New psychology of negotiating: never argue

When I bought my first house I remember standing on the sidewalk gnarled by roots of large shade trees, and explaining to the seller's agent why my offer was lower than the asking price. I had a long list of reasons defending my position and ended with, "Look at the sidewalk. It has issues. It's the owner's responsibility to fix them. This is going to cost me a lot."

I was young, I was defending my position in the lamest, most obscure way possible. We settled closer to their price than mine.

Later on in the closing process, I honed my real estate technique when I asked the escrow officer to make the paperwork I was about to sign available to me 24-hours before she expected me to sign it. I'd read all the little pamphlets and learned that state law gave me that right. I'm so glad it did. I discovered the escrow company had received a verbal from the sellers agent to charge me for the oil left in the tank. I called the oil company and learned I could buy oil from them cheaper than what the seller was charging me.

I pulled out the earnest money document and scoured it to see if I had agreed to the oil purchase. It stated that any oil left in the tank belonged to the buyer: me. I figured the seller could pump it out and re-sell it the oil company.

I alerted the escrow company. We worked it out. They left the oil.

What would have given me a better price at the beginning, I wonder now. A glimpse at a recent psychology study demonstrates that the negotiation process evolves into a struggle when the discussion reduces into arguing or positioning.

Art Markman, Ph.D., writes in his post When You Negotiate, Don’t Argue, that the initial offer in a negotiation is called an anchor. The anchor gives the negotiation process a framework and whoever defends the framework is likely to be the loser.

Yes, you may be right. Yes, you may have all the right reasons. But you may be wrong to share them. Think if that has ever happened to you at work.

A former co-worker used to say, "The first one to speak loses." He would craft a proposal, walk his prospect through it, and end by asking a question. He waited any length of time until the prospect to spoke. He was a top salesperson.

When we defend our position counter-arguments are created in the head of the person we're trying to convince.

Instead of trying to negotiate where we agree, our brains try to come up with all the reasons why we disagree. This puts the focus on the wrong anchor. That's when it becomes really hard to move a process forward, to get things done, to cheer on the same team, to 'get on the same page.' That's why we say, 'They threw the anchor in.'

Markman says, "Each side wants to get the best deal, and so they treat every piece of information given by the other party with skepticism." He says that our arguments are seen as "flawed" and that they are not successful at persuading the outcome of a negotiation. His recommendation is to anchor the process by making the first offer, "However, after you make that initial offer, resist the temptation to give reasons to justify that initial bid."

When has keeping silent saved you money, or saved your job?

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Never come back here without money

One of my new staff members encountered a difficult client situation. Customer claimed they had not signed a contract for the new 'WebProfile' services which we added to their account in February. The new employee, let's call him Don, researched the situation, found a copy of the original contract, compared the signature with the one for new services and it was obvious the customer had authorized it. Plus, we had received payment for the February billing. So, they'd agreed to it at least once and confirmed with their payment.

There were two brothers involved in the family business running three restaurants and each deferred to the other as responsible for payment. The only way we were going to resolve it was to get the brothers together. Don set it up. I told him I'd go with him and we'd get to the bottom of it.

I knew it would be an interesting conversation.

It was.

At the conclusion of our client meeting I contacted the credit department and asked that the new services be cancelled. We were only five days into the month, I didn't think it would be a big deal. The credit department sent this email to the project coordinator, we'll call her Sista:

Please cancel WebProfile for this account---Carol and Don just met with them.  If it pro rates, we will need to adjust off. Thanks, The Credit Dept

Sista expressed her dismay to me in a curt email.

I canceled it. There is no prorating. They will owe $150 for March. What happened?  -Sista

I considered how to respond to Sista. I could craft a curt email back, I was afterall the manager, or I could demonstrate why it would not serve our purpose to pursue the $150. I decided on the later and sent out the following and copied all the personnel involved:

We were in a no win situation. Client had a Ferris wheel of reps in a short period of time: Rep A, Rep B, Rep C, and then Don.

