Vendor Management Tips: Advanced Power Plays

Before you sit down at the bargaining table, read these advanced negotiating tips from vendor management expert Roger Dawson, quoted with permission from Secrets of Power Negotiating (Career Press, 2000).

Bracket your objective. Assume that you will end up midway between the two opening negotiating positions. It's not always true that you'll end up at the midpoint, but it's a very good assumption to make.

Danger Point: You have made the first offer. The vendor representatives bracket your proposal, and when you end up in the middle, they get what they want.

Solution: Get them to go first. Any suggestion that you should make them a better offer should be met with: "If you'll make a proposal to us, I'd be happy to take it to my people and see what I can do for you with them."

Options give you power. This principle underlies all power in a negotiation. The side that has the most options has the most power. Work to let the other side know that you have options. Limit their perception of options by positioning yourself as different from your competitors.

Danger Point: You have fallen in love with the car, house or job opportunity for which you are negotiating. The other side can sense that you have few or no options.

Solution: Work to develop options before you go into the negotiation.

Flinch at the other side's proposal. This is the No. 1 mistake that poor negotiators make. They don't flinch at the other side's proposal. Always react with shock and surprise that they would have the nerve to ask you for a concession.

Danger Point: The other side often makes a proposal to you that they really don't expect you to agree to. When you don't flinch, they start believing that they could get it from you. It makes them tougher negotiators.

Solution: Practice your flinches before you go into a negotiation. A concession often follows a flinch.

Play reluctant buyer. When you are buying, you can squeeze the seller's negotiating range with this three-stage tactic.

  • Stage 1: Listen very carefully to the vendor representatives' proposal and ask all the questions you can think of.
  • Stage 2: Tell them that you appreciate all the time that they have taken with you, but tell them it's not exactly what you're looking for.
  • Stage 3: At the last moment, call them back and say, "Just to be fair to you, what is the very lowest price you would take?"

Danger Point: A seller may be playing reluctant seller with you.

Solution: Believe that you have more power than you do. Let them know that you have options. This gives you power.

Use the vise technique. Listen carefully to the seller's proposal and then say, "I'm sorry, you'll have to do better than that." Then be quiet! The next person to talk loses. The next person to open his mouth will make a concession.

Danger Point: Buyers may use this on you.

Solution: Reply with the countertactic, "Exactly how much better than that do I have to do?" Pin them down to a specific figure.

All power is subjective. You have power if you think you have power, even if you don't. You don't have power if you don't think you have power, even if you do. Reality doesn't matter in a negotiation. Perceptions matter because perceptions become reality. The Japanese surrendered in 1945 because they thought the U.S. had an arsenal of atomic bombs with which we could destroy their country. We didn't. We didn't have any more atomic bombs. We had only made two and just used both of them. But they thought that we had more, and that perception became reality.

Danger Point: You feel that you have no power in the negotiation because the people on the other side appears to have options and you don't.

Solution: Find out whether their options are real. Or have they just convinced you that they have options when they don't? Then work to convince them that you have options. The perception of options gives you power.

Gain power by ignoring reward and punishment. If you feel that the other side can reward you by accepting your proposal or punish you by turning you down, you have given them the power to intimidate you. Turn that around by projecting that you have options. Tell them that you are very cautious in selecting your business partners and that they're fortunate that you are willing to do business with them.

Danger Point: They may call your bluff when you tell them that you have options.

Solution: Work to develop your options before you start the negotiation. It's the most important thing you can do, because options give you power.

Ask the tough questions. Gathering information is critical to conducting a successful negotiation. Don't be afraid to ask the tough questions. Even if people refuse to answer, you're still gathering information by evaluating their reactions to being asked.

Danger Point: You're only asking the questions that you think they will answer.

Solution: Ask the tough questions. Perhaps they will answer because information that was confidential or privileged is no longer so. But even if they don't answer, you're still gathering information.

Tie up all the details upfront. Time pressure is one of the factors that always affects the outcome of negotiations. People become flexible when they're under time pressure and will make concessions. Try to resolve all of the issues well ahead of a deadline.

Danger Point: The other side says to you, "That's not a big problem. We can work that out later."

Solution: Realize that it might not be a big problem if you resolved it now. It may become a very big problem if you wait until the last moment, when you are vulnerable because you're under time pressure.

Position for easy acceptance. Sometimes a negotiation will deadlock at the last moment. When a negotiation deadlocks like this, the ego of the other person probably got in the way. They want to accept your proposal but they don't want to feel that they lost to you as a negotiator. Position them for easy acceptance with a very small concession made just at the last moment.

Danger Point: You don't realize it, but the reps of other side bragged to their boss that they would get a large concession from you. Now they are not doing as well as they hoped, and they're reluctant to give in to you.

