Never Lose Again
Become a Top Negotiator by Asking the Right Questions
By Steven Babitsky, James J. Mangravit Jr.
St. Martin's Press Copyright © 2011 Steven Babitsky and James J. Mangraviti Jr.
All rights reserved.
HOW DID YOU HEAR ABOUT US?
Information translates directly into negotiating power. The more information you have when negotiating, the better off you will be. "How did you hear about us?" is a superb, zero-risk question that should be used routinely by sellers in an attempt to gather information.
The idea behind "How did you hear about us?" is simply to get the potential buyer talking. The question itself is very open ended and encourages an open-ended response. The person you are negotiating with will often blurt out damaging information, including how you were recommended, their current situation, why they are desperate for a deal, etc.
"How did you hear about us?" has the big advantage of being risk free. It is completely polite. It's innocent sounding and almost conversational. There is really no downside to asking this question as a matter of course. "How did you hear about us?" can and should be asked routinely by sellers of goods and services.
We have found that new potential clients almost always answer "How did you hear about us?" The reason for this is simple. The question is so innocent sounding and on its face so reasonable that the person you are negotiating with has no reason not to answer it. A sophisticated negotiator might be cagey when answering, but you are still very likely to get some sort of an answer.
Another important advantage of "How did you hear about us?" is that it allows sellers to track how various marketing campaigns are working. Let's say your business placed an ad in a certain newspaper and you routinely ask people calling to inquire about your services, "How did you hear about us?" If several people respond that they saw your ad in that newspaper, you know the ad worked and you might consider repeating it at a later time. If nobody mentions the ad you might consider discontinuing it.
The benefit of "How did you hear about us?" can be greatly enhanced if you ask follow-up questions. Once the person you are negotiating with starts answering one question it is more likely that they will answer follow-up questions. The conversation is flowing in this direction and the person you are negotiating with has already shown that they are willing to answer questions.
Asking the right follow-up questions depends on carefully listening to the responses you receive. The goal of all of this is to get the person you are negotiating with talking in the hopes that they will reveal information about why they called you, their situation, timetables, problems, budgets, or anything else that can be used to your advantage. Let's look at some examples.
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Recently, we got a call from a person working at a federal governmental agency. He was interested in hiring us to train some of their employees. Here's how the negotiation went:
LEAD: Hi, I am interested in your company doing some training for us.
AUTHOR: That's great. How did you hear about us?
LEAD: One of our people here has been to your seminars and told us that your training is superb, that you are the best.
AUTHOR: What's your time frame for the training?
LEAD: Well, here's the thing. We have a lot of money we need to spend by October 1. So we'd like to move this along on the fast track.
AUTHOR: Well, we can certainly help you with your problem.
From the above example, you can see the potential phenomenal benefits of asking "How did you hear about us?" and innocuous follow-up questions. In response to "How did you hear about us?" we were able to learn the extremely valuable information that they already thought that we were the best. That is, they were already sold on us. The biggest and most valuable information score came on our follow-up question, "What's your time frame for the training?" The response we received about their having a ton of money they needed to spend fast was exactly the type of priceless information we were fishing for. Once we heard this answer, we were able to negotiate quickly and agree upon the highest fee we had ever collected for training.
Here's an additional example. Once again we were being contacted by an organization that was interested in hiring us to do some consulting/training.
LEAD: Hello, my group was interested in hiring you to do some consulting and training for us.
AUTHOR: Hi, nice to meet you. How did you hear about us?
LEAD: My boss is the president of the company. He's been to one of your seminars and loved it. He told me to hire you.
AUTHOR: That's very kind of him. Who's your boss?
LEAD: John Smith.
This also turned out to be a very easy negotiation. By asking the simple question "How did you hear about us?" we were able to learn that the potential client was already sold on us. More important, were able to discover that the person we were negotiating with basically had zero alternatives. He was actually instructed by his boss to use us. Needless to say, after learning this information, we were able to easily negotiate a favorable rate.
Sellers should ask leads "How did you hear about us?" as a matter of course. This is a no-risk question that may result in valuable information being provided to you. The information often gained about the person you are negotiating with — motives, deadlines, budgets, intentions, etc. — can greatly enhance your negotiation position. This question can also help set up follow-up questions that can obtain additional useful information. "How did you hear about us?" has the additional important benefit of tracking the value of various marketing campaigns that you may have conducted.
