Plotting Your Concession Strategy in Negotiations

by Omid Ghamami

Plotting Your Concession Strategy in Negotiations

 In every negotiation, you have to plan out what you plan to give away, and what you plan to receive in return.  If you’re getting taught that negotiations are only all about getting what you want, drop that information source like a hot potato.  The real world doesn’t work that way.Negotiation Strategy

Concession planning needs to be done in advance of negotiations.   The only way it can be done is through investigative strategies to determine what the other party’s needs and wants are, what their motivators are, and what their fears are.  The biggest mistake you can make in negotiations is to assume you know the answers to those questions.  You know what they say happens when you assume.

Now how is it that some negotiators can give away a little in the form of concession and the other party is thrilled, while other negotiators may give away a lot in the form of concessions, and the other party is somehow still not happy?

There are many answers to this, including that the negotiator who gave away a lot may have given away the wrong things.  But another thing that could happen, and happens more often than you think, is that the negotiator packaged the concessions incorrectly.  There’s a lot of research to support this.  But let me convey the point with a personal story.

I ran an experiment for 3 years in a row during the holiday season, and nobody knew it but me.

  • In Christmas 2013, I gave my wife and kids the normal amount and value of gifts, but I packaged them all in one box for each of them respectively (i.e., they each got one big box full of gifts).  All the gifts had the same wrapping on the outside.
  • In Christmas 2014, I once again gave my wife and kids the same amount and value of gifts, but I packaged them in separate boxes – each gift in its own box – but with the same wrapping.  This resulted in many small boxes instead of just a few large ones.  All of them still had the same wrapping on the outside however.
  • In Christmas 2015, I did the same thing as in Christmas 2014 (same number and value of gifts, but packaged them individually into many smaller boxes), but this time I gave each gift a unique wrapping.   This resulted in each person getting many small gifts, each with unique wrapping.

I filmed all the festivities and the opening of presents each year, something which I always do.  A review of the tape showed that what I thought was happening – actually was happening:

Irrespective of age or gender or status in the household, everyone got more excited when the gifts were individually packaged into smaller boxes, giving them more small gifts to open, and even more so when they had different and unique wrapping, because it made them feel special.  If the same gifts were aggregated into large boxes and had homogenous wrapping – the same as everyone else’s – they got much less excited.   This was true for every single person I gave gifts to.  This is fascinating stuff.

Did they know that I was doing an experiment?  Absolutely not.   I watched the tape over and over and marveled at what this meant from a human psychology perspective.  This was exactly what I had been practicing and teaching in negotiations seminars and consulting for years.

So what’s the big takeaway here?   When you are making concessions to a supplier, you should break them up into small chunks.  Make them feel like you are making LOTS of concessions, not just one big concession.  Give them many small gifts, in other words. And package each one individually – let them know why you are making this concession just for them, based on your understanding and appreciation of their unique wants, needs, and motivators.  Don’t just give it away, tell them the thought you put behind the concession, and how you wanted to help them.  Suppliers will love you for it.

When you read off the summary of the outcome of the negotiation to the supplier at the end of negotiations, read out what concessions you’ve made in as much line item detail as possible – giving them many small gifts again. Negotiations are all about how you make the other party feel.  Make them feel like they’ve gotten a great deal.

Now conversely, when you list off what they’ve agreed to concede to you – employ the opposite strategy – because you don’t want the supplier feeling like they gave away too much.  Lump everything they’ve agreed to do into broader and more all-encompassing concessions, so they don’t feel like they’ve given so much.  Make it seem like they only gave away a few gifts. Their receiving list should be much longer.  Why?  Because they like it that way.

Keep in mind, I’m not telling you to fool your suppliers, far from it.  We’re just packaging information strategically, and will still be fully transparent in the process.   I’m advising you that there are certain fundamental aspects of human behavior that are pivotal for you to understand if you want to achieve success in negotiations.  And this is one of them.

Now go off and do something wonderful.

Be your best!

Omid G

P.S. Have you checked out the World Class Certification program I’ve launched?  It’s the best in the business.  You can see it at http://www.CenterForPSCMExcellence.org/

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