Solution: Save a small concession for the last moment. Tell them, "I can't budge another dollar on the price, but go along with that, and here's what I'll do. I'll personally supervise the installation so that you'll know it will go well." Perhaps you had planned to do that anyway, but now you've been courteous enough to let them feel that they traded something off.

Retain your resort to higher authority. Don't let those on the other side know that you can make a decision in the negotiation. Tell them that you have a higher authority that has to approve the final deal. You can put a lot of pressure on the other side without creating confrontation by blaming your higher authority. "I can never sell this to my people at this price. You'll have to give me a better price."

Danger Point: Don't make your higher authority an individual because they will want to go around you to deal directly with the decision-maker.

Solution: Make your higher authority a vague entity such as a committee or board of directors. That makes it appear unapproachable.

When There's Trouble
Don't let other people give you their problems.
International negotiators will tell you that when the other side tries to give you what is essentially their problem, you must test for validity right away.

Danger Point: They tell you, "We just don't have that much in the budget."

Solution: Test for validity. Ask them, "Who has the authority to exceed the budget?"

Handle impasses with the set-aside gambit. If you are a long way apart on an issue, set that issue aside and create momentum by reaching agreement on smaller issues.

Danger Point: Before the negotiation starts, they tell you that they already have two good proposals from other people. And unless you can beat those proposals, there is no point in talking.

Solution: Tell them that there are many things to resolve before you can discuss price. Create momentum by resolving smaller issues first.

Only a mediator or arbitrator can resolve a deadlock. A deadlock is when neither party sees any point in talking because past meetings have not changed either side's position. Only a mediator or an arbitrator can resolve a deadlock. You need to bring in a third party. To be effective, the third party must be perceived as neutral.

Danger Point: You are trying to mediate a problem, but one of the parties doesn't perceive you as neutral.

Solution: Make a small concession to that person, so that you service the perception of neutrality.

When you're asked for a small concession, ask for something in return. Whenever you are asked for a small concession in the negotiation, ask for something in return. Say, "If we can do that for you, what can you do for us?" Often, they will make a concession to you, and you will be pleasantly surprised at the size of the concession.

Danger Point: A new customer asks you for a small concession, and you're so happy to have their business that you say, "Sure, no problem." A week later, they call for another concession. From them on, they never stop asking for concessions.

Solution: When you're asked for that first small concession, ask for something in return. It stops them from constantly grinding on you.

Look out for good guy/bad guy. Whenever you are negotiating with two people, look out for them using this tactic on you. One of them appears to be mean, tough and totally opposed to your proposal. The other is warm, friendly and very sympathetic to your proposal.

Danger Point: You are psychologically drawn to the good guy and want to please him by making concessions.

Solution: Counter the tactic by letting them know that you realize what they're doing. It's such a well-known tactic that when you say to them, "Oh come on! You're not going to play good guy/bad guy with me, are you?" they become embarrassed that they were caught and will back off.

Look out for people nibbling on you. You are most vulnerable when you think that the negotiation is all resolved. You have probably been the victim of a nibble. You've been selling a car or a boat. The pressure and the tension of the negotiations have faded away. Just as the buyer is about to sign his name on the check, he says, "That does include a full tank of gas, doesn't it?"

Danger Point: You're vulnerable for two reasons. You've just made a sale, and when you feel good, you tend to give things away that you otherwise wouldn't. Second, you're thinking, "Oh no! I thought that this was all resolved. I don't want to have to go back and renegotiate the whole thing. I might lose it all."

Solution: The countertactic to the nibble is to gently make the other person feel cheap. You are at a sensitive point in the negotiations, so do it with a big grin on your face. "Oh come on. We worked out a super deal for you here. Don't make me throw in a tank of gas too. Fair enough?"

Always make the second effort. Perhaps the other side is agreeing to your core proposal but is balking at the expensive extras. Understand what goes on in people's minds when they make a decision. They fight the decision up to the point when they make it. Then their mind does a flip-flop, and they want to do things to reinforce the decision that they made earlier.

Danger Point: You've reached agreement on the core items but you're reluctant to make a second effort on the extras because you don't want to lose the entire thing.

Solution: Wait until they've signed the contract and say, "Could we take another look at those extras? I don't recommend it for everybody, but for you I really feel strongly that it's the way for you to go." Because their minds want to reinforce their earlier decision, you have a good chance of them agreeing to reconsider.

Taper down the size of your concessions. The size of your concessions can create a pattern of expectations in the other person's mind. If each concession is bigger than the one you've made before, you encourage the other side to extend the negotiations.

Danger Point: Time pressure is building, and you're eager to reach agreement. Your concessions get bigger and bigger.

Solution: Start with a reasonable concession and then taper down the size of your concessions. If necessary, take a small concession off the table at the last moment.

Contact Dawson at RogDawson@aol.com.


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