How do you feel when you step into negotiations?
Generally, there are two types of people, those to whom the art of persuasion comes naturally, and then there are those who dread going into what they perceive to be a fight, where there can only be one winner.
But it doesn't have to be like that.
Here are 9 psychological tools that will guarantee you to become a better negotiator and help you shift the outcome of a negotiation into your favor.
The first and arguably most important psychological tool to increasing your chances of winning a negotiation is to overcome the mythical fixed pie assumption. This assumption refers to the fact that often within negotiations both parties assume that their interests stand in direct contrast to the other party's interest. As if two siblings are fighting for grandma's delicious pie, and both are trying to cut a bigger piece of the pie than the other person.
For instance, if you are trying to buy a new sofa through Facebook marketplace and you are negotiating the price of the sofa with the seller, you might assume that the seller's main interest is to sell the sofa for the highest price they can possibly get, while your interest might be to buy the sofa for the lowest possible price. Hence, it seems that your interests are in direct contrast.
However, what if you knew that the seller is actually only selling the sofa because they had it spare and want to use the money they get from the sale to buy a new bicycle?
Or to put it differently: What if you knew the underlying interest of the seller?
Imagine if you had a spare bike that you wanted to get rid of anyway. Would you be willing to make it part of the negotiation? You could get rid of the old bike and convince the seller to reduce the price of the sofa.
It would be a win-win for everyone involved, without the need for one of the parties to leave the negotiation having to feel that they "lost". It's as if you realized that the pie you were fighting for wasn't fixed in size and that you could make it magically bigger by listening to the other person and their needs.
Closely related to the above is the principle of reciprocation.
In essence, it refers to a wonderful natural human characteristic, namely, the urge to repay someone who did something for us. This feeling of urgency is particularly strong when someone did something for us without us even asking for it, like your boyfriend bringing you home a bunch of flowers after you had a hard week at work to cheer you up. It shows us that the other person genuinely cares about us and that we mean something to them. This feeling of meaning something to someone is one of the most powerful emotions we can feel and stands at the heart of great communication.
Hence, in response to this kindness, we feel a strong urge to reinforce the relationship with the other person by making it obvious that they also mean something to us.
We can use this psychological principle to our advantage during negotiations. When trying to persuade someone to buy into our idea, opinion, or product, really show that you care about them and that you don't want to harm them but create a win-win situation.
To do so, listen closely to the other party's underlying interest that prompted them to negotiate and look for opportunities to upgrade your side of the deal in a way that could exceed the other party's expectations. Show that you are going the extra mile to fulfill a desire that they didn't even ask to be fulfilled to evoke the urgency within them to repay you for your kindness by buying into your idea, opinion, or product.
Argued by some to be the most powerful of persuasion tools is framing*.*
The frame refers to the "information around the information", or in other words, the context.
Imagine you want to buy a certain used car and you found two ads online for almost identical cars, same mileage, age, colour, interior, performance etc.
You visit the first seller, an official dealership where you are being served by a competent sales rep who is nicely dressed and gives you a pleasant experience.
You then visit the second seller where you view almost the exact same car in the rundown backyard of some dodgy used car dealer.
How would your perception of the two cars differ? Who would you rather buy the car from?
Chances are you are going to say the official dealership, and that despite the fact that both cars are almost identical. Even if the second car you viewed would be in a seemingly better condition you would probably be more likely to stick with the official dealership. This is how much influence the frame of a negotiation has.
However, the frame doesn't always have to be a physical environment, it could also be our culture or past experiences. For instance, if your childhood was marked by having a really strict dad who you would be scared of and towards whom you built a strong defense mechanism, you might be less likely to trust a male car sales representative, even though they might be a very genuine and helpful person. In such situations, the dealership could increase its chances of making the sale by changing the frame of the negotiation and assigning a female sales rep to the customer.
Related to the concept of framing is the contrast principle.
Things look different in a sequence compared to when looked at in isolation.
Imagine you are an estate agent and you are trying to sell an average-looking townhouse that needs a bit of love and probably some refurbishing investment which is an extra cost that has scared most potential buyers off when shown this property.
However, with the next set of potential buyers, you are going to pursue a different approach. You tell them that you first want to show them two other properties that you think they would be interested in. The two properties that you pick are notably smaller and in a slightly worse condition than the townhouse you are actually trying to sell and they lack some of the features that your next clients wished for, like a big window front facing the back garden of the property.
During the day of the viewing, the following will happen. When you are showing your clients the first two properties, they are likely to be slightly disappointed, it sort of meets what they were looking for, but it still doesn't fulfill all of their wishes. With this feeling of disappointment and lowered expectations, the potential buyers will approach the last property you are showing them, the townhouse you actually want to sell.
Primed by the experiences from the first two viewings, the townhouse will all of a sudden turn around the atmosphere by coming in as a pleasant surprise. It will stand out through being bigger, meeting all of the client's needs including a large window front, and being in a notably better condition. All these comparatively superior features over the other houses will make the need to invest in the refurbishment of the townhouse less of an issue since the benefits the townhouse brings clearly outweigh the refurbishment cost.
