neg chesapeake handout 11.09

7/29/2019 Neg Chesapeake Handout 11.09

1/43

Tune Up Your Negotiation SkillsTactics and Strategies

Andrew L. Urich, J.D.

Associate Professor

Spears School of Business

Oklahoma State University405.744.8619

[email protected]

www.andrewurich.com
http://www.andrewurich.com/http://www.andrewurich.com/


2/43

The Worlds Greatest Car Salesman We like, trust, and believe people who like us.

Making a Connection


3/43

Overcoming Fear

Nikita Khrushchev

My Sales Philosophy

When you are skinning your customers,you should leave some skin on,

to grow again

so you can skin them again.

Making a Connection


4/43

Showing Respect & Building Trust

My child choked on a chicken bone

Can you get off on the right foot? What telemarketers dont want us to know

If they are defensive you may be offensive.

Winston Churchills thoughts on the subject

Making a Connection


5/43

Showing Respect


6/43

Showing Respect


7/43

Showing Respect


8/43

Small Software Co. vs. MassiveIndustrial Powerhouse, Inc.

This product is provided subject to anevaluation condition. In the event that thesoftware is deemed unacceptable by thebuyer for any reason, at the sole discretionof the buyer, the buyer shall incur no

obligation to make the final payment asdescribed in the above payment schedule.

Making a Connection


9/43

Concept Summary:

1. ABC.Always Be Charming.

2. Show respect and build trust.

3. They are not trying to skin you.

4. The relationship is the most important

thing.

Making a Connection


10/43

What We Need To Know

1. What is the essence of negotiation?(Not what everyone seems to think)

2. Which negotiation variable has the highestcorrelation with winning negotiations?

3. How do I plan for a negotiation?

4. How do I know when to be satisfied with mynegotiation outcome?

5. How do costs and values impact negotiations?

Program Introduction & Goals


11/43

What We Need To Know

6. Can I better manage the concessions I makeduring a negotiation?

7. How can I adopt a win/win focus withoutbecoming Pollyanna?

8. Appreciate the vital importance of no.

9. How does bargaining power impact negotiations?

10. How can I increase my bargaining power?



12/43

Leverage Through Negotiation

Status QuoSales 100

Cost ofGoods 90

Profit 10



13/43

Leverage Through Negotiation

ConcertedEfforts on

Negotiation

Sales 105

Cost ofGoods 85

Profit 20



14/43

What Does it Mean to Win?

The Bargaining Area$200,000 $215,000 $235,000 $250,000

BuyerSeller

BargainingArea



15/43

Negotiation of a Movie Contract

On a scale of 1 to 10 please note your

satisfaction level when you finish1 = dissatisfied 10 = extremely happy

1

dissatisfied

10

extremelyhappy

5

Exercise


16/43

Negotiation is an inefficient wasteof time. Cant we quit messingaround and get to the bottomline?

Saturn

Winners curse

The box or the curtain

Change Your Mental Model of Negotiation

Have you ever heard anyone say this?


17/43

Change Your Mental Model Completely new focus: It's the experience,

not the terms, that will provide satisfactionto the other party.

Don't look at negotiation as a necessaryevil.

A) It's an opportunity to discover theirbottom line.

B) And an opportunity to demonstratethe FAIRNESS of your position.



18/43

Which provides more satisfaction?

A) a bad deal mistakenly considered to be

a good deal.

B) a good deal mistakenly considered to

be a bad deal.



19/43

What matters most?

Which of these factors are most highly correlatedwith successful negotiation outcomes?

Bargaining power

Aspiration level

Skill of the negotiator


20/43

Research on Aspiration Level

Persons with higher aspiration levels winhigher awards.

High aspirants beat low aspirants withoutregard to skill or power.

Skilled negotiators without power loweredtheir aspirations.

High Aspirations


21/43

Power of High Aspirations

Reciprocity and Anchoring Boy Scout circus

Giant teddy bear

Barbeque restaurant Analysis that does not improve decision making

tends to be a waste

Wifes shoes

Selling up harder than selling down

Pick your clothes dryer

You will not exceed your aspiration.

First offer makes a huge impact.

Who should make the first offer?

High Aspirations


22/43

Factors Restraining High Aspirations

Fear of offending

Time constraints

Fear of failure: A culture averse to failurestifles exploration, experimentation and

discovery

Its more work

High Aspirations


23/43

How Do You Know When to be Satisfied?

Are your criteria arbitrary?

Remember, you never get to see the bargainingarea.

Our satisfaction level is based on..

1. Our expectation

2. How we were treated during the negotiation Are you impacted by how far you moved from

their starting point?

Are you impacted by their pain?

Analyze Your Level of Satisfaction


24/43

How Do You Know When to be Satisfied?

Inaccurate measurement can create a falsesense of confidence.

Koch examples of Measures & Benchmarking

Energy consumption should be measuredagainst some ideal not a budget.

Southwest Airlines studied NASCAR pit crewsto speed up turnarounds not other airlines.

Analyze Your Level of Satisfaction


25/43

..No Talking Please!

$10,000 has been designated for you toshare with another department head.

Person A writes a number on a piece ofpaper and passes it to Person B.

Person B writes Yes or No and passes itback.

Exercise


26/43

Concept Summary:

1. Raise your aspirations.

2. Its not the terms that make them happy

its the negotiation experience.

3. Avoid the winners curse.

4. When they see the fairness they say yes.

5. Being satisfied is a trap

Mental Model & Satisfaction Level


27/43

All Values Are Subjective

Values differ between all customers/clients.

