Image by jonny goldstein via Flickr
Continuing with a series of short blog posts on anything that I can write about in between bouts of writer’s block and indecision, filling in the nooks between longer and better-crafted blog posts. Other examples of 101C coffee breaks can be found here and here.
Pick up any negotiation handbook, and good chances are that the author will admonish the reader that the interest of both parties at the negotiation table is to reach agreement.
If you’re unreasonable, unwilling to concede and compromise, and ultimately walk away from the table, then you’ve failed.
That is actually very good advice.
As a negotiator, your mission is to make the deal. It could be a win-win, or a lose-lose, where both parties compromise on a bad situation and leave the room slightly more unhappy than when they walked in, but thankful that it could have been worse.
On the other hand, having a willingness to walk away completely is a very powerful weapon. This is valid whether we’re negotiating for a knick-knack at a yard sale, or making a million-dollar purchase in a business setting.
A powerful weapon, but limited to a one-time use, like the EMP button in the Matrix movies. (which begs the question, why did Zion’s defenders not station EMPs at the main gates? The invading Sentinels in Matrix: Revolutions could have been disabled at one blow. But I digress….).
I used this strategy a few weeks ago when negotiating a large deal with a foreign supplier on a phone conference. They were being difficult on Terms and Conditions, arguing about indemnification, venue for applicable arbitration, liability insurance and another’s baker’s dozen of nit-picking points. Feelings were getting high, and parties exasperated.
At a certain point, I’d had about enough and politely but forcefully suggested that we agree to disagree, call the whole thing off and go our separate ways, no hard feelings.
My colleague in the same office choked on his coffee and about fell out of his chair. Silence from the speaker phone. More silence. A little more discussion, and when the supplier understood that they could conceivably lose the sale, they were a little more amenable to resolution. We came back to the virtual table, impasse was breached, and we moved on.
Understand thought that the walk-away EMP was not deployed out of emotional frustration. We did actually have a backup plan with Supplier B. Not as desirable and more costly. Hard to sell to internal and external customers. But, Plan B was ultimately doable, and more importantly, we would have carried through with it.
As with anything, don’t make threats if you can’t back it up.
As with anything, don’t be always throwing down ultimatums. It’ll hurt your rep.
As with anything, have a what-if alternate strategy. Or two.
As with anything, stay emotionally unattached — especially if there’s money involved.
This has been your coffee break with 101 Centavos, an interlude between more satisfying and better-researched articles. Readers, what do you think about this strategy, have you used it in the past with success?
Agreed. Negotiation is key and very related to money. It’s actually surprising how difficult it can be sometimes due to the emotions involved. Nonetheless, if you are informed, as you were, and don’t let your emotions run awry, you can come out ahead.
Roshawn @ Watson Inc recently posted..3 Powerful Ways To Decrease Your Financial Stress
This technique or strategy is useful even when yo are negotiating contracts. It works with two individuals that just neeed to cooperate or agree to something. As long as both parties have a stake in it, this can work.
krantcents recently posted..More Interview Questions to Ask Employers
Walking out is certainly a viable negotiation strategy. The key to using it though is to be prepared with your other options (because it doesn’t always work). If you have fall back options, even if they are less desirable, this can be a good move…..of course if you have no other options it can be a dangerous gamble.
Car Negotiation Coach recently posted..When is the Best Time to Buy a Car?
Hi CNC – I agree, this technique is a bit of a nuclear option, and it doesn’t always produce the desired result. But it has a proper time and place.
Correct me if I’m wrong but I sensed that once you said you were willing to call the whole thing off, you waited for the supplier to speak next. I feel that’s a powerful tactic in negotiations, too.
I think it’s important to be serious when you say you’re willing to walk away. Otherwise you stand to get burned, and it will probably end in a lose-lose scenario.
Jeffrey Trull recently posted..Watch Out For Fake Amazon Reviews
Hi Jeffrey, that is indeed another strong tactic. He who speaks first loses. A lose-lose scenario is more common than people think, especially in back-charge negotiations. Ain’t nobody happy at that table.
I think this is a great point andrew – willingness to walk away from negotiations is key and can help tilt in your favor, but cant be used that often. Eventually, you’ve got to come for a compromise or get screwed and have the other party get what they want.
