Even wondered how come salesmen and negotiation experts seem to have the ability to bring you exactly where they want to ?
Negotiation is as much a science as an art, and today we will explore 6 mind bending techniques revolving around the principle of commitment that you can employ in your next negotiation with your suppliers. Each of those techniques can complement each other in powerful ways to reach your goal.
Ready to be a rockstar for your next negotiation ?
1. Your scratch my back, I scratch your back
This technique refers to the principle of reciprocation, which can simply be summarized as “I treat you nicely, you treat me nicely in return”
Try this simple exercise for instance, when you come up to a random colleague that you normally don’t work with, start with a very cheerful “good morning !” with your biggest smile. The chance is that he will reciprocate.
Why does it work ? Because it is in human nature to return favor, this trait served us well through human history to recognize friends from foes.
Actually, there are many traditions in various cultures that revolve around this concept of reciprocation. In Chinese culture, it is common for guests to give money to the bridal couple in the wedding reception, and once it’s the turn of the guests to get married, they will receive back the money and some more. In English, upon receiving a gift or favor, you will often hear the saying “much obliged”.
How will this help you in negotiation ? This sense of future obligation ingrained in us is a powerful leverage that can be used.
3 examples:
Let’s say that the supplier wants to increase its price on a product due to miscalculation, far from being uncommon. If this is still well within your budget, you could accept it at a small cost for you, and in the future when you have a critical need, you could expect your supplier to help you back.
Imagine that you will have a meeting with a supplier in the lounge of a hotel. You know that it’s going to be a tough discussion because you have previously exchanged emails and have disagreements on multiple terms for the contract. When you arrive and greet him, you could excuse yourself to go to the washroom, and then buy him a coffee and cheesecake when you come back. Then after the initial ice breaker, you can ask your counterpart to do you a small favor to help you on specific blocking points that matter a lot to you. “Any reduction in price would help or I will be in very big trouble with my boss !”. Surely, the salesman will not let you down after your nice gesture, at least he will be more accommodating.
Another example, a sales manager is desperate to fulfill his quarterly sales quota and openly asks if there is any chance for you to order XYZ. Why not open give him a helping hand and place an order in anticipation ? provided that of course, you need the products or have no problem ordering in advance and that the price is reasonable. When the day comes when you need help, surely this salesperson will remember you. There is no guarantee, but it is a tacit rule that all humans have understood since the beginning of time.
Key takeaway:
- People usually return the favor if you help them. You can often see this in lobbying and politics when some politicians vote for policies that seem contradictory to their own party’s values, you can be sure that they are simply returning favors.
- People don’t like to owe something, that’s why they feel obliged to give back.
- The initial favor you provide can be of lower value than the returned favor. That’s why sales people love giving out goodies such as USB flash drives or gift hampers ! It costs them very little but the potential return is huge.
2. Rejection-then-retreat combined with anchoring
The principle of anchoring is fairly simple. Start a negotiation by making an unreasonable initial request, for example: I offer you $1,000 for the car. The supplier will undoubtedly turn down your offer, and if they don’t, you will walk away with an absolute bargain.
You then retreat to an improved offer by fainting concession and agree to offer $2,000.
This technique works because of several factors:
- Anchoring. You have initially anchored the other party with an extreme offer.
- concession: it is in human nature to reciprocate when someone offers something. Basically, you treat me nicely, i treat you nicely. The trick resides in the fact that this also works well if you offer something seemingly of low value.
This is why you would typically see on some websites prices that are crazily discounted, before: $1000 now $10 for a limited time only.
This psychological ploy plays on the huge contrast between the before and after price which seemingly make us feel that we are getting the deal of the century.
Tips to make it work:
- Start with a high offer or low offer depending on what you are negotiating that will serve as a powerful anchor. However beware that a crazily out of touch offer will trigger a negative effect as the other party may be alerted that you are not serious. If you buy an expensive piece of equipment and offer pennies, chances are that your salesman will quit the negotiation table immediately.
