Negotiation, Negotiation, Negotiation

UK Property Investment news and comments from Mark Harrison of YourPropertyExpert.com

Confidence / Belief / Call it what you will, it works…

Posted by markharrison on January 1, 2007

I don’t know why, but today, I had this odd flashback to a deal I negotiated for an (IT) client a few years ago.

Basically, they were unhappy with the service that a supplier had given them, and wanted compensation. They thought that somewhere between £10-20,000 would be reasonable.

I was asked to represent them in the meeting with the supplier. We held this at my client’s office, and there was a member of the client’s finance team, briefed to initially back me up no matter how outrageous I got (but to step in to over-rule me at the second meeting if it looked like we were approaching an agreement, but needed a concession.) The supplier had, likewise, sent in a couple of people.

So, based on a client’s expectation of £10-20k, I decided to ask for ten times that. I asked for £210,000 in refunds.

I don’t want to make it sound too maverick – this wasn’t an “off-the-cuff” figure. Instead, I had about 150 individual documents as backup, and a spreadsheet summarising the work that this supplier had done, referencing the documents, and  detailing how I’d arrived at the figure of £210,000.

The supplier was, to put it mildly, a bit surprised. We spent about 20 minutes going through my calculations. All the time, I “kept congruent” – I stayed calm and professional, and acted as if asking for £210k was completely reasonable.

After that 20 minutes, they asked if they could “have time to concur”, so the client’s finance manager and I said that we would pop out of the meeting room for 10 minutes and get coffees. We went downstairs to the next floor, and at the bottom of the stairs, the finance manager burst out laughing. “I can’t believe you did that, Mark” she said, tears rolling down her eyes.

We went back in, and the supplier had a counter-proposal. They would agree to £150,000 of the concession in cash, disputed £10,000 of the calculation, and offered to make up the additional £50,000 in credits against future services. (This was a smart move on their part – it meant that my client would be locked into still using them.)

Now our turn to confer. Important lesson here – despite the fact that the cash element alone of the offer on the table was over seven times what my client had been expecting, we were NOT going to accept straight away. Instead, we asked for permission to pop downstairs, and present their offer to the client’s FD. As you might imagine, he was more than happy, but also understood the importance of making the other party believe that they’ve won. He agreed PROVIDED that a cheque for the funds was issued that day.

We went back upstairs with the offer, which was accepted, and a courier and the cheque arrived that afternoon.

Several important negotiation lessons there:

  • Match the sizes of your teams
  • Feel free to make an “outrageous” opening offer – you never know what they’re expecting
  • Never present yourself as the ultimate decision maker. Always leave yourself room to be over-ruled (in either direction.)

.. but most importantly:

  • Act confidently. Make sure that you DON’T act nervously, or as if you feel you are making  an insulting offer. Always act as if you feel you are asking for something entirely reasonable.

2 Responses to “Confidence / Belief / Call it what you will, it works…”

  1. Joel said

    Mr. Harrison,

    I am impressed by the outcome of your negotiation. I hope to see more stories like this in the future. I have added your site to my blogroll.

    Best Wishes!

  2. Joel,

    Thanks for adding me to your blogroll. From the quality of your posts, I suspect that I’ll be adding blog your to my blogroll once your site is a bit bigger, but at only two posts, it’s not there yet😦

    M.

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