“Are they taking you for a ride?”

“Wait a minute! Are you negotiating?”

By Valentin Komarovskiy, MBA as commentary for prior work by Ed Wertheim

You probably heard it all in regards to “negotiating anything,” “Bargaining for Advantage,” and “getting to yes’s” and so many other great books, articles and resources that teach you to negotiate. However, can you spot when someone is negotiating with you and what technique they are using? ?Lets see how good you are…try to identify the negotiation technique for each paragraph and then check if you are right.

1.????It was a beautiful summer day, typical of early June in Cleveland, when Judy Berne pulled into Lee Road Chevrolet.?She came directly from her service station, where the mechanic gave her twelve year old Chevy Cavalier two to three months left to live.?Without much thought, she got out of her rusting heap and began to peruse the new cars. Within seconds, a nicely dressed, middle aged man approached her, introduced himself as Ed Wargo, and asked, “What can I do for you today?”

Ed is making an assumption that Judy needs a new car and his first question is an attempt to verify his assumption. He is discovering other party’s goals.

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2.????“Well, I just started looking because my car is about to fall apart.?I’m not really sure what I want,” Judy replied honestly.

Judy is declaring herself to be a potential car buyer with no particular car model in mind. This gave Ed an opening. Judy is stating her Positioning Theme.

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3.????Seizing the opening, Ed whisked Judy away from the practical into the sporty.?He showed her the red Crystal GT, a little sports coupe with a not-so-little price.?“This baby’s loaded: sunroof, A/C, power steering, power brakes, AM/FM Quad stereo with CD, magnesium hubs, full options package.?They’ve been very popular with your “young professional” customers,” he added, knowing full well that there would be a $400 bonus waiting for him if he unloaded this overloaded model that had been stuck on the lot for weeks.

Ed is throwing in the anchor high, presenting Jen with an expensive car. This will reveal how much she is willing to spend or what type of vehicle she is looking for. Also, Ed is aligning Judy with a certain stereotype of “young professionals,” this puts her in a certain class of vehicle from which he will benefit. He is also aligning Judy’s interests in an attempt to reach his own goal of a $400 bonus.

4.????Judy could hardly contain her excitement.?“I’ve always wanted a car like this!” she exclaimed, her eyes reflecting genuine enthusiasm.

Judy is making a mistake of showing too much interest and being too eager.

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5.????“Hey, take it for a test drive and tell me what you think.”?Ed tossed her the keys and sat back to prepare his strategy. Ed is giving Jen a taste of possession and a glimpse at ownership of the vehicle, which would put her into a situation where she would be reluctant to part with the vehicle after the test drive. Ed is leveraging Judy’s ego and probing tendencies to impulsive buying. Once Judy drives the car and experiences possession, she will be reluctant to let go of the deal and it will be a loss in itself.

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6.????Judy returned, her hair tousled (she had obviously tried out the sunroof) and looking as if she had genuinely enjoyed the drive.?“How did you like it?” