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There is nothing worse than to be in negotiations and you get blind-sided or derailed not by the other side but by one of your team members.  Here are a couple of problems in team negotiations and how to solve them:

A team member is trying to advance his own agenda. You are in negotiations or are preparing for them and one of your team members is pursuing an agenda that does not synchronize with the overall objective.  One of the first steps to avoid this is to make sure during preparations that you set the goals for the negotiation and that your strategies lead to those goals.  If you encounter a team member that is pushing an agenda that does not match your goal, call them on it.  The best way to address this is to have a private meeting with them.  Ask them how their agenda helps you meet the goals that the team has set and get their agreement to stick with the agreed agenda.  If they don’t agree, remove them from the team.

One of your team members is a loose cannon.  There is nothing worse than being in the throes of negotiation and one of your team members pipes up with an off the wall comment or proposal that wrecks the momentum or strategy that you are pursuing.  Part of your preparations is to establish the ground rules and the expectations of the team.  I have seen agreements completely wrecked by the actions of a loose cannon.  Designating one spokesperson for the team helps since that precludes that person having a chance to talk. Again having control over them or excluding them from all or part of the negotiation might be needed.

Your team member is rooting for the other side.  This could be that they really want the other side to win; they have an interest in the outcome of the other party winning the contract; or they are helping a friend.  Worse case is that they have a conflict of interest and it is to your detriment.  This should be addressed immediately if it comes up.  If you are in a company, it should go back to the person’s supervisor.  If it is your company, than you need to have a serious conversation with this person and find out what the reason is for this.  Counseling or exclusion from the negotiation or the project of that person is one way to solve it. 

Most problems with internal conflicts in team negotiations can be prevented by proper preparation and getting all team members on the same page. By having a unified approach during negotiations you can avoid these problems in team negotiations.

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Sometimes it is to your advantage to leave the negotiation table and sometimes you are the one left.  What are legitimate reasons and what are traps set by the other party to snare you?  Here are three tactics and how should you react to them.

1. Calling a Recess, Timeout or Caucus.  Both sides in a negotiation do this frequently and it often helps move the negotiation forward.  Times to call a recess is when you get new information that you need to check out, when emotions get tight and one or the other side needs to cool down, or you need to consider an offer, concession, to assess where you are  in the process or to develop a counteroffer.  Your response:  While taking a time out is a common tactic, you might consider what caused the other party to recess and use the time to discuss your strategies with your team mates.

2. Adios Amigo: The other party intentionally walks out of a negotiation to show disinterest.  Their message is “I don’t care whether we make a deal or not.  Usually this is sprung on the party that really wants to make the deal and happens early in the negotiation.  They are hoping that you will chase them or sweeten the pot to make them interested.  On American Pickers, I have seen Mike frustrated with this tactic and he keeps throwing numbers at the seller hoping to hit the magic number that will interest him.  Your response: Let them go.  If they do not come back, leave.  You can try to resurrect the deal after 30 days, or when the other party calls you. At that point, it will be your turn to get concessions.  Better yet, pursue your alternatives.  This will immensely strengthen your hand.

3. The Reluctant Dragon – Just before you are ready to complete the agreement, the other party announces that they are not completing the deal. They retreat from the negotiating table back to their cave hoping that you will come to them and try to coax them out.  Their intent is to make you move closer to their position in order to “save the deal”.  This tactic puts pressure on you to yield further concessions. Your response: Don’t fall for the tactic.  Let the negotiation drop and follow the same response as above – call them after a month or pursue your other alternative(s). 

Anytime you leave the table, you are changing the negotiation dynamics so use it this tactic wisely.  It is perfectly legitimate to take a time out since you are not calling an end to the negotiations.  Obviously the second and third tactics are not good tactics and are gamey.  You should never consider leaving the table unless you are absolutely sure that you will not need to come back in either of these situations.  They are included here to make you aware of what some negotiators may do and show you how you can avoid being sucked into their trap. 

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I have emphasized many times the need to be prepared to negotiate as that is the most important phase of the process. This is especially true if you are involved in team negotiations. I was in a meeting to discuss hiring a property manager for a condominium association recently and we discussed what we wanted from our new manager we were planning to hire. The president and treasurer had been negotiating with the prospective manager and I thought we were just finalizing the final details of what we wanted from him. Too my surprise, the manager was invited to the meeting and we discussed other details that were not brought out in the “pre-meeting”. In essence we were not prepared to negotiate. What can you do if you are in a situation like this?

