What does “traditional-style bargaining” mean?
T: There are three traditional ways to handle objections: convincing, deceiving or ceding. More precisely: make the buyer a fool, cheat or bribe.
I purposely use harsh terms.
All known approaches come down to these three. To convince, that is, to convince the buyer that he is wrong, that everything is fine, and all his objections do not make any sense. So, make him a fool. The second is to deceive him, that is, to carry out some kind of manipulation, such as, “How much would a charter flight from New-York to Las-Vegas cost?” - “Ten cents per mile per ton.” This trick is based on reasonable assumption that a person does not have time to quickly calculate. He sees only a small “price” and says, “Well, agreed.” Then one can charge him millions. The third is to give in, yield, cede. And what does it mean “to cede”?
I recently became interested in political correctness. I realized what the main trick is there: to name the ugly things with decent words.
I looked at synonyms, other names for concession. The most accurate is a “bribe.” Bribing people to buy your product. Great, huh? In fact, what is a “concession”? It’s act of transferring part of your money to the buyer’s wallet. That’s the simple physics of this action. You take money out of your wallet...
I’m not talking just about money. You take his risk and shift it to your company’s shoulders – it’s the same thing! In fact, it comes down to taking money out of your wallet and putting it in the buyer’s. What is the name of this act? It is a bribe, right?
S: OK... But for something valuable – for a reason!
T: Yes, of course! You bribe for something. What is it done for? For the fact that he will buy your product. But there is one trap. When bribing, you usually tell the corrupted what it is for. By making a concession, you assume that the buyer understands why he is bribed. The trouble is that the buyer does not perceive the concession as a bribe, rather as a reward for his consent to buy your product. And therefore, he does not even think about any further services for this bribe! You don’t tell him frankly, “I agree with you on a reduced price, and for this you take me to a big company (or buy some other goods from me).” The buyer does not know about your secret wishes! If he even guesses, his only comment is, “Forget about that!” Therefore, a “concession” is not just a bribe, but rather an “unfulfilled” bribe. You bribed but didn’t announce the reason. It means, you bribed for nothing. What is the point of such bribing?
S: Well, eh...
T: Do you need to bribe your buyer? Are you so unsure of your product? Is your product complete bullshit that can only be bought for a bribe?
T: Why are you offering people a bribe?
S: Do you mean a bribe by the fact that I reduced the price?
T: Exactly! This is a bribe. You reduced the price - this is a concession, a nice word, you went easy on people. But actually, what did you do? If you sold your product for the full price, you would receive, say, 1000 units per month. You yielded to them, you said, “Well, I will sell it to you for 900.” This means that every month you get 1000, and take out 100 of it and put it in their wallet. Right?
T: What’s the name of this act? It is called a bribe.
S: Yes, in principle, yes.
T: I understand that in this particular case it is called “just a concession”, you conceded, you bargained, but in reality, it is a bribe.
S: But there are different situations. We had such a situation when everyone called, and I also met resellers who have long worked in a certain area. For example, they’d provide city offices or state-owned companies or large companies, with coffee, sugar, notebooks, pens, all kinds of attributes. When they heard the price, they also said, “Oh my God, what is it, nobody will buy it from us, they order from us for 0.0001, not more.” But my sense of this situation is twofold. There are situations when it is important to me, say, when we are talking not about 800, but about 800 million, and this amount is completely different. Plus, when this buyer is potentially large, or there is a chance for some other things which don’t take heavily from my budget: advertising, all kinds of technological things, some kind of advertising on the Internet, website promotion, and so on. This share may come from this, let’s say, agreement, which brings my goods to the base firms and accustoms them to a certain desire to purchase and want my goods. That is, it could be my important customer, this is a lot of money, this is an advertisement that is important to me, this is some kind of business promotion, in short, I have to do with less. But initially, when I enter into such a bargain, I expect a certain benefit: how big is this company; how important is it; if I close or do not close the deal, how important it is for me that this company works with a certain company that I want to get into, because it is my springboard into the spotlight. This is very ambiguous! Sometimes they contradict one another.
T: I understand it. Now, please, listen carefully to yourself and think: why are you ready to yield? For some opportunity that it may open up for you, right?
S: Well yes!
T: Are you ready to voice this to buyer as a condition to price reduction?
S: Not really, no.
T: Not really, of course.
S: But this is for the future, it’s understandable!
T: No, he doesn’t owe you anything. Again, he doesn’t owe you anything! You say, “He works with a large company and I want to get in there!” Does he have to introduce you there? No, he does not.
S: He should not...
T: And not the fact that he will do it in the future.
S: But I know that he works only with that big company. That means he will bring me there!