- Improve your offer, ideally in a series of incremental steps, up to the point where you reach your ideal offer you want to obtain. People love a good deal and would be more eager to accept a deal after you made a series of concessions starting from an extreme offer than if you present directly your best offer even if in both situations the ending offers are the same !
- Each concession you make must appear to be extremely painful for you, and that you are genuinely doing your very best to compromise and make this work. What matters is to make the other party feel like he is having a good deal. Agreements that appear to have been forged through laborious concessions are satisfying for the other party, even if in reality you are only giving the illusion that you sacrificed a lot.
There is a pressure to reciprocate concessions and kindness
3. There is no free lunch
Most people agree that there is no free lunch. But ironically, most people love free stuff. This underlying contradiction can be observed everyday. At the supermarket, with free samples. At the office, with salesmen giving free goodies. In business, with consultants providing free of charge assessment, etc.
If you work in procurement with sales people, undoubtedly you experienced this technique used against you before. But, what if you could also use this technique in negotiation against them ?
But what can a buyer possibly offer to a salesman for free (or sort of) ? A lot !
Time, information, contacts, volume commitment, early order, business prospect, etc.
Of course, none of those are totally free because time is money, data has value, volume commitment requires a budget, inventory has a cost but you get my point.
A buyer could tell a supplier that it is not in his company policy to accept volume commitment, but that he is ready to make an exception to this while in reality he already knows that he has specific quantity needed for the upcoming year. In other words, you could give away something for free that costs you nothing but brings you back value such as a discounted price. A win-win, the salesman is happy, you are happy.
A procurement professional could share about his company’s roadmap, latest impressive growth and increase in revenue, and expansion in new markets. All this information is provided to the potential suppliers for free to appeal to them. And once the presentation is over simply ask them if they would be interested to be part of this journey and how much reduction they can offer compared to existing corporate suppliers. If this sounds familiar to you, most likely it’s because you experienced it before where some salesman offers you something free of charge but ends up making a sales pitch for an expensive product or service.
A supply chain professional could suggest going to his supplier’s factory to help perform an improvement audit which is of course free since it’s part of his job anyway. And then urge the supplier to procure an expensive piece of equipment to improve its productivity. Our supply chain guy would gain a lot since the production output is now higher, the defects lower, and all this at no cost for him. This is the same principle of pest exterminator companies that provide free of charge diagnostics and then charge a premium for their service after the initial assessment.
Hint: If something costs you nothing, you can still exchange it for something valuable. The other party doesn’t need to know that it cost you nothing in the first place. Be creative.
4. Appeal to their fairness and consistency
Consistency is an important principle for humans. It allows us to behave and conform in society, after all people hate when others are not consistent, it means that their words and actions don’t match. Thus the expression “to walk the talk” which is all about valuing the consistency trait.
This trait considered as valuable most of the time can easily be exploited for the purpose of getting the upper hand in negotiation as people tend to feel obliged to commit to something just for the sake of being consistent, even if it goes against their own interest. By not conforming to this expectation, they will appear unreliable. In some asian cultures, when you promise something but don’t do it, you “lose face” and this concept is paramount in everyday’s life, to the point that Japanese’ samurai had a code of honor where they will perform the act of “seppuku” when they bring shame and dishonor.
Read more about the concept of giving and saving face when doing business in China here.
A good use case about this technique in negotiation is to listen very carefully to the arguments presented by the other party and then appeal to this principle.
For example: over the course of 2 months, a supplier who is participating in a bidding has promised to offer cleaning service for your company’s office premises at an all inclusive price of XYZ without any raise for 1 year. However, due to miscalculation on the time needed to perform the cleaning activity, the supplier wants to come back to you and increase its price. As a buyer, knowing the principle of consistency, you could appeal to this. “Didn’t you promise that you will keep the same price for 1 year ? Are you planning to break your promise? How am I supposed to trust you?.”. Either the supplier needs to admit that they lied, or they choose to live up to their words. In most instances, people rather choose the higher virtuous choice which is to keep their promise.
If you go to a seller and tell him that he was recommended to you by a common friend who shared with you that this seller is very reliable, fair and competitive. Then, you will start the relationship positively and it will serve your goals well. The seller will have a reputation to live up to !