Client had a print contract soon to expire, was sold 'WebProfile' by Rep A. Client believed he could give us a check each month. Then we told the reps if customer does not have a credit line, the client has to pay up-front for three months. The only other option we gave them was for the client to put a credit card on file. Brother who signed the contract did not have access to the credit card and referred us to the other brother, noting that the other brother who had the credit card needed to approve/sign the contract.

We set up their 'WebProfile' using pictures from a web-site they forgot they had. It had menu prices from five years ago. They felt we were stealing the other guy's work by nabbing pictures from the old web-site. They noted that they never approved our profile site. That is, the brother with the credit card never approved it. The brother who signed the contract saw it and noted Rep A came in took pictures of the restaurant and was very nice during her visit.

I noted we used pictures from their Web-site to help them get started and show them what their profile page could look like. From there they had full access to upload any information or picture they wanted, the program is completely self-serve. They replied with a barrage of complaints noting they didn't understand why every rep we sent  tried to sell them something different: one sold them the print product, another online, and the current rep, Don tried to get them to keep both.

I told them Rep A volunteered to call on them when their prior rep retired, and Rep A sold them 'WebProfile' because she was so excited about it. They must have approved it as they had paid for it in February.

The brother in control of the credit card noted he had given the credit card number to Rep A, but said he never approved the profile site. Which apparently was impossible to do because he became increasingly difficult to get ahold of—he has four kids, he has custody of his kids, he is going through a divorce and due to depression he stopped answering his phone. He told his employees to write down the name and number of each caller and noted that Rep A did try to get ahold of him, but he told his employees "If it's important they will call back." He noted that Rep A did call back.

(Are you enjoying this, yet?)

The first brother told me never to send Don back to his restaurant again because 'he pushed me.' (Definition of pushed me: Don showed him his signature on the contract he claimed he never signed).

He agreed to complete the current print contract, but after that he was done with us. Since Don was kicked out of the restaurant he said I could come in and pick up his check. He gave me two days during the month to do this, and if I'm late I'm toast. He said he was wiping his hands of advertising at that point his brother could handle it. He was happy not have to spend any more time on it.

I asked the other brother if we could call him about advertising the restaurants. He said yes, it was okay to have Don call him. I noted that I have another rep who handles the north county area where he is located and he said he had met the tall, skinny guy who covered that area. "Bob?" I asked. He nodded.

Then the first brother got riled up again and threw in that he was mad because once we raised our prices. I explained commodities—such as paper—have fluctuating costs, but I don't change their ad price every time my costs change (like at the gas station), I explained I hold prices steady for twelve months, but at some point they must change. I detailed that the WebProfile project is our company's way of helping small businesses, that small businesses no longer have to rely on web designers who set up their sites, get paid and disappear. WebProfile puts their online pages in their hands, they control it, they can put their menu on it whenever it changes. They told me that their menu prices didn't change that often, it's too expensive to reprint a menu.

I assured them that WebProfile is a good product and that I/we would talk to the brother (with the credit card) about it again, because it is THAT good. And they are nuts at the moment. I didn't actually tell them that they were nuts.

I told the first brother that at a future date I would be asking permission for Don to be welcome back into his  restaurant. He relented and said, "Don can come in, but ONLY if he's eating a meal." I tapped my pencil to on the table top to the tune of 'Never come back here without money,' and smirked. Some transactions continue to have value.

He asked me if I understood their situation. I sai, "I am trying." I also explained that it was I who instructed Don to push him, and he said, "I'm not mad at you."

That I did not understand as I was pretty relentless to get to the bottom of their insanity and I'm surprised they didn't kick me out.

After I left, and I could speak again, I called credit and asked what was on the books for WebProfile and instructed them to cancel it. If the charge goes through we will need to adjust it off.

Just saying,

Carol

So, that's my conversation and email recap. What was the most interesting conversation you had this week?