T: Not a fact. He will remain... You see, if he brings you there, then his mediation, at least with your company, ends. Right?
S: Well, yes.
T: Therefore, he prefers to remain an intermediary, he would do anything to prevent you from getting into that company. Not because he is a bad man. Simply because it is his money.
S: Well, yes.
T: You see, people have their own interests, and they do not cross with yours at all. You must take this for granted.
If you deal only with goods and price, and nothing more, then your buyer crushes you because he has an upper hand. He doesn’t care whether he buys from you or not. Maybe, he cares, but it is not important, and he does not show that to you. But you do care whether you sell it or not.
Do you understand the difference? This is the generally accepted model. Either you accept this generally accepted model, or you have to break it. How to break it? There is only one way to break it: you have to go to another level of negotiations where you could find the common interest. Only then can you both get to agreement.
At the “traditional” level that is imposed on you this game is very difficult because there is no gain, only loss. In this formulation of the problem there is no win-win solution. Someone must lose, someone must retreat, someone must yield. And why do you think the buyer retreats? His position is better than yours. He has a bunch of other suppliers. But you need buyers! That is the difference. He plays this card if he is competent, if he understands the game, if he is not new to this business. But usually newcomers do not have money to buy from you. And those who can buy from you are not newcomers. They are experienced, they are seasoned wolves.
It’s not without reason that I tell you all the time that in no case, for no reason you should agree to discuss the objections, fears, concerns, no matter how you call them. As soon as you agreed to discuss the fear “as it is,” you got caught.
The objection has double meaning. Firstly, it is a fear that if he buys on your terms, he gets into trouble. But there is also the second meaning. This is his solution. He has already found a solution to get around this threat. If he says, “It’s expensive,” he may have any fear that he will lose his image or anything else, anything. But he has already found a solution that. If you give up 20%, say, or even more, then he is not in danger. This solution suits him already, but you can’t do it! He will push this solution with all his energy. But this solution does not suit you because you must yield. You must get away from this solution. If you start discussing this solution, he starts convincing you that this is the only possible solution to the problem. Without naming the problem, by the way. At the same time, he feels and maybe knows this problem, but he doesn’t name it. He must solve this problem! Otherwise, he is in trouble. So, he must convince you... In fact, you are selling the price to him, and he is selling his solution to you. See the trick here? He is selling you a solution that he has already found. Since this is his only solution, he will stand on it until the last drop of your blood.
Why am I saying that you need to move to another level of game? You must reveal what problem he was solving and then search for other solutions to it. Otherwise, he rests on this solution, and you cannot move him.
We bargained for almost an hour, and I did not retreat a single step. Why? Because I knew that if I take this product from you for 800, everything will be fine with me, I have no problems. I would not have to bother, I would not need to explain to customers why they should buy this product for 1.2, and not for 0.82. I should not teach every seller, track each seller so that he sells properly. I do not need all that! It turns out, I take on myself your problems in order to pay you 1000. I do not need it. However, it is not at all a fact that I will not resell your product at 1.2. Then I would receive 1200 for it while paying 800. That’s my solution... Everything is nice to me, but you are at a loss because you agreed to my decision.
I have already found a solution for myself: yes, presumably my customers will buy for 0.82, maybe they will buy for 0.85, so I have nothing to lose. But I should not risk raising the price. And that’s it, I stand firmly on this solution, and the more you try to move me from this solution, the more firmly I stand on it. The more I become confident that none of what you said might solve my problem better than my solution.
It means that my solution is the right one, and it is the only one that exists. The more you bargain, the more you convince me.
If I am convinced, especially since I have a winning position, I can get up and leave at any time and not get involved with your product. It’s your business to bother yourself with it. But you cannot leave. Your business is to sit and listen to my fairy tales.
The psychology of this negotiation is very complicated, and it is very harsh. It is not at all in favor of persuasion. You cannot persuade him to retreat from his solution. You don’t have enough arguments. Nobody has. If he decided that it is expensive, you have no reasonable argument to prove that it is inexpensive. None.
S: I see. This conversation leads in the wrong direction.
T: Exactly. He carefully pushes you into this chasm so that you agree to yield. By the way, as soon as you make one concession, then you do another, third, and it will be easy to break you further. That’s all. It’s simple.
It does not mean that you have a bad customer. No, he is a kind person, he has a nice soul, he is ready to go easy on you, you see, he added from 700 to 800. And if you cannot succeed in negotiations, guys, get out of business and don’t mess with it. Who told you that you found the right business model? Not a fact, huh? This is his position, not mine. And this position is strong like reinforced concrete. There is no way to break it.