In negotiations, I find my favorite saying is “It’s better to be at the table than on the menu”
Jeff @ Sustainable life blog recently posted..Book Review: Shiny Objects
Hi Jeff – *that* is a great line. I’m going to totally steal it.
I see this all the time when watching shows like “Pawn Stars” and “American Pickers.” Usually the sellers aren’t prepared to walk away and don’t get the best price on the items they’re selling.
Andy Hough recently posted..November Income – $3713.69
Hi Andy – I’ve dealt with pickers at our yard sales. Typically they’re the first ones there. My tactic is to *raise* the price after their low-ball offers. If you do it with a smile it completely discombobulates them.
Wow, that’s a great story. I’m not a very good negotiator and would love to hear more lessons like these. I’ll have to keep that option in mind and have a plan B. at all time.
retirebyforty recently posted..November 2011 Cash Flow
Hi RB40 – A guy that’s made the kind of real estate investments you’ve done I suspect is not a poor negotiator.
Good advice. I always say you need a Plan B, a Plan C, and a Plan D. With back-up plans you can keep your cool a little better, and be ready to take action when Plan A falls through.
Maggie@SquarePennies recently posted..Beautiful Angel Ornaments to Craft
Agreed, Maggie. Multiple backups are best.
Having that power and flexing it can save you a lot of money over a lifetime. Of course, you can always do like I did, which is flex it, have the carpet guy call my bluff (since my wife insisted we use him), and then go back to him with tail between legs and pay his asking price anyway :>. Lesson learned – choose your opportunities wisely; and not ALL negotiations are purely competitive.
Darwin’s Money recently posted..If Stock Trading is Addictive, Options are CRACK
LOL! I’ve done that as well, eat crow with crow gravy, and two sides of crow-slaw.
Darwin,
You crack me up. Thanks for the humor, and the courage to admit your mistake, in print no less. I learned a lot from 101 Centavos, but I learned even more from you.
Negotiation skills are a valuable skill set to have in business. I like how you took a stand in your meeting! Nice job getting the company to come more into your favor. -Sydney
Untemplater recently posted..Why Does Money Corrupt People?
Hi Sydney,
Agreed, negotiating is a valuable skill that can be learned and practiced in various ways. I know this lady that is nice and sweet, and yet unexpectedly fearsome on demand.
I have many years of negotiating experience both in sales and purchasing and I think I take it for granted what a great skill that is to have. I think this advice is super important when house buying. There will be another house. Be prepared to walk away if the seller is unreasonable.
I do tend to sometimes take things too far with second hand sellers though. A lot of times, it’s hard for them to say no to an offer that’s too low for them. They’d rather get offended and accuse me of trying to steal from them vs just saying no, that’s lower than I’m willing to take. If I want something badly enough, I’ll pay close to the asking price, but if it’s something I’m on the fence about, then I’ll lowball the bid and I’m fine walking away if they don’t agree to the price.
First Gen American recently posted..Some Materialism is Good For You
FGA, that’s a valuable perspective, to have sat on both sides of the table. I suspect that you have your own strategy to deal with EMPs tossed out by buyers.
An EMP that I’ve come across more than a few times on the sales side is the threat to never do business again if (sometimes unreasonable) “X” isn’t done. Rather than focusing on achieving “X”, it’s helpful to talk about the threat, dissect it, and unmask it for the bluff that it is.
Haha, good thing you had the backup strategy – but you deployed the walkaway bomb to good effect. I usually look at negotiating through the lens of buying a used car (for whatever reason). Of course, with a used car – it’s a commodity. You can always walk away.
I’m unsure of the number of suitable suppliers you had, but you definitely played this one right!
PK recently posted..The Male-Female Unemployment Gap
PK, we only had one slightly suitable supplier. It would have been a painful switch. We almost audibly unpuckered after the impasse was breached.
I love negotiating. I walked away from many deals and some sellers chased me down and accepted a price, some never did. My best haggling experience was in China – everyone haggles there (well, except for my husband
) Walking away is indeed a powerful tool that works.
Aloysa recently posted..Is Hoarding The New Frugal?
LOL! You’re right, Aloysa. They do really chase you down in China!
I love these cafe break posts. I think negotiating plays a huge roll in what we do and we can make happen in our lives. We have try as hard as we can to get what we need for the smallest cost. It makes us more efficient. I also think that we need to be brave sometimes and walk away when things aren’t going well. There is no good done in compromising to the extent where your original purpose isn’t met. Learning how to negotiate well is a skill everyone should develop.