Advice:
- As a general rule, It is always a good idea to appeal to someone’s better nature and higher sense of justice, nobody wants to be the bad guy. People are willing to sacrifice a bit just to appear consistent.
- The key to succeed with this technique is to make sure that in the course of your relation with the suppliers to get them to say “yes” as many times as possible, agree on the terms out of their free will (or at least make them feel so), and verbally commit and adhere on the arrangement whether transactional or the principle of the deal you have with them. Once they are committed, it’s always good to put this in writing or have a minutes of meeting sent out that recap the agreement then when the time comes to appeal to their consistency, they will feel obliged to walk the talk. The opposite would mean that you will never trust them again.
- It is always better to have the supplier send out the minutes of the meeting, this would ensure personal commitment since they sent it out. It would be very hard to feint forgetting something or disagreeing when you are the one that wrote down and sent out the recap to the entire list of attendees, right ?
5. Make the other party feel guilty
This technique works well in many situations . There are 2 ways of doing it.
First, combining the commitment technique explained previously, we could also reinforce this by making the other party feel bad for us
Obtain commitment by asking a seemingless mundane question “Hello, how are you doing today ?”, “Hello, how’s the business doing ?”, or proceed with “I heard the great news that your company signed a big contract with customer ABC ?”
Often, the go to automatic answer would be “I’m doing great, thanks and you ?” or “Business is doing well, we are growing”, “Yes ! It’s terrific news !”
Gotcha ! Once the party falls into this trap, it is time to make them feel guilty. “Glad to hear that, because I’m doing very badly and wonder if you will be willing to help me out …”
This works marvelly well because once people have asserted a positive position even if it was answering a simple question, they will feel more inclined to agree to your demand if you now appeal to their sense of humanity. How could they not help you since they said they are doing great and you not, it would be admitting that they are an insensitive human ! Nobody wants to appear lacking in humanity.
Second technique, we will call it “The Simpson” technique ” in reference to the scene where Krusty the clown is mistakenly being beaten by Homer while the kids are pleading him stop.
6. Foot in the door technique
Seemingless small requests or acts of commitment can later lead to big commitment.
Let’s take the below fictive conversation between a buyer and a seller:
Now guess the obvious answer from the seller ?
This shows the power of commitment, once a person has actively committed to something, it becomes near impossible for him to change his mind later on, doing so would mean rejecting one’s self image. So future behaviors are often dictated by past commitments. Scary ?
During the Korean war, the Chinese extensively used this technique based on a so called leniency program to brainwash the Americans POW.
Here is another example of this technique in action:
Buyers can ask salesmen if they can trust them to be honest and transparent.
Invariably, they will answer “Yes, of course”, this is the standard answer after all. If someone asks you the same question, do you not answer “yes” ?
Then, we could carry on with another statement “do you think your company is offering us perfect service/perfect product”. Since no company is perfect, sellers would find themselves admitting that of course they aren’t perfect.
Now that they agreed on imperfection, buyers might ask them to list down all of those imperfections and issues.
After all, they are the ones that admitted to imperfection so they shouldn’t have any problem to be honest and transparent about it now.
Later, the supplier could be asked to deep dive on this list of problems and how he will remedy them.
Or perhaps, the buyer could say “do you think it is normal that we are being charged for imperfection and quality defects ?”
The seller is now cornered. At each step, he agreed with the statement of the buyer out of his own free will, now the buyer is using the seller’s own words against him.
If small gestures go a long way and help obtain favors, “you help me, I help you” technique.
Then small harmless commitments surely are next level mind tricks to persuade people to do things that they wouldn’t have done in the first place.
The best part is that they genuinely believe it since every time you manage to elicit a small positive feedback loop from them in the form of an agreement.
Why does it work ?
- Why is using baby steps more effective than bigger steps ? If you ask too much, people will shrug it off and later say that they were pressured into doing something.
This technique works because you slowly and steadily shift the balance of the opponent’s inner thoughts, ultimately he convinces himself that he is doing this out of his own free will. It’s like psychological judo, using your opponent’s mind against themselves.
