Sometimes the best negotiating stance is not to negotiate—as long as you’re in a strong position, and you strike a pose that is informed and reasonable. We call this posturing (without the negative connotation normally associated with that word).
Let’s say a Coach asks the seller’s best and final price. Wisely, the seller—call him Ben—asks if his company has been selected, and if price is the only remaining open item. The Coach says yes. Now Ben asks, “Doesn’t Sherry have final signing authority?” The buyer agrees and sets up a meeting for Ben and Sherry. Not surprisingly, Sherry begins the meeting by squeezing Ben on price:
Sherry: Ben, thanks for coming in today. Our organizations have spent a great deal of time on this project, and we believe that you have earned our business. I compliment you on understanding our business issues and defining exactly what we need to do to improve our results. My staff is comfortable with your recommendation. Having said that, one of the reasons we are even considering your offer is that our margins have taken a beating, and we believe your offering can help. But in this climate, $250,000 is a significant expenditure, and I would like you to sharpen your pencil so we can see if we want to get started.
Sherry has been through negotiations numerous times. Given the size of the expenditure, she already has an idea of what type of discounting should be possible. The vendor decision has been made, and now it is a matter of getting the best possible deal. Ben knows the pricing was presented as a step in the Sequence of Events 3 months ago, and in fact was a delineated checkpoint. By not challenging it back then, the buyer implicitly agreed they could afford it. Now that it is time to buy, though, they want to pay less.
Rather than responding with the deadly six words, Ben surprises Sherry:
Ben: I don’t understand, Sherry. We presented pricing 3 months ago. If it was an issue, why wasn’t it raised then?
Sherry is somewhat taken aback by Ben’s assertive (but accurate) response. Quickly gathering her wits, she counters:
Sherry: Well, I felt the pricing was high when you presented it, but I was sure you left some room to negotiate.
Ben: The pricing is based on our volume purchase discount. Is there anything you want to take out?
Sherry: We need all the proposed capabilities. Frankly, I need you to take out about 10 percent of the cost.
Ben: As I recall it, your cost-benefit analysis shows a payback in 5 months. Doesn’t it make sense to get started now?
Sherry: Well, yes. We want to get started, and that is why we scheduled this meeting. The cost-benefit analysis will look even better if you lower your price.
Note that in this dialogue, Ben was pressured for a better price no less than three times. Each time, he postured, using questions that politely said no to each of Sherry’s requests. Each “no” was unemotional and was virtually impossible for her to challenge or disagree with. The buyer has already made the decision to buy, but has the emotional hurdle of needing to believe she is getting the best possible deal. By saying no three times, Ben is actually helping Sherry make her decision.
Without getting too formulaic about it, posturing often consists of preparing three questions that politely decline the request for a better deal. These should be planned in advance and customized to each situation. Ending these polite no’s with a question puts the ball back in the buyer’s court. Our experience indicates that it is impossible to drop price while listening. Here are some examples of polite no questions:
Put it on the buyer’s shoulders: “Is there anything you would like to take out?”
Feign surprise: “You’ve known the cost for 2 months. Why is this coming up now?”
Remind the buyer of the value: “By your numbers, the savings are $36,000/month. Shouldn’t we get started?”
Reference usage: “Didn’t you say that after calling on customers, you want your salespeople prompted to update pipeline milestones, so managers can help with qualification and you can improve the accuracy of your forecast?”
Some buyers will agree to go forward after one, or two, or three of these polite “no’s.” If so, the seller receives an order for the full amount merely by posturing—that is, without negotiating. In the example so far, Ben has not yet reached the point where negotiation is appropriate. Posturing provides artificial patience during a stressful time and maximizes the possibility of a more profitable transaction.