How to Respond If You Are Asked "How did you hear about us?"
An excellent way to respond to this question if it is used against you is to provide an answer that suggests you are aggressively shopping around for the best deal. Such an answer will boost your bargaining power since the seller will likely draw the conclusion that he will have to offer the best deal in order to win your business. Please consider the following example, which is typical of the response we would give if we were asked "How did you hear about us?" by someone we were considering buying something from.
PRINTER: How did you hear about us?
AUTHOR: I had my assistant come up with a list of thirty to forty printers who do this type of work so that we could aggressively compare cost and get the lowest possible price.
SO, HOW'S EVERYTHING GOING?
Your negotiating success is directly related to the amount and quality of the information that you are privy to. The more information you have the better your results will be. "So, how's everything going?" is a low-key, innocent-sounding question designed to help you learn valuable information from the person you are negotiating with. This question, and other small talk, is a good way to start many negotiations. In fact, it's the typical way we start many of our negotiations.
There are several variations of this question. These could include "So, how's business?" "What have you guys been up to?" "Have you been busy?" and the like. The idea is to ask a question that is friendly, conversational, and socially appropriate, and listen carefully to the response you get. You will be amazed at the valuable information the person may blurt out.
If used correctly, there is no downside to this question. The key to the risk-free use of this technique is to very gingerly question the person you are negotiating with and ask appropriate questions. Gentle questioning combined with careful listening can yield big dividends.
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Here are two examples. In this first example, the question was actually used against us. Many years ago, one of the authors and his wife were negotiating to buy a new car with a dealer. Here's how the beginning of the discussions went after the test drive, as we sat down in his office to go over numbers:
SALESMAN: So, how are you folks doing?
AUTHOR AND SPOUSE: Fine. And you?
SALESMAN: Excellent. Where are you from?
AUTHOR AND SPOUSE: We're in the area.
SALESMAN: And what do you guys do for work?
AUTHOR AND SPOUSE: I work for a small business and my wife works at a bank.
SALESMAN: Did you guys go to school around here?
AUTHOR AND SPOUSE: Yes.
AUTHOR AND SPOUSE: Boston. Look, we have two more dealers to visit tonight, so can we get down to how good of a bid you are going to have?
Since we are sophisticated negotiators we knew that we should be careful about providing information that was going to be against our interest. As such, we didn't leap out and volunteer that we lived in an upscale town and were both lawyers who went to prestigious schools. Two high-powered lawyers usually don't get much sympathy when claiming that they can't afford something or that they need to be cost-conscious. What we did reveal is that we were going to be shopping around to other dealers. This was intentionally done to improve our negotiating position.
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Here's another example. In 2009, one of the authors and his spouse were vacationing on Martha's Vineyard. It was near the end of the summer. The great recession was still in force. While traveling, the author's wife had just lost a prized bracelet that she had worn every day for the last twenty years. We walked into a jewelry store that she liked with the aim of seeing if we could find a replacement.
JEWELER: How are you folks doing?
AUTHOR'S WIFE: We are having a pleasant trip, thank you. How are things going for you?
JEWELER: We're hanging in there.
AUTHOR'S WIFE: How's business been?
JEWELER: It's been a tough summer.
AUTHOR'S WIFE: Yeah, I hear you. When does your peak season end?
JEWELER: Next weekend, unfortunately. If you are interested in anything, please let me know.
After asking these questions the author's wife had a very good idea that she could negotiate a tough bargain if she found anything she was interested in. Business was tough and the season was almost over. She, in fact, found a bracelet that she very much liked. There was a $500 price tag on it and she was prepared.
AUTHOR'S WIFE: How much flexibility do you have in the price on this?1
JEWELER: We can come down 50 percent.
AUTHOR'S WIFE: What does that come to with tax?
AUTHOR'S WIFE: I don't know. We're heading to Edgartown tomorrow, there's a lot of nice jewelry stores there. If you make it $200 including the tax, you've got yourself a deal.
JEWELER: Let me call my boss.
