How to negotiate

Chris Ingram says you can never know it all
If people think about negotiating at all, they assume you should play it hard and reveal nothing. Yes, there is a place for this but only on some occasions. When I wrote about this subject last year I emphasised the dangers of bluffing; the importance of always having a Plan B; persuading versus bullying, but most important of all, the need to do your homework in advance and prepare.

Beyond this is the need to recognise that various styles work well in different situations and markets. If you are in a market where timing is key, then that should determine your tactics. The television airtime market in the UK is limited by the number of advertising minutes that can legally be transmitted each hour. If a TV contractor can’t sell all his minutes he cannot make it up the following day – it is one of the most perishable commodities.

So in the days of a separate weekend franchise held by London Weekend Television, at my agency we knew that if we could keep talking and delaying on Friday night the price would tend to come down dramatically.

Doubling up
If your negotiating is intended to result in some form of partnership, then the approach is different again. There must not be a sense that one side has to lose for the other to win. I remember an interminable negotiation in the Far East to set up a joint venture with the biggest agency in one of the so-called tiger economies. We were really keen because it would have been a landmark deal that we could have used to enter other markets. For that reason we were very patient – too patient. The deal was signed but our ‘partner’ had squeezed any potential for profit out of the deal and then looked to grab more and more services from us. The JV broke up inside 18 months.

It was afterwards that I overheard the agency owner being described: ‘He’s built a terrific business, the trouble is he never leaves any meat on the bone for someone else.’ Try to avoid people like that, they’ll suck the blood out of you.

Sometimes you have to deal with chisellers like this. Many of those in procurement departments have this approach. They will be obsessed with what an item or service costs rather than what it is worth. Therefore, you have to be very careful if your product has a high intellectual property component. 

Who’s the boss?
One route is to go round the procurement department if you can, to find someone senior who can override them. Many get pulled into the ritual of providing a detailed cost breakdown which is inflated in some places so that procurement can beat them down to somewhere near where they expected to be in the first place. I don’t pretend to be an expert in dealing with procurement departments, but the best advice I heard was to concentrate on their costs and their processes and show how you can improve them. This is only relevant to some suppliers but it can transform the whole negotiating process.

It is essential to show confidence in a negotiation (again, this is where preparation helps) and I was reminded of this recently in the most unlikely circumstances.

My wife and I were enjoying a long weekend in Suffolk and found ourselves in the village of Saxmundham. The high street was closed up except for a convenience store and a second hand book store. It too was empty except for the proprietor – a large gentlemen with a plummy Home Counties accent.

My wife put to one side a rather battered poetry book, marked at £3. I’d been browsing the art books and selected a 25-year-old book on David Hockney, but it had ‘£15’ marked on the inside.  This sounded pretty steep – after all, the shop was jammed full of stock and we were still the only people in it.

Confidently, I went up to the proprietor with the book in my hand. ‘I’d quite like to have this one, but you’re not really asking £15 for it are you?’

Ponderously, he took the art book and then the poetry collection from the two of us. Turning the aged, discoloured pages, he noted the prices. ‘Hmmm…,’ he said and then, with an air of finality, he announced: ‘£17 for the two to show I’m not completely heartless!’

Commercially, this gentleman didn’t have a leg to stand on, except for knowing the value of books.

But I had to admire the gall of his six per cent discount. He had gone beyond demonstrating confidence – this was chutzpah of the highest order!