“Mr. Gitou, the last time we spoke you said one of the problems women have in negotiating is they focus too much on the relationship,” said Janice Lumere. “But when I joined the sales group I read some of your Deal Whisperer articles and it seems to me that you focus a great deal on relationship building. Isn’t that inconsistent?”
(See "Women in Negotiation Part 1" at http://dealwhisperers.blogspot.com/2011/10/women-in-negotiation.html)
Tyler Gitou leaned back in his chair and smiled. “That’s an excellent observation,” he said. “The difference is in the balancing.”
“Balancing of what?”
“Here’s an example. Imagine you are trying to close your first deal as a new sales rep for an existing client. It’s a big deal. You get down to the day of signing and the client says, ‘You know Janice, we looked over the pricing and we feel you guys still have room to move. We do a lot of business with your company and we think we’re entitled to a two percent cut.’ What do you say?”
Janice straightened up in her seat. “Well, that’s a tough one. I mean, if I say no to a long-term client, what will that do to…” Janice couldn’t bring herself to finish the sentence.
“The relationship?” Tyler said. “Suppose you say, ‘We really don’t have any room to move. That’s the price.’ Then the client replies, ‘Wow, you’re a lot less friendly than the last rep we had. We were able to work with Mike. I didn’t know the company was sending in a hardliner.’ What do you think of that comment?”
Janice thought for a moment. “Like I did something wrong and maybe I should soften my approach.”
“Why?”
“To preserve the…” Again, Janice was stuck on the last word.
“Relationship,” Tyler said. “How did the comment make you feel?”
“It felt unfair.”
“Unfair how?” Tyler asked.
“Like I was being played.”
“Exactly,” Tyler said. “It was a tactic and what you were feeling was the tension of ‘legitimacy.’ His last-minute request for a price cut lacked legitimacy and triggered your ‘fairness’ antenna. In order to maintain a disciplined and balanced approach in negotiations, each party needs to test the legitimacy of the other party’s requests. When a negotiator lacks legitimacy, he will use tactics to leverage two other elements: relationship and BATNA. Either you’re hurting the relationship by not saying ‘yes’ or if you don’t say ‘yes’ he will go to the competition.”
“So how do I respond to that?”
“Ask him to explain the need for the ask. I would say, ‘My first concern is your perception of our price. We have been working over these numbers for the last three months and I have provided complete transparency into what’s required to do this project well. What has created a perception that we have room to move’?”
“That’s good,” Janice said.
“Keep going. You play the client. What does he say back?”
“He says, ‘Come on, Janice. You guys are always holding something back. I know how this game is played. We’re just looking to get the lowest price possible.”
“The lowest price?” Tyler asked. “Or the best price? Because we can provide a lower price but it will mean putting more risk back into the deal. My goal was to balance your interests around price, risk and quality. We can move those levers around to reduce price if you want to take more risk or reduce scope.”
“Just take it out of your margin,” Janice said. “Do it for the relationship.” She smiled.
“Believe it or not, I am doing this because I am focused on the relationship,” Tyler said. “I want the kind of business relationship that is built on mutual trust to drive mutual success. You have been a great client for many years and you deserve the type of relationship where we provide our best price and then the transparency to show you how we got there. If you want us to quote a price with ‘room to move’ so we can do some positional back and forth, I can do that too. But that adds transactional friction and inefficiency into the negotiations.”
“Wow,” Janice said. “That was like negotiation judo. Now I feel like I’ve hurt the relationship by asking for the price cut!”
“That’s the power of understanding a party’s perceptions and testing legitimacy,” Tyler said. “When a Deal Whisperer feels the tingle of the fairness antenna, the question to ask is ‘Why? Why this? Why now?’ Seek to understand the legitimacy of the other party’s ask in an unconditionally constructive way and you may end up helping them see the unfairness of the ask and the impact on the relationship with that type of behavior.”
Janice stood up. “Thanks, this has been very helpful. Can I come see you again?”