By having shown the property in a sequence, you as the estate agent completely changed the perception of the townhouse compared to if you had shown it in isolation as previously done. That is the contrast principle.
Another very useful tool for shifting the outcome of an negotiation in your favor is anchoring.
Psychology suggests that we constantly make assumptions, without us even realizing or being able to control them. It's also the reason why we make up our mind about someone new within the first 10 seconds of meeting them.
However, we need a basis or anchor for making assumptions. When we meet someone new, this might be, the way they dress, the way they speak, their body language and facial expressions, and so on.
In negotiations, we can use this mental mechanism to our advantage.
Especially in situations where you are trying to sell something always be the first to name a price. By doing so you create the first impression and subconsciously force the buyer to form an assumption of the actual value of the object you are selling without them realizing it. You are effectively anchoring an assumption about the value of the object in the buyer's mind.
The buyer will still probably try to negotiate the price down to what seems like an acceptable price to them, however, it makes a difference if you anchor them at £500 or £5000. They are not going to try to negotiate you down to £400 if you set the latter price first because in their subconscious mind they will automatically assume that the value of the object you are selling lies around the £5000 mark.
However, a real problem with the psychological mechanism of constantly making assumptions is that we are overconfident.
You don't believe me?
Let me ask you a couple of questions. Without using Google (you cheeky sod) I would like you to write down your own estimation for the following. Your answers should be intervals. This means that if I asked you "What's the world record in men's 100m running (in seconds)?", you should say something like "Somewhere between 9 and 10 seconds", i.e., an interval between two numbers.
Here are the questions:
Right, now go to the very end of this blog post to find out the answers. How many of the answers lied within the intervals you wrote down? All of them? Not even 1?
Chances are that most people did terribly during this exercise because the human being tends to be overconfident.
This characteristic can also be problematic in negotiations, namely because we tend to be overconfident in estimating the zone of potential agreement, i.e., the difference between the reservation prices of both parties. For the seller, the reservation price is the amount below which they will not sell the object in question, i.e., they will not sell it for any cheaper than the reservation price, let's say £1000. For the buyer, the reservation price is the maximum amount they are willing to spend on the object in question. If it gets more expensive then they simply won't buy it, this could be £2000. The price range between these two reservation prices is the zone of potential agreement.
Obviously, when we are in a negotiation, we don't know the other party's reservation price, so all we can do is guess. This is where the danger lies. We shouldn't be estimating the zone of potential agreement too narrowly. The other party's reservation price might actually be way higher (or lower) than we assume and therefore be more in our favour than we realise.
Any additional information that helps you understand the other party's underlying need which prompted them to engage in the negotiation will help you be able to get a better understanding of what it is they are aiming to achieve and therefore, what their reservation price might be.
A very important aspect that determines how we make decisions is the availability of information. If I asked you, what is the bigger killer in the US, car accidents or lung cancer? What would your answer be?
Chances are that most people will say car accidents. However, in fact, the number of people dying from lung cancer is actually almost 5 times higher than those dying in a car crash.
The reason for this illusion is the media. Unfortunately, a horrible car crash makes for a better story. As a result, we are much more often exposed to emotional stories and pictures of vehicles drenched in flames and families being torn apart, which is information that is readily available within our minds and therefore will come to mind much quicker than rational thinking when asked a question like the one above.
In negotiations, we can use this to our advantage by attaching a memorable aspect to our offer when we are trying to sell our ideas, products, or opinions. Ever wondered why some advertisements on TV are completely over the top and crazy, like SnoopDog rapping in a super fancy over-the-top outfit about the delivery service JustEat?
Well, next time you are thinking about ordering a takeaway, the memory of this advert might be easily accessible and you are more likely to open the JustEat App rather than Deliveroo.
If you have ever watched an auction, there is a high chance that you witnessed a rather interesting situation in which there are just two willing buyers left who are relentlessly fighting for an object in question driving the price sky high beyond any rational reasoning.
And you are thinking: Well, that escalated quickly...
That's what escalation is, a situation wherein the emotions take over and any rational thinking is completely turned off. In the case of two bidders during an auction, competitive arousal takes over, and the bidding is now only about beating the other person and not about buying the object for a reasonable price.
Beware of letting your emotions take over and end up in a situation of escalation. A good way of doing so is to adopt Big Picture Thinking.
An overriding principle to always keep in mind during any negotiation is to never get lost in the details and lose sight of the big picture, i.e., the overall goal of the negotiation.
The best way to ensure you are not getting distracted by the details of the agreement terms within the negotiation is to clearly define two things:
Keep reminding yourself of these two things during any negotiation and constantly evaluate whether the agreement you are working out is better than your BATNA and ideally close to your stretch goal or whether it is not. This will help you will stay focused on the bigger picture to ensure the agreement is in line with what you are wanting to get out of the negotiation.
Answers to 6. Overconfidence:
My Story
My name is Stefan, and just like you, I had (and still have) this little voice in my head telling me that I'm not good enough.... continue reading
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