- People don’t like being told what to do. And if you force them to do it, you might obtain short term compliance but they will resent you and it will be unproductive in the long term. Should you have asked directly for a price reduction, or to invest a big amount of money, the other party would most likely say no. Brute force is often met with resistance. So be water instead.
Make a DEAL
If you do something against your will, your opinion will still remain against the request even if you perform it under duress. So make sure to secure the other party’s commitment through the DEAL method: The process must seem Demanding, with Eyewitness, with the other party being Actively engaged and always feels that he has the Liberty to agree or disagree.
7. Conformance or the herd mentality
Correct behavior is dictated by what the masses decide to be. Did you ever found yourself in a situation where you join in a group of people talking and suddenly they all laugh, but you have no clue why, but still end up laughing in order to fit in.
The tndency to feel the need to blend with the crowd is a very powerful tool that can be used in our favor in negotiation.
People feel more compelled to buy something if they see a whole bunch of testimonials on the website or if there is a 5 stars rating from 1,000 people that bought it. Seeing a long queue outside of a shop or restaurant also works like magic, if so many people queue then it must be good !
An experiment was carried out in 1967 by A Bandura, J E Grusec, F L Menlove, where children terrified of dogs would watch a little boy playing merrily with a dog over a period of days. A big fraction of the normally terrified children would later on feel at ease petting the dog.
This is the power of social proof. If as a buyer, you can show to your seller that many of your suppliers are willing to increase their yearly price by only 2% instead of the requested 10% that this seller is asking. Then, your seller would feel pressured to align himself. Even if his initial reasons for this request may be very legitimate or perhaps we are not even comparing exactly apple-to-apple in terms of supplied products. All this doesn’t matter, if you can prove and convince your supplier that he is the black sheep and 99% of the other suppliers took a different position than his, he will feel compelled to align with the majority.
Tips and anecdote:
- To see is to believe. The more supporting evidence you can provide to the other party that your opinion represents the majority opinion the better it is. For example, you are having your annual price negotiation with your supplier and he is asking for a +10% increase. If you can show him data in hand that his competitors are asking on average +5% only, then you will increase your likelihood of having him lower his expectation to align with the general consensus.
- In case of doubt, be a copycat. Just like seeing a group of people laugh, or all the hundreds of positive reviews for a product, this will trigger an irresistible urge to change opinion and join the mass in order to conform. In situations of uncertainty, people are more likely to use others’ choices to guide their own choices. This is perfect for us, as negotiation is all about dealing with ambiguous situations: is the other person having the upper hand ? Am I asking too much and risk losing the deal ?
- There is comfort in conformity / We are all the same. This technique works best when you can show to the person you are trying to convince that the other people are exactly just like you. It is in human’s nature to try to relate, and people will always be more inclined to follow the lead of similar individuals. Example: supplier A based in Vietnam wants to raise the price by 10%. Tell him that you have all your suppliers based in Vietnam providing exactly the same products that are only raising the price by 5%
- Why do sheeps jump off cliffs to their death ? When I was a young exchange student in Guangzhou, China, I went with a group of friends to visit an iconic landmark called Baiyun mountain. My friends all decided to go bungee jumping. All of them. Frankly, the idea of jumping from the top of a mountain never attracted me, and I’m sure that a lot of people reading this would share my feeling. Well, I decided on that day that I’d jump so that I won’t be left as an outsider. Once I was at the top of the platform, and looked into the void, I felt absolutely terrified, my whole body was shaking uncontrollably, and I wanted to give up. But everyone had jumped before me, and I was the last one. So I jumped.
Classic peer pressure, this is to illustrate the power of conformance. It is so powerful that you may be surprised at doing something that defies all rationality. After all, jumping just because all the people before you jumped isn’t the most intelligent reasoning. “Insert sheep jumping out of the cliff”
The shocking mass suicide incident at Jonestown, Guayana where nearly 1,000 people committed suicide is probably the most horrific know example of the power of the crowd. Never underestimate it.