Tyler shook her hand. “Please do. This is to be continued. There are many more nuances and hurdles women have to deal with in negotiation and I’d enjoy exploring those with you.”
(See "Women in Negotiation Part 1" at http://dealwhisperers.blogspot.com/2011/10/women-in-negotiation.html)
Tyler Gitou leaned back in his chair and smiled. “That’s an excellent observation,” he said. “The difference is in the balancing.”
“Balancing of what?”
“Here’s an example. Imagine you are trying to close your first deal as a new sales rep for an existing client. It’s a big deal. You get down to the day of signing and the client says, ‘You know Janice, we looked over the pricing and we feel you guys still have room to move. We do a lot of business with your company and we think we’re entitled to a two percent cut.’ What do you say?”
Janice straightened up in her seat. “Well, that’s a tough one. I mean, if I say no to a long-term client, what will that do to…” Janice couldn’t bring herself to finish the sentence.
“The relationship?” Tyler said. “Suppose you say, ‘We really don’t have any room to move. That’s the price.’ Then the client replies, ‘Wow, you’re a lot less friendly than the last rep we had. We were able to work with Mike. I didn’t know the company was sending in a hardliner.’ What do you think of that comment?”
Janice thought for a moment. “Like I did something wrong and maybe I should soften my approach.”
“Why?”
“To preserve the…” Again, Janice was stuck on the last word.
“Relationship,” Tyler said. “How did the comment make you feel?”
“It felt unfair.”
“Unfair how?” Tyler asked.
“Like I was being played.”
“Exactly,” Tyler said. “It was a tactic and what you were feeling was the tension of ‘legitimacy.’ His last-minute request for a price cut lacked legitimacy and triggered your ‘fairness’ antenna. In order to maintain a disciplined and balanced approach in negotiations, each party needs to test the legitimacy of the other party’s requests. When a negotiator lacks legitimacy, he will use tactics to leverage two other elements: relationship and BATNA. Either you’re hurting the relationship by not saying ‘yes’ or if you don’t say ‘yes’ he will go to the competition.”
“So how do I respond to that?”
“Ask him to explain the need for the ask. I would say, ‘My first concern is your perception of our price. We have been working over these numbers for the last three months and I have provided complete transparency into what’s required to do this project well. What has created a perception that we have room to move’?”
“That’s good,” Janice said.
“Keep going. You play the client. What does he say back?”
“He says, ‘Come on, Janice. You guys are always holding something back. I know how this game is played. We’re just looking to get the lowest price possible.”
“The lowest price?” Tyler asked. “Or the best price? Because we can provide a lower price but it will mean putting more risk back into the deal. My goal was to balance your interests around price, risk and quality. We can move those levers around to reduce price if you want to take more risk or reduce scope.”
“Just take it out of your margin,” Janice said. “Do it for the relationship.” She smiled.
“Believe it or not, I am doing this because I am focused on the relationship,” Tyler said. “I want the kind of business relationship that is built on mutual trust to drive mutual success. You have been a great client for many years and you deserve the type of relationship where we provide our best price and then the transparency to show you how we got there. If you want us to quote a price with ‘room to move’ so we can do some positional back and forth, I can do that too. But that adds transactional friction and inefficiency into the negotiations.”
“Wow,” Janice said. “That was like negotiation judo. Now I feel like I’ve hurt the relationship by asking for the price cut!”
“That’s the power of understanding a party’s perceptions and testing legitimacy,” Tyler said. “When a Deal Whisperer feels the tingle of the fairness antenna, the question to ask is ‘Why? Why this? Why now?’ Seek to understand the legitimacy of the other party’s ask in an unconditionally constructive way and you may end up helping them see the unfairness of the ask and the impact on the relationship with that type of behavior.”
Janice stood up. “Thanks, this has been very helpful. Can I come see you again?”
Tyler shook her hand. “Please do. This is to be continued. There are many more nuances and hurdles women have to deal with in negotiation and I’d enjoy exploring those with you.”
