Hi the day, sails thought that day has to do with negotiation.
Negotiation is a hot topic.
It’s in sales, it’s the it’s, the probably the star of the sales process.
However, it’s going on all the time in our life, whether we’re in sales, whether we’re in customer service, whether we’re accounting, no matter what we do, we’re really negotiating throughout our day and throughout our life.
Some examples when we’re negotiating that we maybe realize, when negotiating, would be automotive purchases, homes, salary negotiations, there’s times, though, that we don’t realize we’re negotiating, we really are and then be whether it’s ours, our friends or family, where we’re going to dinner for the Saturday night To bedtimes or getting your children to eat their vegetables you’re in a negotiation more than you think, being good in negotiations would be an important skill to pick up, wouldn’t it in fact harvey mackay.
He said you don’t get what you want.
You get what you negotiate again, a skill that we should all be picking up.
Let’s transition, though, into today’s debate or today’s paradox about negotiation, and that is who should go first? Should it be you or should it be the other day, general rule-of-thumb tells you that you should let the other party go first in negotiation.
Why well? They may be willing to pay less or charge less than what you were thinking originally so it’d be a good idea to let them go further, and that would be in a situation where you don’t have a lot of information about the parties.
Willingness to pay or willingness to charge there’s another time, though, that it might be a good idea for you to go first and before we talk about that in depth.
Let’s first talk about where that came about back in the 70s and 80s to people to economic psychologists, Amos Tversky and Daniel Minh studied cognitive biases.
They studied all these different biases that be.
We could do lessons each week on on their particular biases.
Today, though, we’re going to talk about the bias of anchoring, so anchoring says this in the definition or let me read you what they found out about it, and that is, they said that the benefit of making the first offer is an acts like an anchor anchor Ins well document cognitive biases that describes the human tendency to rely too heavy on that first piece of information that they’re being offered or the anchor the initial piece of information makes biases and their expectations are subconsciously, worked on when somebody makes that that first offer or Makes that that anchor? So what happens? Is this really simply, if I make the first offer really what happens throughout that negotiation? You’re managing my expectations, because I threw a incre out there of an expectation.
Let’s do some examples, so some examples of when we should go.
First or when we should let the other party go first, so in general you let the other party go first, when you don’t have any information about the subject.
A good example would be salary negotiations for a newly a new position that your company has has developed.
So it’s a new position: no one’s ever had this position before you’re not able to go online or ask your co-workers what they were being paid or what approximately ask HR, what that job pays or what salary is for that job.
So it would be a good idea to let the other party go first cuz a lot of it’s gon na, be based on your value and they’re they’re.
Thinking of how you fit in that position, so they’ll be a good example.
Let them go first, an example where you would want to go: first would be automotive dealer.
We’d want to go first because they could anchor and they do actually go for it too.
Most situations by anchoring, with either the used car market price or an MSRP or suggested market price for the the new vehicle.
That would be a good example of that, and why? Because they’ve got a pretty good idea: you’ve got a pretty good idea of what they’re gon na be charging for that vehicle and they’ve got a pretty good idea of what your willingness is to pay for that vehicle.
Because of that information it would behoove them to go first and anchor.
So if you do let somebody go first.
However, then you can fall victim to being anchored.
The question then becomes: how do you avoid being anchored? You don’t want to be anchor well before we go into my three steps to avoid being anchored and help yourself in these situations.
I just want to say this: the fact that you’re watching this video and that you know now about the cognitive bias of anchoring you’re ahead of the game you’re halfway there you’re half way ahead of the battle you’re halfway home, just right there by knowing a being Aware, there’s also three steps that you want to use to help you avoid being anchored and to help you in that situation.
So the first step is first seek to understand.
The other party seek first to understand and there’s three steps in this first go ahead and do what they call a cold read of the situation.
So let me give you the example.
The example is that you had an MSRP on this vehicle $ 35,000.
You marked it down already once to $ 30,000, and now it’s the end of the year.