You have several choices, none that are great. First, you can postpone the meeting and clear up any issues within the team. This is very disruptive and often not feasible due to time or travel constraints.

Second, you can caucus and have a side meeting with the team to ferret out other hidden items. This disrupts the meeting and can raise trust issues with the other side if not handled properly.

Another way is to continue, and see where the discussion goes. This may work out and you can always stop and take a break if you need to. This can be done seamlessly and not be obvious to the other side if handled correctly. In the situation mentioned, we continued and the issue raised was resolved with no impact to us since we did not increase the cost (we provided a housing allowance allocated out of the total salary package we had set) and it helped our applicant since it reduced his tax liability.  We were lucky that it did not turn out to be a substantive issue.

Obviously, the best solution is to not have it come up in the first place and that means not only having a team meeting to get everyone on the same page, but make sure that everyone knows all of the issues and be in agreement on them. That is being prepared to negotiate.

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When negotiating you need to keep your negotiation in perspective. Your perspective helps you set your goal but you need to remember that how you view the negotiation and its issues are different from how the other party perceives the negotiation and the issues.

I was reminded of this when my wife and I were evaluating real estate in our condominium development. Most of the units for sale in our development fall into two areas: those where the owner wants to have a quick sale and they price accordingly; and those where the owner want top dollar for their property.

We had originally looked at a condominium where the owner, “Molly”, had bought at top dollar in the latter stages of the real estate bubble of 2008. She had paid $450,000 for her three bedroom unit and had redone it for an additional $100,000. She was leaving the area and wanted to move on with her life. She realized the market had collapsed in 2011 and had marked the unit down to $299,000 (from her starting price of 350,000.) Similar units were selling for about $50,000 less than her price. So what was Molly’s perspective versus the buyer who came into the development looking for a deal? Her frame of reference was the price she paid for it and what she had put into it (~$550,000). But, she wanted to move and knew that the current market was not going to support $350,000 much less $550,000. From a buyer’s perspective, the unit was on the bay but it was the most expensive unit in the development for sale.

Another unit is currently priced at $299,000 on the canal. It has been at that price for over a year with no price reductions. The owner bought it at the height of the bubble and has a large mortgage on it. His perspective is that he is facing a loss on the property and he is not willing to take the hit. From a buyer’s perspective, he sees a property that has been on the market over 400 days, and is overpriced in relation to a recent sale (Molly’s) of $280,000 and several units that are comparable or better than his and are priced $50,000 less.

So here are two examples of different perspectives. As a seller you would want to know how the buyer sees your property and figure out how to move them toward seeing your perspective. One way Molly could show more value was to point out to perspective buyers that the surrounding houses outside the development on the other side of the bay were million dollar plus homes. Her unit was nicely furnished with high end tile and appliances and was a bargain compared to other houses on the bay. A buyer might point out that her price as the highest and that it was a condominium and not a single, stand alone house. Molly subsequently sold for $280,000.

For the second unit, the seller might try to point out any attributes that his unit had that made it a great value. A buyer might point out that prices were estimated to continue to drop and did the seller want to continue to carry a declining asset. In addition, if the buyer had looked hard enough he might find in the court records that the property is about to be foreclosed and his offer would be better than defaulting on the loan.

Obviously, everyone has a different perspective when they come to the negotiating table. How well you fare in the negotiation is dependent on your preparation and how well you can determine and understand the other parties’ perspective and figure out how to meet their needs while getting them to see your perspective on the negotiation.

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“It’s not nice to copy another person’s work”.  Isn’t that what your mother taught you when you were little?  Strange as it seems, finding out that someone is copying your work, such as sales letters, websites and materials seems to be a common problem in the internet marketing community and comes up quite frequently.  In fact, the following four examples have come to my attention in the last two weeks:

At an internet marketing training meeting of entrepreneurs, the question was asked about what to do about a friend who had informed one lady that she had liked her webpage and sales letter it so much that copied it.

The following week, I attended a meeting on magazine publishing and was shocked when I heard a person’s question.  It was “It’s okay to publish another person’s blog in our magazine isn’t it?  After all, it’s not copyrighted.”    The moderator made some half-hearted answer about you should attribute the person who wrote it and moved on.

A news article in the Sarasota Herald Tribune mentioned that the new school board administrator outlined a plan that at the very end mention some of the work was outlined by another person.  In fact most of it was the other person’s work.

