates, whether real or imaginary, protect the negotiator from being held personally responsible. Therefore the negotiators are unlikely to become the target of any personal abuse or hostility - should the other side become irritated during the bargaining phase.

Surprise Tactics
Surprises are a classic negotiating ploy that can be used either to get stalled negotiations moving again or to shake up a negotiation that is not going your way. Here are some examples:
“We’re going to have to change the discount levels from those previously agreed, as our board has rejected that aspect of the proposed deal.”
“My boss would like to meet your general manager to discuss this situation.”
“We want to review this deal because we’ve just received a better offer.”

If the other side spring a surprise on you, remain calm, make sure that you understand the details and then ask for a break in negotiations, so that you can rethink your position. Whatever you do don’t panic and try to recover the situation on the spot, but adjourn and then come back with a calm and considered response. If you’re planning to use the surprise tactic in a round of negotiations then it is important to remember that one surprise is enough, a second or third is likely to make the other side lose confidence in you as a trustworthy negotiator.

Concession Trading
To a large extent negotiating is the art of knowing how to exchange concessions. One of the major drawbacks with this approcah is that it can involve losses at two levels - both materially and from an image perspective. Concessions can become a way of life, eating away at an organizations profit margin - particularly, for example, when sales targets are volume based with little or no recourse to the bottom line. This is why it is important to plan carefully the concessions that you are willing to make. Here are some useful guidelines on how and when to offer movement.

Avoid making the first major concession
It is important to work hard at not being the first party to make a major concession. The psychological victory gained by the winner of the first major movement is so important that it may shape the overall outcome of the talks. If you do find yourself in this unenviable position then try to obtain an equally important concession in return.

Offer concessions in reverse priority order
When the other side offers to make a concession they will usually expect you to make a concession in return.

It is important to have your concessions listed in reverse priority so that you can offer a concession of your choice before they can ask for something specific. Alternatively you could opt to play ‘hard-ball’ and accept their offer without responding in kind.

Make every concession contingent
Frame every concession you make in terms of “If you agree to X, we’ll give in on Y”. If, however, the other side makes a contingent offer, you should aim to seek an advantage. For example you could counter with an offer like “We’ll accept X and Y but only if you agree to Z”.

Behave as if every concession that you make is important
The other side will not usually know how much importance you attach to the concessions that you make. If you give the impression that a concession that you have traded is of no consequence to you, then the other side may push for further concessions before making a significant movement in their position.

When concessions are being traded, be wary of the negotiator who gives in too easily. They may be naive, they may know something that you don’t or they may have misunderstood the consequences of agreeing to your demands. It is in both side’s interests to make sure that the implications are fully understood before entering into a formal agreement.

Avoid Goodwill Concessions
Each concession made may be read either as a goodwill gesture, or as a sign of weakness. Even in the best case scenario - where a concession is taken as a sign of goodwill - there is absolutely no compelling reason for the other side to respond in kind. Making goodwill concessions is not contagious. An experienced negotiator is more likely to accept the concession and feel confident that he can seek further movement from a party that is ready to make unilateral concessions. If however, the concession is read as weakness on your part then the other side may very well adopt a tougher stance. The law of the jungle prevails at the bargaining table and one thing that you must try to avoid doing is to draw attention to any weaknesses in your case.

Concession Management
The problem with making concessions is that making one from a position of weakness can lead to requests for you to make a series of follow-on concessions. Alternatively, if you are not in an obviously weak position, and are seen to be too ready to make concessions, then the other side may start to feel that the underlying deal must be biased to your advantage. Another important aim during the bargaining phase is to get the other side used to making concessions. A good tactic here is to get them to make a few minor concessions at the start of negotiations - as this will lay the groundwork for obtaining more important ones later on. If the other side refuses to make any significant concessions then this may indicate that they are not negotiating in good faith. Finally, if the other side has got used to giving little, or nothing, away then they may assume that they are in the stronger position as the negotiations draw to a close.

Recognizing a Losing Trend
In long negotiations, the advantage often swings back and forth between the two sides. However, sometimes you can find yourself on a losing trend when you feel that despite your best efforts you are consistently coming off second best.

As a general rule consider a losing trend to be indicated by:
1.      A situation in which you find yourself making three unilateral concessions in a row.
2.      You can’t keep the other side focused on issues which you feel are important.
3.      You find yourself persuaded by the arguments of the other side on three or more successive points.

You should learn to recognize a losing trend and respond by either:
1.   Taking a Break - make an excuse and suspend negotiations while you reorganize your arguments and rethink your strategy. This could be a short coffee break, a lunch break or you could make an excuse for suspending negotiations overnight.
2.   Moving the Focus - a losing trend can result from the negotiations becoming centered on your weak areas. Try to move the debate on to areas where you are stronger.
3.   Trading a Concession - one sure way to stop a losing trend is to gain a concession from the other side. This may be worthwhile even if the trade seems generous from your perspective - as you may shift the momentum back to your side of the negotiating table.

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