Persuasion Techniques

The use of emotion (not to be confused with ‘being emotional’) can be surprisingly effective, particularly when the personal relationship is strong. It is aimed at the humanity of the other party and is pitched at the personal level. It should be used early in the negotiation process, can increase the perceived value of your argument and can be used to counter logic. However, it should not be over-used or appear to be insincere.

Logic is a powerful persuasion technique. When using logic, it is best to put forward your own logic first rather than allow the other party to provide its own planned argument. Keep it simple, be credible and do not dilute your argument. If the other party is persuaded to agree with each step of a logical argument, it is very difficult for them to say ‘no’ to the final outcome without appearing illogical.

The use of threat should be treated with care, particularly in relation to integrative negotiations. Do not be too quick to use threat, threaten the business rather than the person, hint at the threat and use mirrored or remote threat rather than direct. Be credible and never make a threat you are not able or prepared to carry out. This technique will not be possible in situations where you have no power over the other party.

Emotion, logic and threat are all one-way movers inasmuch as the intention is to persuade the other party to alter their position without you reciprocating, which represents the ideal outcome. They should be used in the order presented. If it is not possible to reach an agreement, it will be necessary to utilise the two-way movers of bargaining and compromise. These entail both parties moving their positions to reach agreement.

Bargaining is more likely to be used than threat in integrative negotiations. It is important not to expose your position too early and not appear to be too eager, but to move slowly and in small steps. You should not, however, be unresponsive to offers. The idea is to exchange concessions which are of limited value to you in return for higher value items. If the other party does the same, then this is the basis for a win-win outcome. You should ensure that the other party has to work for their gains and any concessions received should be acknowledged and secured (‘thank and bank’) before continuing.

Compromise is the technique of last resort and should only be used when other methods have been exhausted and an agreement is close. Otherwise, both parties may feel less than satisfied with the outcome. Furthermore, 50/50 is not the only compromise, so there is still scope for securing additional value at this late stage of the negotiation.

Examples

It should be noted that negotiation requires great skill and technique. You should undertake appropriate training and take advice from experts within your organisation.

How does it work in practice?

Aimee Jackson is a senior procurement analyst with experience in negotiating healthcare contracts for medical equipment and services, as well as IT services. She recommends five negotiation tactics which have enabled her to achieve favourable outcomes.[2]

1) Do not be afraid to ask. Expressing your expectations can be a surprisingly powerful negotiating tactic, especially when used as an opening move.  Most people never ask for discounts. Buyer’s either put too much faith in the supplier’s willingness to offer a fair price, or their own lack of conclusive benchmarks leaves them feeling less than confident about securing a better deal. In other words, ‘it costs what it costs’. If you never ask the question, the answer is always ‘no’. Rather, focus on the opposite assumption: there is always money on the table. 

2) Follow the 10% method. In the absence of benchmark data, ask the supplier for a 10% discount. You may be surprised at the response. Even if you only receive a 5% discount, it is better than nothing. If you have additional leverage, such as seeking a multi-year agreement or there is end-user dissatisfaction, open by asking for a 20% discount. While it is rare to obtain such a discount without data to back it up, an additional 10% to 15% in savings is more common than you may think.

3) Go above and beyond benchmarks. Where benchmark data is available, consider whether you want to target the market rate, or the aggressive rate. If the current rate for a medical testing contract is $20 per test and the market rate is $15, then ask for $12 per test. By making an ‘unreasonable’ request, the supplier will be happy to give you the $15 rate, or something close to it. The lesson here is to ask for more than you plan to achieve.

4) Consider the C-suite card. The success of this tactic depends on the effectiveness of your messaging. Tell the supplier that you need to gain approval from your CFO and CEO. If the supplier is not able to move on pricing, then there will be a stalemate, and the senior management team may want to look elsewhere. Say that a lot of effort has been put into the deal and that you both want it, therefore the supplier needs to offer you something more to take to the C-suite. Condition the supplier to believe that you are ‘on their side’. In most cases, they will step up to the plate and offer a discount.

5) Play good cop, bad cop. While this tactic may sound like a cliché, it actually works. In the context of healthcare-contracting negotiations, the ‘bad cop’ can play the part of the stickler: “To get this deal done, we’re going to need you to go through this grueling RFP process.” Or the penny-pincher: “We can’t spend one cent more than we’ve spent in the past for these services.” Or the critic: “Here’s everything I don’t like about your proposal.” The bad cop refuses to back down, but the good cop bends in the interests of keeping the relationship intact. The supplier is thus more inclined to offer favourable terms to the good cop.

This tactic was used to close a deal that generated $80,000 in year-on-year savings on a service desk contract renewal. However, it required a great deal of coordination, communication and contingency planning, along with the combined power of two skilled negotiators. It can also be seen as devious and manipulative, therefore it is more suited to distributive negotiations rather than integrative.

[1] Steele, Paul & Beasor, Tom; Business Negotiation: A Practical Workbook; Routledge, 2017
[2] https://www.hpnonline.com/blog/article/21086119/five-contract-negotiation-strategies-healthcare-professionals-should-know; 25 June 2019