A poster on a FaceBook forum I belong to had a client post direct except of her course materials on her own website and used some of the material on a YouTube video.  When brought to their attention, the poster said they would take it into consideration.  No apology or agreement to pull or attribute the work.

So what’s the big deal?  Aren’t they just spreading the word and helping you by reproducing your work?  First and foremost, using someone else’s work without their permission is a violation of copyright laws.  Basically it is theft of someone’s work.  So what do you do if your work is copied or the question comes up?  How can you protect your Intellectual Property?  Here is my layman’s (non-attorney, non-legal advice) point of view:

In the first instance, after getting over being appalled at both the question and the instructor’s response, during the break, I went over to the person who asked the question, and gently told them that contrary to popular belief, when you write something or create it, it automatically is copyrighted.  You cannot use the work or parts of it without permission.  If someone uses your work, you should send them a cease and desist letter requesting them to remove the work and not to use the material without your express written permission.  Usually they just don’t know it’s wrong and will remove the material.  If they persist, you should consult your lawyer, get legal advice, and have them send the copier a letter.

If you let them use the work, ask them to attribute the work to you and provide a link to your website.  I have had requests to use one of my blog posts as a teaching example to a group of insurance agents.  The requestor told me what it was for and I agreed as long as I got attribution and that the example was limited to be within the company he was teaching. If you want to post someone’s blog on your web or quote from it, ask them for permission. Most bloggers will give you permission it you attribute the work to them (don’t be like the school administrator, do it upfront and not as a hidden aside at the end of your article) and provide a link back to their website.  After all, wouldn’t you like the same courtesy extended to your work. 

While some people don’t care or enforce their copyright; others are very protective of their work and will let you know if you have violated their copyright.  Don’t think that they won’t find out.  Many of the larger internet marketers have followers who would recognize that person’s work and let them know or they might send you a note that says it is owned by someone else.  Also, as they say “There’s an app for that!”  There are programs that can compare or look for phrases or paragraphs to see if they show up elsewhere on the web.  That’s why school teachers can catch kids who copy a book review as their own rather than reading the book and writing their own report.

Using other people’s work is getting more common, but that doesn’t make it right.  Enforce your rights and protect your Intellectual Property by letting people know that it is not acceptable to use work without permission or attribution.  In a future blog I will discuss more ins and outs of copyright.

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Are American companies really interested in retaining their customers by keeping previously offered service?  The quick answer is yes, but several recent events regarding customer service, have made me think otherwise. Consider the following:

Three major hotels chains upped their requirements for redeeming customer loyalty points for free night stays.  Hilton went so far as to reclassify many of their hotels into higher classes so not only was the level higher, it also increased the number of points for that level.  No real explanation or reason was given in the notice sent out to their “loyal customers”.

The airline industry in general has not disguised its contempt for passengers by charging for extras such as bags checked, seat selection, premium seats, food, pillows/blankets, and rumor has it, one airline seriously thought about charging for restrooms.  One result is that bags are being brought on board for the overhead bins, that will not fit and there are far too many bags then space for them.  An unintended consequence is that it takes longer to load the plane and if the overheads are full, then the extra bags are stored in the hold with the paid bags but at no charge.  Wise travelers bring their luggage on –board since it is a win-win either way for them.

Being a first class passenger is just that.  In the boarding area and on the plane you do get better treatment for a price.  However, once you deplane, you are on your own.  Recently, my wife had to travel with a wheel chair.  The stewardess was helpful in getting the chair out and we got off of the plane okay.  However once the auxiliary service chair pusher got her to the top of the ramp, we waited for the entire plane to empty so that he could be sure he did not have another chair to push (they make them push two chairs at once).  Rather than getting a priority to get to the baggage area, we were shunted to the end of the queue.

The prearranged “fully accessible room” we had booked had a tub (no roll-in shower without a curb) misplaced grab bars and table lamps that were difficult to turn on and off if you were fully mobile.  This is what greeted us at ten o’clock at night after a five hour flight from the east coast making it after midnight on our time.  [A polite meeting with a manager soon rectified this with the properly equipped room.]

A major home-improvement store, following the airline industry’s bad practices, now charges for carpet estimates and also charges for installation rug removal and furniture moving ala-cart.  Plus a limited selection of carpet with a two plus week delivery time for the special order carpet after the installer comes to your house.