8. Scarcity – what is rare must be valuable
Why are diamonds worth so much money ? Because they are rare, or at least, we were led to believe that they are rare because in reality it is a monopoly controlled by a company known as De Beers. Reality is often disappointing, diamonds are not particularly rare. But a cleverly crafted fairytale by De Beers with very convincing advertisement and marketing had made society believe for all those years that the only proper way to propose to a woman is to buy a fancy shiny stone worth at least three months of the man’s salary.
The same principle applies to baseball cards. Ever thought how could a piece of carton with a picture on it be worth thousands ? The inevitable answer of those collectors is always “because it’s rare !”
This marketing trick is nowadays widely used to entice innocent consumers to buy stuff that they would normally not consider. That’s why you will often see on e-commerce websites’ banners with crafty words like: “SALES: only 10 items available for TODAY only !”, “4 remaining only”, “our crazy discount is back, only once per year: 80% off everything !”, “Diamond Limited edition in collaboration with Superstar”, “Platinum Limited Edition with special VIP access !” etc. And you know what ? It works fabulously well ! People just fall for it because what must be rare must be good. It works so well that the gaming industry employs this same trick with their so called “Special Edition” and “Limited Edition” and just throws in some rare limited colored weapons, digital pets, and so on. From clothing, to gaming and even automotive, they employ this one technique
The good thing for us is that all those examples are clear evidence that this is a powerful technique to use.
There are many ways to use this to our advantage in negotiation with suppliers, and as always, you are only limited by your creativity.
Let’s assume that you are a buyer for a global toy company. Every year, you are inviting your suppliers to participate to biddings on a hundred of projects or so. If you need to obtain better prices, then you can tell them that this year the number of biddings available for them to participate will be only half as much as last year. Suddenly, it rings as a wake up call for the suppliers. It is like you pronounced a powerful magical spell and now all suppliers just come to you with a more attractive proposal.
Scarcity + Deadline = Your cocktail for success
Did you ever see those ads with an on-going countdown until the promotion is over ? it becomes a frequent sight every year for Black Friday and other so called Special Sales season or Limited edition sales. When combining scarcity with the pressure to act, it triggers in us the fear of missing out. Because we know that once the timer reaches 0, then the opportunity is gone, and it won’t be back, not tomorrow, not in the future, never, and that’s a scary thought. It pushes you to act immediately.
Another example would be to let your suppliers know you are consolidating your approved corporate suppliers panel and that you can only keep the best ones. You only have 4 spots out of 10 available and that’s it. This is the new company’s policy and it’s coming from the very top. Throw in additional pressure with a time-bound proposal, and you have a perfect recipe for success. “I understand that our business is valuable to you. If you can tell me by the end of the day that you are willing to keep your annual price unchanged, then I can probably keep you in the list of approved suppliers otherwise we will have to go through the entire validation process”. If your entire negotiation is verbal, just make sure to write down a recap by email for safe measure.
Why does it work ? Our supplier doesn’t want to lose the business, there are only limited seats available which make it scarce, and finally there is a time limit proposal, after which things become way more cumbersome for our supplier.
Opportunities are way more valuable when they are less available. And even more valuable when there is competition for it. This was particularly true at the peak of covid when supermarket shelves were completely empty for paper toilets and other basic necessities.
Three important points:
- People associate rarity with value. It is just an automatic shortcut that we take in our mind unconsciously in our daily life.
- Loss aversion is a very strong behavioral bias. Many studies have proven that people experience loss as more painful than equivalent gain. So if you want to obtain something, make sure to frame it in this way by letting your suppliers know what they stand to lose if they don’t listen to you. As the prospect of losing something rises with the tick tack of the countdown, people tend to lose rationality, become more emotional, and act in the spur of the moment by fear of missing out.
- Things tend to become more desirable when it has become less accessible than when it has been in short supply all along. People want whatever is taken from them.
Conclusion
There are many ways of achieving a successful negotiation, but the key is to always obtain the commitment of the other party.
Now time to put all those techniques into practice by downloading our pdf cheat sheet that will help you prepare your next negotiation and bring it to the next level. You have my words !
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