Sometimes things just fall into place; we negotiate a great deal without really understanding the skills that we used or why they worked. If asked, we would say it was “just good luck” or “my personal brilliance”. The problem with these reasons is that the deals cannot be regularly repeated. We are not always going to be lucky and sometimes our personal brilliance fails us.
So, I am going to attempt to isolate and highlight the key stages of a negotiation and the skills that each negotiator has at their disposal. If these key skills can be identified, we have a good chance of repeating our success. Using these skills does not guarantee a better outcome or even any deal at all, but if the conditions are right, then consistently great deals are within reach.
The details of the negotiation I am about to share are straightforward: a large retail chain which never has sales or discounts agreed to reduce the price for some avocado trees from the marked price of $78.50 to $40 per tree. Over many years of dealing with the retailer, discounts this large are unheard of. The trees are in perfect condition, and we are in the market for some trees to complete our orchard.
We were not there to buy the trees, but once we saw them, we thought we should make some enquiries. We asked the question, “Who do we speak to about these avocado trees?” The response was, “Wendy’s in charge and there she is over there.” This was our first key step - finding the person in charge who had authority to negotiate. Too often this step is forgotten, so we waste valuable time talking to people with no interest in negotiating with us or even if they did have an interest, no authority to do so.
The conversation with Wendy followed.
“We’re interested in the trees but they’re too expensive.” So we indicated an interest in purchasing but not at the retail price.
“How many do you want?” asked Wendy.
“We can take twenty” was our response. So now we had indicated a desire to negotiate and provided a substantial incentive. The size of the order was large enough for a retailer to indicate we were serious about negotiating. The next question from Wendy indicated that she also was keen to negotiate.
She asked “Can you take them now?”
Our response was, “Yes”. The now indicated that she might have a problem of being overstocked.
“What can you pay?” asked Wendy and our response was to quote the price offered by our wholesaler.
“$38.50” - a legitimate price. By being the first party to nominate a price, we had now anchored the subsequent negotiation around that credible price point.
Wendy then revealed that she too, paid $38.50 per tree and that she was at a loss to understand why she had been supplied with so many by the national office.
She then said, “If you take them today, you can have them for $40 per tree.” She had solved her overstocking problem, did not have to carry the trees through autumn and winter and had received some profit. For both parties it was a good deal. We could have got the trees cheaper from the wholesaler, but with significant travel and time involved.
In summary we had:
- Negotiated with the person with the authority.
- Indicated through the size of our order that retail pricing was not appropriate.
- Anchored the negotiation around a credible price point - the wholesale price.
- Given the other party what they wanted - a large sale, trees taken today and a small profit.
So, luck? Personal brilliance? No – clearly definable negotiation skills and strategies worth remembering for your upcoming deals.
If you found this blog useful or need further advice on how to negotiate a great deal, check out our flagship Advancing Negotiation Skills program here.