So how do you respond or react to these drawbacks by companies?  For one, you can let them know you do not approve of their behavior and also vote with your feet.  In the instance of the hotels, they all have coincidently done this at the same time.  Focus more on price and immediate benefits when choosing the hotel and not on future benefits since they have indicated that they may not be available in the future.  Also, take advantage of any grace period and redeem your points while they still have value.

Complain nicely.  In the inadequate room situation, my wife had the person come to the room to see the problems rather than talk about them over the phone.  It was more effective and got immediate results rather than a vague “we will look into it” response.

For a company that does only ala-carte pricing, try to bundle it together if you want it.  If they won’t, shop elsewhere and let them know you are goin g to do it.  Competition brings pressure to a seller and may make them more receptive to you offer.

These examples are probably the tip of the iceberg.  Please feel free to share your observations and how you reacted or resolved them with me.

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How well you make your initial offer will set the tone of the negotiation and may make the difference between getting a deal and getting a really good deal.  Here are three easy mistakes to avoid in making your initial offer. 

Making your starting offer too high:  You over estimate the value of what you are offering or your offer is way over the other party’s budget.  The other party has no alternative but to reject your offer or worse; they choose not to negotiate since you are “too far apart”.  In other words, your offer was a non-starter.

Making your starting offer too low: Either the other party realizes that you do not have a clue about the value of your product or service, or else they think something wrong with it.   Since you are making it available at a ridiculously low price, they either go for broke or drive your price even lower or they head for the exits.

Making no starting offer: The final negotiation tip is not making the first offer because you feel that the other party has much more information than you do about the item to be negotiated or about the relevant market or industry.  Typical sectors such as real estate or employment fall in this category.  Rather than making a poor offer, you let the other party make the first offer and set the anchor.

So how do you reach a “Goldilocks moment” where you make your offer and it is not too high, or not too low, but just right?  The best way is to properly prepare and know not only your product or service and how it fits in with your competition, but also you need to know the other party and what their alternatives are, what similar products or services they have bought or sold to you or others in the past and what kind of relationship you have with them and what kind of relationship you want with them in the future.  This your opportunity to gather more information and build your confidence to make a good initial offer.

Avoiding these three mistakes in making your initial offer can help you make better offers and help you reach a better objective when negotiating.

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I mentioned anchoring your price in a recent article and have been asked what is anchoring and how does it work?  Let’s say you are buying a piece of used equipment from another company.  It has the features you want and you want to buy it.  After doing your research, the equipment retails new for $150,000, but a used one in good condition is worth around $100,000.  You have the classic choice to start the deal. Who makes the first offer?  You either ask: “How much do you want for it?” and see if it is near your estimate; or make them an offer. Since you know the value of the item you want, you probably should make the first offer.  The reason is that the first number is the starting point or reference and any subsequent counteroffer will be compared to the first number.  So it acts like an anchor holding that number in place, and like an anchor, it can be hard to move away from it. 

While there are ways to counteract this advantage; in most price negotiations the final number agreed upon will tend to be nearer that number than the counteroffer amount.  This has been shown in several research studies and practical experience.  So you should make the first offer if possible in order to ground the negotiation toward the price that you want. 

If you are going to make the first offer, make it a good one.  By that I mean aim for your best price.  In this case, you might want to offer $50,000.  You might be surprised that it is accepted.  How would you feel if you did not go for your best price of $50,000 and a lower expectation number (for instance $75,000) was your offer and it was accepted?  You could not say “Wait, I really meant to say a $50,000.”  If the other side is not going to accept the first offer, then you have room to negotiate a better number.  For instance, they were thinking of asking $125,000.  By making the first offer and anchoring at $50,000, you have accomplished two things.  First, $50,000 is now the starting point and the other party is negotiating up from that figure.  Second, you may have lowered their expectation of receiving the higher number.  Instead of the $125,000, they may reconsider  the value of their piece of equipment and you get a counteroffer nearer $100,000.  After several rounds of negotiation you will probably be closer to your figure of $50,000 than their “wish” number of $125,000.

What should you do if you are not making the first offer?  You should try to minimize the impact of the first offer if possible.  This could be as easy as rejecting the first offer out of hand and requesting a better offer.  Another way to reduce its impact is to express disbelief or astonishment at the offer.  “You want what?”  Another way to reject the opening offer is to use humor.  Often, I see negotiators simply say “No way, that’s not going to happen!” followed by a laugh.  It is a way of saying no that disarms the offer without being hostile and not treating it as a serious offer.  A good follow-on to that statement might be “Seriously, what do you really want for this?”  Unless the offeror is really good, they will not repeat the number but offer a better figure that is less than previously stated.