Ten minutes later the author's wife walked out with the new bracelet for a price more than 60 percent off the asking price. She's worn it daily since. Her small-talk questioning, "So how's business?" yielded invaluable information as to how desperate the store was to raise cash before the long cold winter. As such, she was able to push aggressively on price. This was set up by questions designed to promote anxiety such as asking when the jeweler's high season ended. Her not volunteering that she was looking to buy in response to the jeweler's small-talk question, "How are you folks doing?" also helped improve her bargaining position.
Every communication made with someone you may end up negotiating with should be considered part of the negotiation. As such, the gathering and control of information should be a prime concern of yours. Small-talk questions such as "So, how's everything going?" and "How's business been?" are risk free and can provide you with valuable information.
How to Respond If You Are Asked "So, how's everything going?"
The person you are negotiating with will likely also use these questions against you. When he does, you should be careful not to reveal information that will weaken your negotiating position. Instead, you should use the opportunity of being asked such an open-ended question to strengthen your negotiating position by providing answers that will do so. For example:
BUYER: So, how's it going?
SELLER: Excellent, thank you. My only complaint is that I haven't been able to take as much time off as I would like; it's been very busy and we're just trying to keep up with the demand. How's it going with you?
WHAT IS YOUR TIME FRAME FOR WRAPPING UP THIS NEGOTIATION?
This is a superb question to ask in almost any negotiation since it is very innocent sounding and can often provide you with valuable information. Information, of course, translates into leverage, which translates into better negotiation results. The other benefit of this question is that the person you are negotiating with is reminded of the pressures that he or she is under to finalize a deal.
A good time to ask "What is your time frame for wrapping up this negotiation?" is toward the beginning of the negotiation. The answer that you receive can help determine how you proceed with the rest of the negotiation. The types of answers you will typically receive are:
Nonresponsive or evasive: "I haven't thought about that. What's yours?" This type of response probably reveals that you are dealing with a sophisticated negotiator who does not readily leak information unless such leaks are intentional.
Snappy or defensive: "That's none of your business." This is a helpful response in that it helps you to identify parties that you wouldn't want to get involved with.
Honest and direct: "I really would like to wrap this up before the end of the quarter. That is, by close of business tomorrow." This is a very helpful response as it shows that the person you are negotiating with is eager to conclude an agreement and is operating under time pressure.
The answer you are hoping for, of course, is the honest and direct one. You'd be surprised how often the person you are negotiating with will blurt out revealing and valuable information in response to your question "What is your time frame for wrapping up this negotiation?"
We have been using this question for years to great effect. One memorable occasion involved our negotiating with a major corporation about training part of their staff in legal matters. Once again, toward the beginning of the negotiation and before we set our price, we asked the question, "What is your time frame for wrapping up this negotiation?" The answer that came directly resulted in our being able to command a premium fee. "We're under a court order to complete this training in the next ninety days so we'd like to nail this down immediately, if possible." There certainly could have been other questions we could have asked that would have resulted in this information being leaked, but the beauty of this question is that it is very innocent sounding.
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A second example. One of the authors and his spouse were negotiating to buy a house. We had agreed on a price but were still negotiating the terms of the purchase and sale agreement. These terms, of course, can be quite important. We had been going back and forth for a while and there were some potentially deal-breaking issues that we had not reached agreement on, such as precise inspection contingency language, how clear the seller's title needed to be, language dealing with the septic system inspection, the closing date, etc. We asked the seller's agent what his time frame was for wrapping this up. His answer came back: "The sellers are down in Florida closing on their new house today, so I hope to be able to get an answer from them sometime tomorrow." Again, very helpful information was revealed. The fact that the sellers were now locked into their new house purchase gave us much more leverage in the purchase and sale agreement. We were able to resolve the negotiation favorably. The bottom line is that you never know what kind of helpful information will be leaked by the person you are negotiating with as a result of an innocent-sounding question such as "What is your time frame for wrapping up this negotiation?" (Continues...)
Excerpted from Never Lose Again by Steven Babitsky, James J. Mangravit Jr.. Copyright © 2011 Steven Babitsky and James J. Mangraviti Jr.. Excerpted by permission of St. Martin's Press.
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