You’ve got your super blowout Christmas special price of $ 30,000, so you started it at what they say: 40, then to 35 and now worth $ 30,000 and the guest offers you twenty twenty thousand dollars.
And you know as a dealer that the vehicles the the invoices is well above that price, and probably so, does the customer that gas they’ve probably been able to find the the what those vehicles are going for, or maybe even the invoice they’re out there.
The prevalence of the Internet information out there provides them with quite a bit of info to go on, so what you want to do is, rather than stating your point and discussing right away, why they’re wrong or why they should a higher price.
Let them talk seek.
First, to understand: do a cold read a cold read would be, it seems like or it looks like, or it sounds like.
It sounds like you’re, a little bit below or quite a bit below the market price of what these vehicles are being sold for.
On the on the retail market here in this area and then be quiet, you don’t even ask it as more of a statement.
It’s a cold read and that way it’s not a question.
It’s really you’re, not accusing them you’re, not saying hey you’re.
You know you’re a lot lower than what you really should be, or whatever people are paying for these you just calmly.
Let them know it seems like you’re a little bit lower than what these vehicles are going for.
Based on market prices, be quiet, though they’ll hopefully expound on and give you some more information if they don’t or if they do, you want to follow it up with the question, and I would tell you this, avoid the wide question and use a tower.
What type of question why just seems like you’re, accusing them of something? Why would you come up with $ 20,000? Why did you offer that? Because I want to save money right? That’s what they tell you.
Well, what you want to do is ask a how or what question just say to them: how did you land in that failure of $ 20,000? What was the information that you used to arrive at the figure of the $ 20,000 you’re just asking questions, so that is the second part to step one and then the third part to step one.
The third part is really important, and that is you need to listen.
You’ve got you’ve got two years and you’ve got one mouth so use them in proportion.
Listen to them, and I would tell you this listen without thinking of what you’re gon na say.
Next, just listen to is justifying how you justify your position depends on what they said.
So again, you have to have an open mind and being able to ask them these questions and do that.
Cold-Read gives you a better idea of how you’re going to answer this.
So let’s say that they had told you hey look, you know, I just know this.
I know it’s the end of the year.
I know you’ve already discounted it twice and that you want to get rid of these because you got the new model year.
It’s 2020 model years are out there.
This is a 2019, it’s already almost 2020, so I know you want to get rid of these vehicles.
Well again, now you’ve got some idea of what they’re basing this on.
So you can justify your position with third-party data.
You can say: hey, you know what we’ve got some third-party data that shows what these are going for.
I can show you what our cost is on this vehicle and your offers well below that cost.
I just wouldn’t be able to sell it for that.
It wouldn’t be a good business decision for us.
We wouldn’t be able to provide you with the service that you would want at that particular price, so that would be a way to justify it again.
The justification step two after you step one, which is a seat to understand, step two, a lot, that’s going to depend on the answers you get in the first part, so the step number three is to reclose and step number three is going to be the same.
In just about every situation now, when it comes to a high ticket item, a great closing questions, an either/or question that asks a minor point that carries with it a large decision, minor point that carries with it a large decision, an example would be this after you’ve.
First understood their position, and then you justify yours, you would close with the in or question of what would you like to drink a pop water or a coffee when we go ahead and finish up the paperwork that asks really them to purchase the car without asking Them to purchase the car because they know when they select one of those three beverages that they are gon na proceed with.
Writing the the the offer or writing up the purchase order that way they don’t have to have that weird feeling of yes or no.
It takes away that yes or no question and asked an either/or question centered around a minor point that said that it carries with it a large and a big decision.
That’d be a great way, so, just in summary, the ways to avoid being anchored are one seek.
First, to understand to justify your position, three reclose with an either/or question in conclusion: remember what we talked about the top that was Harvey, McKay’s quote, which is you don’t get what you want? You get what you negotiate.
Therefore, negotiation is an important skill, whether you’re selling cars homes or whether you’re just negotiating bedtimes or where you’re going to go to dinner.
It’s an important skill to pick up.
I hope that the information you got today helps thank you.