When negotiating, you need to remember that the first offer will be anchored and that it is difficult to move away from that number as a reference throughout the negotiation.  Even if you are aware of the impact of the anchor, it still has a strong psychological influence on you and your way of looking at the negotiation.  If you are setting the anchor, make it your best, but realistic offer.  If you are given an anchor, don’t let it sink your negotiation.  Instead, minimize it and be aware that it can subtly influence you throughout the negotiation.

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This is Dr. Seuss’ birthday week; I hope my blog doesn’t make me a geek.
If you are in a negotiation fog, get clear by reading this blog:

Horton hears a “No!”

Horton makes an ambitious offer to start the negotiation, he hears a loud “NO” much to his consternation.
Did the buyer really flinch, or is he just a mean old Grinch?
Does Horton waiver from his task? No, he checks his list of questions to ask.

What is the reason for this rejection?  Don’t you know this offer is pure perfection?
Is there something important, that I forgot to say, what is needed to win the day?
I offered you some green eggs and ham; would you rather have them served with Spam? 
We can explore “This” and then look at “That”; you say that you want a Cat in the Hat?

I’ll become a partner with you, evil old Grinch, working together will be just a cinch. 
I’ll find out what it is that you need, we’ll look at options, see where they lead.
I know what we can do; I’ll give some, if you’ll give some too!

What, you say you want “This! And not “That” in return I’ll give you the Cat but not in a Hat!
We’ll make this deal if it takes all night, we’ll work together rather than fight.

You say you will, “That’s great!” I shout; we both can win, no need to pout.
We’ll sign on the line, we‘ll be oh, so happy, let’s do it right now, let’s make it snappy!

Horton gives a sigh of relief, that’s the end the beef. The deal is now done what could be any more fun?

(Horton knows that a “NO” is not really the end, it’s just a nice place to begin.)

So how many negotiation principals did you catch that Horton did?

Here are seven:

1. He made the first offer and aimed high.
2. He did not drop his price after a ”No”, instead he clarified his offer.
3. He was prepared (list of questions).
4. He looked for alternatives and expanded the pie.
5. When he gave a concession he asked for one.
6. He approached the negotiation as a partnership and solved the problem.
7. He closed the deal and both sides won.

Not bad for a pachyderm.  Want to be as smart as Horton?  See how you can work with me by going to my website at http://businessnegotiationservices.com.

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Sooner or later you are going to receive a low-ball offer. It could be an offer for your house, a business proposal, an insurance claim, a service you are providing, or an item you are selling.  How you respond is going to set the style and tone of the negotiation going forward.

First, before you respond, you need to decide if it is a serious offer or a whim.  For instance, in real estate, many people are bottom feeders and make crazy offers.  When I was selling my house, I got an offer that was half of the asking price and a promise to settle in two weeks.  The guy lived in Florida and I was selling in Tennessee and he had never seen the house except for a few pictures on the internet.  This was a crazy offer, as in “If you are crazy enough to sell at this price, I am crazy enough to buy it.  I rejected the offer without any counter offer.  I did this for two reasons.  I did not think this would go anywhere, the difference was too great; and I did not want to anchor his starting price at fifty percent below my asking price.

If it’s not a crazy offer and you want to negotiate, you can respond by refusing to respond to the offer with a number, by saying, that you are too far apart and they need to make a “serious offer”.  This gives you the advantage of not dropping your price and it tests whether they are serious. 

Another way to respond is to tell them that they are missing the value of what you have and list some of the features of what you have, be it rarity, upgrades, better location, etc., and repeat your first price.

If you are in a situation where the other person makes the first offer and their number is a low ball, then you could respond with an absurdly high number beyond what you would have set your price.  They will probably respond by saying “You can’t be serious,” or “That is way out of range!”; then you can agree with a smile and say “Lets both get realistic and give me a serious offer.”  Most times they will not insist that their first offer is valid and they will give you a more realistic number.

A final way is the tried and true incredulous response.  This is a look of shock or surprise and a “You can’t be serious?” response.  This may fluster the other side and they will immediately follow up with a more realistic number.

Regardless of which of the five negotiating tips you use to respond to a low-ball offer, you can take control and set the tone to getting the negotiation on a realistic track.