Miss T @ Prairie EcoThrifter recently posted..Put Yourself on the Path of Happiness for the Holiday Season
Hi Miss T – realizing *when* we’re negotiating is also useful. I’ve seen people give the farm away during casual conversation, and not know it.
Walking away is an amazingly powerful weapon. There comes a point in every negotiation where you must shut-up, the first to talk generally gets 49% or less while the stronger negotiator get 51% or more. Love this stuff. Use your EMP wisely!
Hunter – Financially Consumed recently posted..Save Money For Emergencies And Double Up
Hi Hunter — so why did Zion not deploy EMPs? Would it have fried their own machines?
I enjoy this type of article! I find most people don’t have good negotiation skills and “don’t get it.” You seem to be an expert in this area, so it is well researched.
My first thought? Washington needs to read this (and the people who elect them). My brother-in-law is a lobbyist on Capital Hill. Over Thanksgiving, he told me that in the “old days”, Republicans and Democrats could sit down over dinner or a beer together and hash things out. Nobody was the wiser and good legislation was passed.
No more. Now, with the media constantly in their face, each side is forced to demonize the other, creating hurt feelings and a lot of nonsense that doesn’t help get good legislation passed.
AverageJoe recently posted..Board Games: A Financial Gift Guide
Hi Joe – smoke-filled rooms did serve a purpose, it seems. A little more cigars-and-whiskey, a little less cameras-and-action. Seems reasonable to me.
Loved the post 101! It takes solid nerves to drop an EMP in the middle of a negotiation round. Even with your plan B, it’s still somewhat a gamble because had they not came around, you might have heard some wining because Plan B was more expensive.
BeatingTheIndex recently posted..Eagle Energy Trust: A Dream Come True For Income Investors?
We definitely would have had whining, gnashing of teeth and tearing of hair. It would not have been a pretty sight.
Very interesting story! Ultimately it doesn’t have to be made in the form of a threat at all — you just need to show that you are not willing to make a deal that does not benefit the both of you, instead of one party exclusively. This also goes for advertising negotiation for our sites, as well!
Invest It Wisely recently posted..5 Ways to Avoid Debt This Christmas
Good point, IIW. Showing some backbone with a little subtlety is also effective. Knowing your site’s worth and courteously holding fast for a better deal won’t make any enemies.
Negotiation is not really my strong suit, but is something I want to work on. Good article and some great tips in the comments too!
Shaun @ Money Cactus recently posted..Wealth Creation Online: Your Finances Simplified Interview
Hi Shaun — I recommend garage sales and second-hand stores. Great places to hone these skills.
Looks like you have a new winning format 101C! EMP and tense negotiation drama? Great stuff. I haven’t used an EMP myself, but I was prepared to walk away in my recent job interview. I had a good job in hand which was my plan B. Ironically, in this weird in between state, I felt like I was empowered on both sides. Big lesson to have a plan B to fall back to and give you extra strength to go after A. Looking forward to more coffee breaks!
Buck Inspire recently posted..Style vs Substance
Hi Buck, good observation. Wouldn’t that hold for most or all backup plans? Having an emergency fund gives some financial peace of mind. Being able to say “Don’t worry, I got this covered” is huge.
[...] 101 Centavos is a master negotiator. Cafe Break: Walk-Away Negotiating. [...]
Two of my favorite things in one post- Negotiation & Sci-Fi! Plus the ICEBERG drawing too! Love it!
GO BELOW THE LINE! POSITIONS & INTERESTS! DISTRIBUTIVE & INTEGRATIVE! The scenarios go round and round in my head. I could write a month’s worth of posts just on negotiation…maybe I will now.
BATNA…WATNA…MLATNA…there can be only ONE!
Dave @ DebtBlackHole recently posted..Not Even In The Land Of Unicorns & Rainbows!
The iceberg drawing was kind of a cherry on top. It’s the only one I could find in Wikimedia commons. Post away, Merrill, post away!
Hmm. I only invoke the walk away strategy for stuff I’m only lukewarm about getting. If I really want it, I’m less likely to suggest changing the existing terms. But you know? It really doesn’t hurt to ask for more.
Shawanda @ You Have More Than You Think recently posted..3 Creative Ways To Save Money On Cable TV And Internet
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