Want to be a better negotiator? Then you need to learn seven simple words.
Americans, for the most part, do not enjoy negotiating. I’ve attempted to examine my own hesitations when it comes to negotiation and I believe it has to do with status. It seems a bit needy to haggle — as if I couldn’t afford the price their asking. “Oh I can afford it buddy! I’ve got money oozing out my ears! Just let me show you how much status I have! I’ll buy TWO at full price just to prove it!”
Or something like that.
Hopefully you’ll move quickly beyond that type of attitude and will be on your way to saving toward your bottom line by disarming sellers and wielding a magical 7-word weapon of your own.
Be Aware of Anchoring
There is a classic tactic of retailers called anchoring and if you’re aware of it, you can combat it (as we YNABers very well know, awareness is the key to just about everything!) when doing your purchasing.
Originally introduced to the idea of anchoring in Russo/Schoemaker’s excellent book Winning Decisions, I’ve tried to be very aware of it, and how it’s used against me when it comes to my purchases. In an instructional module that Russo wrote in May 2006, he described a simple exercise he did with his students to demonstrate the power of anchoring:
“The anchoring bias can easily be shown by posing two related questions to students. First, ask a question that implants an anchor value. For instance, if the quantity to be estimated is the year that Europeans defeated Attila the Hun, the first question might be: “Was the year that Attila the Hun was defeated in Europe and forced to return toward Asia before or after 900 CE?” Then the second question asks for the year directly: “In what year was Attila the Hun defeated and forced to return toward Asia?” (emphasis added)
You might guess what happens. Students have been anchored to the year 900 CE by the previous question. As a result, their estimate for the exact year of Attila’s defeat is unmistakably clustered around 900 CE. Russo makes the case even stronger when he uses each student’s last three digits of their phone number in place of 900 CE. The students all tend to answer near the year given even when that year has absolutely no bearing on the second question.
How is anchoring used against you every day? Ever heard an auto dealer talk about the MSRP? Ever looked at a clothing tag and seen that suggested retail price crossed out to show you your sale price? Discount price? Today-only price?
I only mention anchoring because it’s a classic tactic that can easily be combated by simply knowing that it’s a psychological trick that really does work.
Seven Words to Better Negotiating
Oh, I wish I could take credit for this, but it was actually based on an interview of Richard Paul Evans that I heard on the Glenn Beck show while I was driving around the other day. Glenn Beck described it as:
“Seven words that will change your course, seven words that will change not only I believe your financial future but also the course of your life.”
Those 7 magical words? Is that the best you can do?
Embrace any silence that may follow.
Use this all over the place. Use it at restaurants, retail outlets, hotels, airports — everywhere. Evans says it’s a rule for every one of his staff members to use that line whenever they’re purchasing anything. They’re seven harmless (but powerful) words! They’ll cause no embarrassment, you’ll feel no pain, and you’ll likely end up saving a bundle.
What you’ll find happens nine times out of ten is that the person will come back (after having spoken with a manager or whatever) and offer you some percentage off, and then apologize for not being able to offer a steeper discount.
Do this in places where negotiating just never happens. Walmart. Gap. Target. You will be amazed at what happens! And at the mom and pop shops you’ll find an even easier time being able to talk to the person that can actually call a few shots.
Is That the Best You Can Do?
If you’re looking for a full-on thesis regarding negotation, this little email won’t be for you. However, the excellent book Getting to Yes: Negotiating Agreement Without Giving In will certainly suffice. It is a great source if you find yourself wanting to improve your negotiation skills. I highly recommend it.
However just knowing about anchoring, and wielding your own negotiation weapon will go a long ways on its own.