“Fair prices and minimal drama”: these were the words that caught my attention when I read The Age’s recent article on how a Harvard-based negotiation strategy helped the Geelong and Adelaide Football Clubs negotiate a complex player exchange. Senior executives from both clubs had recently completed short programs on negotiation at Harvard University and were sufficiently inspired that they put the theory into practice in a high-stakes negotiation back home.
Now, I know as much about Aussie Rules football as I do about nuclear physics (which is not a lot), but here’s what I do know. Organisations that adopt a ‘principled’ (interests-based) negotiation strategy are reaping the rewards – both in terms of the negotiation outcome and their reputation or brand.
Anecdotally, I’ve heard that certain banks, law firms and even construction companies have adopted a collaborative approach to negotiation and successfully used it to encourage other parties to do business with them. Then, just a few weeks ago, I experienced the power of principled negotiation in a place where I least expected to find it – a car dealership.
Buying a car can be a tedious process that is riddled with clichéd behaviour. So when I decided that it was time to upgrade my wheels, I was curious to see how far I could take principled negotiation into such a haggle-prone environment.
To my great surprised, the car dealer beat me to it.
Having narrowed the field down to two alternatives, I was struggling to make a decision. On paper, the two cars are very similar. I read the usual reviews, and there’s very little separating them in terms of size, functionality and performance.
So how did I decide?
Ultimately, it came down to the negotiation experience. All other things being (fairly) equal, I chose to buy my new car based on trust rather than purely specifications or price.
When I looked more closely at what the successful dealer had done to create this trust, it came down to a few key elements:
- Interests: He asked questions to figure out what was important to me and was explicitly focused on helping me to find the right vehicle for me. By contrast, the unsuccessful dealer made some assumptions about what might appeal to me – for example, telling me that many people were attracted to “the badge” – and completely missed the mark.
- Standards (Legitimacy): He was (relatively) transparent about the pricing of the vehicle, showing me a complete breakdown of the base price and options. While I have no doubt that some of these items included a significant mark-up, the structured approach made it easier for us to find a price that we were both happy with – without getting irritated with each other in the process.
- Relationship: He was proactive in building the relationship, calling me a few weeks after the initial test drive to say: “Hey, it was raining last weekend when you did your test drive. The weather’s going to be great this weekend. Why don’t you come in, and we can take the car out on the freeway?” He also talked about the future relationship in terms of being able to “look after me” with a loan car when I brought the car in for servicing. (This was surprisingly impactful.)
Ultimately, the successful dealer negotiated like a human being. Yes, he was “selling”, but he did it in a way that came across genuine, transparent, and therefore trustworthy.
Now, none of this is rocket science (or nuclear physics, for that matter). But by taking a principled approach – with a particular focus on interests, standards and relationship – the successful dealer managed to close the deal and create a brand advocate. Go Team MINI!
In an industry plagued by positional tactics, the successful dealer stood out by creating an experience that was surprisingly enjoyable – and got us to a “fair price” with “minimal drama”.
So what’s your organisation’s “negotiation reputation”? How could you challenge some of the norms in your industry by adopting a more principled approach?