Nothing has inherent value.

PEOPLE value things.

Value will vary from person to person.

Adopt a Value Focus


28/43

Bases of Subjective Value

Specific situation

Time

Uses for the product

Personal preference

Alternatives

Adopt a Value Focus


29/43

PRICE

COST VALUE

Bargaining Area Redefined by MBM

Adopt a Value Focus


30/43

NO Induces Trauma

Develop a positive NO.

Being ready, willing, and able to say nogives you power.

Knowing when to say no gives you power.

Setting Priorities: Risk-adjusted present valueof opportunities relative to resources consumed(such as scarce talent or capital)

The Power of No


31/43

Rigorously Explore All Alternatives

Harvards Methodology: Have you identifiedyour BATNA (Best Alternative to Negotiatedagreement)?

Have you fully explored and analyzed yourBATNA?

Confidence soars Identify alternatives so you will feel able

to say no.

The Power of No


32/43

A lot of problems in the world are caused by a person whosaid yes when they should have said no.

Southwest Airlines: The King of No!

No food

No choice of planes

No assigned seats No extra baggage

No first class

No shared reservation system

No expensive equipment

Why we need a Sales Manager

Failure to say no leads to disaster

The Power of No


33/43

Purchasing Managers Favorite Trick

How to say no when they tell you yourcompetitor will say yes.

They are testing you

Your competitor is over promising

You will lose focus

With a good relationship, they will get over it

The Power of No


34/43

Concept Summary1. No is the key to success.2. Practice your no!3. Slow down

1. Hmmmm.

4. Focus on the relationship not the terms.1. Manage emotions2. Show respect

5. Manage their response to your no.1. Fear

2. Guilt6. They are testing you.7. Remember Southwest Airlines.8. You dont want to win them all.

The Power of No


35/43

Make the Pie BiggerInstead of Arguing About How to Slice It

Win/win is an attitude. (Fixed Pie Fallacy)

62% buy into the fixed pie fallacy.

Pay close attention to their concerns.

Increase their value. Make it easier forthem to buy from you.

Reduce their opportunity cost (because if they

deal with you they arent dealing with someoneelse)

Use creativity, diligence and enthusiasm toidentify new options Stephen CoveysThird Alternative.

Win/win


36/43

Listen First

Are you projecting?--Listen for somethingunexpected.

They know everything you want to know.

Listen for opportunities to make the pie bigger?

Identify their problems before you sell a solution.

Take notes.

Listen twice as much as speaking.

Become an active listener.

Win/Win


37/43

Concept Summary:

1. Win/win is an attitude.

2. Listen!!

3. The goal is to increase the value for bothsides of the transaction.

4. Cooperation is better than competition.

Win/win


38/43

Understanding Bargaining Power

Dont underestimate your power.

Dont dwell on your weaknesses.

The illusion of power

The power of competition

The power of legitimacy

Evaluating and Building Bargaining Power


39/43

Landlord - Tenant Exercise


40/43

The Ten Most Important Things to Remember

1. The most important thingmake a connection

Its not about termsthey want a fair deal.

2. The other most important thinghigh aspirations.

3. Your satisfaction criteria are arbitrary?

4. You are trading valuescost is irrelevant.

5. Listen first.

Conclusion and Summary


41/43

The Ten Most Important Things to Remember

6.All concessions send messages whether youreaware of it or not.

7. You always have more power than you thinkyou do. 20% of the power is missing.

8. No!!!!!!

9.Whos skinning who?

10. Look for Win/Win opportunities.

Conclusion and Summary


42/43

Thank You

I appreciate your time and attention.

Please keep in touch.

Andrew Urich

405.744.8619

www.andrewurich.com

[email protected]
http://www.andrewurich.com/http://www.andrewurich.com/


43/43

References

Ailes, Roger. You Are the Message. New York. Doubleday, 1988. Bazerman, Max H. Smart Money Decisions, Wiley & Sons, 1999 Cialdini, Robert B. Influence: The Psychology of Persuasion, Harper Collins, 2007 Cohen, Herb. You Can Negotiate Anything. Secaucus, N.J.: Lyle Stuart, 1980 Covey, Stephen R. The 7 Habits of Highly Effective People. New York: Simon &

Schuster, 1989.

Dayton, Doug. Selling Microsoft. Holbrook, MA., Adams Media Corporation, 1997. Fisher, Roger and William Ury. Getting to Yes. New York: Viking Penguin, Inc.,

1981. Forsyth, Patrick. The Negotiator's Pocketbook. London: Alresford Press Ltd., 1993. Johnson, Spencer. The One Minute Sales Person. William Morrow, N.Y, 1984. Karrass, Chester L. Give and Take. New York: Harper Collins, 1993. Karrass, Chester L. The Negotiating Game. New York: Harper Collins, 1992.

Koch, Charles G., The Science of Success, Wiley & Sons, 2007. Kozicki, Stephen. The Creative Negotiator. Pyrmont, Australia: Gower, 1993. Lewicki, Roy J., et.al. Negotiation. 2nd Edition., Irwin, 1994. Lewicki, Roy J., et. Al. Essential of Negotiation, 4th Ed. McGraw Hill, 2007 Nierenberg, Gerald 1. The Art of Negotiating. New York: Barnes & Noble, 1995. Paul, Richard. Critical Thinking. Santa Rosa, CA: Foundation for Critical Thinking,

1993.

neg chesapeake handout 11.09

Documents