James offers Zabel a measly $2 per share. “Under these conditions”, starts off James, “… [James and co] are prepared to risk $2 a share”.
“2 bucks?”, questions Zabel, breaking out in a nervous laughter shocked by the ridiculously low offer. “You're out of your mind. The stock was trading at 79 a month ago. Our building alone is worth more than 2 bucks a share. My board will never accept this. There is no way I'm going to sell for 2 bucks a share.”
The government representative steps in to back up James, telling Zabel that the government could never justify a high price for his firm and that he has no other option. If he doesn’t sell then he faces bankruptcy.
But Zabel remains unmoved. “I'll take my chances in bankruptcy court before I sell to that barracuda” angrily responds Zabel.
A blanket of silence falls over the room. It looks like the deal is off. Neither party is willing to pay the price the other is wanting.
The Defining Moment
Realising that the negotiation has reached stalemate, James decides to do something completely unexpected. While he really wants to buy Zabel’s firm and knows he is getting a great deal, he decides to walk away.
“Then we have nothing more to talk about” says James as he gets up out of his chair and turns to walk away.
But just as James reaches the door, Zabel calls out "6". It’s a counter offer.
“3 and that's it” responds James.
“5”
“3”
“Alright, we'll call it an even 4. So we don't look so god damn pathetic.”
James pauses for a moment, looks at his colleague for confirmation, who nods back at him in agreement, before taking a step forward. “3, and not a dime more,” says James and locks in the deal.
There are two key negotiation techniques used in the scene above.
Negotiation Technique 1: Use Anchoring and Adjustment
James started at $2 and Zabel started at $6. In what is called Anchoring and Adjustment (see Those Clever People at Wikipedia and a little phenomenon called anchoring) initial values, regardless of how extreme, have a strong affect on final values. In this case, James used a $2 anchor, not because he thought he would get it for such a low price but because he knew it would get Zabel to start thinking low values. To counter that effect, Zabel used a $6 counter anchor to get James to start thinking higher values.
If you are selling, start by asking a high price. If you are buying, start with a low price. The technique will subtly but strongly influence the figure the other party has in their mind, therefore allowing you to get the best price.
Despite the effectiveness of the technique, however, many people will not feel comfortable asking for an excessively high or low figure because they don't want to appear unreasonable. That is, they don’t want to risk the Zabellian response, ‘are you out of your mind?’
For those people, negotiation technique two provides for a more comfortable approach.
Negotiation Technique 2: Walk Away
Who wins in a negotiation? The one who is willing to walk away.
Guess what? Be willing to walk away. Even if you are willing to pay the asking price, pretend like you can walk away. This technique is especially useful for people who don’t see themselves as hard line negotiators.
Why? Because you do not have to haggle, you do not have to offer unreasonable figures, and you do not have to have a big mouth to use this technique. All it requires is that you risk not making the purchase on that very day, which, for most purchases worth negotiating for, is worth risking for.
Here’s How You Do It:
Next time you are negotiating with a business supplier, nicely tell the person:
“Thanks for your help but the price you’re offering is beyond my budget” (or whatever reason you want to give).
“But I’ll tell you what I’ll do. I’ll leave you my name and number and if you can do me a better deal, then give me a call and we can take it from there."
Now if that is the best price the salesperson can do then you probably will not get a phone call, in which case you can just go back the next day or so and buy the product. But if they can do you a better deal then they will call you. After all, you have already proved to them that you are not willing to pay their asking price.
What is more, 9 times out of 10 you will not even have to come back. If the salesperson is able to do a better deal, they will usually offer it to you on the spot. It will probably be along the lines of, “alright let me try asking my manager again and see if we can do you a better deal”.
Having been on both sides of the negotiation table (as a salesperson and as a buyer), I have seen this technique work over and over for all deals great and small. It is not only one of the most powerful negotiation techniques, but also one of the easiest and comfortable to use, which makes it all the more useful in securing yourself the best deal.
Pinger’s disruptive Textfree service is heading to Europe, and it’s doing it with the help of hottest buzzword around: gamification.
Pinger has managed to build a huge userbase in the United States by offering free text messaging without any major catches: users are given their own, real phone numbers, and they can send and receive text messages with any phone. And, most important — the app works on the iPod touch, which doesn’t otherwise have SMS functionality built-in. Pinger also launched a free voice calling service in December but lets users make free phone calls and earn minutes by completing basic offers. Pinger makes money off of these offers and by running ads in its mobile apps— to the tune of billions of impressions a month.
But the SMS situation in Europe makes international expansion a difficult affair. Cofounder Greg Woock explains that in the US, when a text message is exchanged both the sender and recipient ‘burn’ one of their texts — in other words, they’re both paying for it. Things are different in Europe, where only the sender pays for the text. The recipient pays nothing, but the carrier of the recipient does pay the sender’s carrier a few Euro cents. Yes, it’s a little confusing.
Woock says that this model doesn’t normally lend itself well to a free texting model, because Pinger could wind up owing carriers boatloads of cash if its users are receiving more texts than they’re sending. We’re talking many many millions of dollars owed if it could build a userbase as sizable as the one they have in the US.
But Pinger came up with as solution: it’s going to use game mechanics to ensure that users are sending and receiving the same number of text messages. That way Pinger will be paying European carriers the same amount the carriers are paying Pinger. The net result: Pinger can run a texting service that’s free of charge, and it can place ads on top of it through its mobile applications, the same way it has in the US. In theory Pinger could actually use the game mechanics to ensure users are sending more texts then they’re receiving, which would wind up with Pinger actually making money from the carriers.
The game mechanics themselves sound pretty straightforward: users are presented with a meter that’s at 100% when you’ve sent and received an equal number of text messages. If you send a message, that percentage drops a bit. Receive one, and it goes up. Pretty easy.
But what happens when you’ve dropped to 40% and are worried about being able to send more texts? The trick, Woock explains, is to tap into your social graph (he says the company consulted with Zygna for advice on this front). Textfree will prompt users to post updates to their Facebook News Feed inviting their friends to send them text messages, which in turn will boost their meter. I’d imagine this would be a little weird to see initially (“hey guys, please send me text messages!”) but no more so than a Zynga game that prompts you to ask your friend for helping watering some virtual plants.
I asked Woock how the European carriers felt about the model. He says that all of the carriers they’ve spoken too have been very supportive and see an opportunity for incremental revenue. And he adds that Pinger has applied for patents on the meter system that drives the equal flow of texting.
Pinger’s mobile app will be launching in a small test in Germany in the coming weeks (they want to make sure the model works). Assuming that goes well, it will be expanding throughout Europe in the near future.
brand reputation management
Great <b>news</b>: Service industry now slowing down, too « Hot Air
Great news: Service industry now slowing down, too.
Great <b>news</b>: Service industry now slowing down, too « Hot AirNASCAR - CUP: BREAKING <b>NEWS</b> – Keselowski Hurt
Brad Keselowski was injured today at Road Atlanta…
NASCAR - CUP: BREAKING <b>NEWS</b> – Keselowski Hurt<b>News</b> attacks — Crooked Timber
I've received the ultimate accolade from News Corporation, graduating from snarky asides and dark mutterings in which I'm identified only indirectly to a full-length hit piece in our only national (general) newspaper, ...
<b>News</b> attacks — Crooked Timber
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