Negotiating Part IV

Telephone Negotiations

Negotiating a deal by telephone is practical and can be effective for simple deals that aren’t important to you.  As for complex and important deals, my advice on negotiating by telephone is simple and easy to express-- don’t.  See, I didn’t even need a sentence to say it.

I’m hard pressed to imagine anything less effective than lots of amorphous voices on a speakerphone trying to negotiate a complex deal.  It’s slow.  It’s ponderous.  Moreover, it’s ineffective. 

The upsides of the telephone are probably limited to two.  One is that it’s easier to arrange a telephone call than a meeting.  The second is that you save money by negotiating by telephone rather than in person.

While the first one is undoubtedly true, the second one may be an illusion.  While you may save on the front end by reducing your travel expenses, you may cost yourself money in the end.

The problem with the telephone starts with losing all your visual cues.  You can’t see their body language or eyes.  If you’re good at reading people, these can be more important than what they say. 

I also find that it’s easier for people to be say “no” and generally be obstinate on a telephone.  Maybe that flows from the distance the telephone brings.  There’s just something about looking somebody in the eyes that helps bring people together.

The telephone also fosters less focus.  If you call a meeting, you monopolize everyone’s attention.  This usually helps to move the deal.  The advantages of this focus may even offset the additional time that it may take to organize a meeting.

Yet, another problem with the telephone is that you lose the easy ability to have back channel communication.  When I’m sitting next to my client, it’s easy to write notes or simply walk out of the room for a private discussion.  On the telephone, people seem to forget about how important that back channel can be.

This one can be easier to overcome than some of the other problems with telephone negotiations.  Sometimes, I’ll suggest that my side run AOL’s Instant Messenger while we’re on the conference call, so that we can type back channel messages within our team.  It’s nice to be able to quickly type, “Don’t go in that direction,” or “Be quiet, I think they’re about to give on that point.”

Your cell phone can also be a good tool to help overcome the back channel problem.  It can be as easy as walking out of the room and using it to privately discuss a point.

No Authority

Ever notice that when you buy a car, the “sales manager” with the authority to make the deal is invisible in some ivory tower.  You talk to the salesman, who is always on your side (sort of like a pet rattlesnake) and is on the edge of being fired for giving you such a great deal.  The problem is that he can’t make the deal.  He can only “propose” the deal to the invisible sales manager, who always says “no,” as they slowly drive up the price in successive rounds of this charade.

Not bringing the decision-maker to the table is a monstrously effective technique.  Large tech companies like IBM, Computer Associates and Microsoft do it all the time. 

You bring your president and lawyer to the table to get the deal done and they send a salesperson and paralegal.  You make concessions and they take things to the ivory tower and get back to you because they don’t have authority.

Don’t fall into the trap of bringing too much authority to the table.  Never ever have more authority on your side of the table than the other side has.  If they send a mid-level person, you send a mid-level person.

When things are going too slow, if they want the deal, they’ll suggest that the decisions makers meet.  If they never make that suggestion, it tells you something about the importance they place on your deal.

The problem with an imbalance of power is that “no authority” creates a situation where a person can’t give away the tough points.  This leaves it to the side that brought a decision-maker to the table to give away important points as the two sides push to get the deal done.

Set your ground rules before the “big” meeting (or phone call -- if you must).  Make sure that you know who will participate and what authority they have.  Then make sure that your side has the same or less authority than the other side. 

As for the next time you buy a car, my advice is when you get down to the nitty gritty, you let your kid discuss price and walk their offers to you, while you sit in the car.  When they get tired of your farce, the guy in the ivory tower will make his royal appearance.  Then, it’s time to cut the deal.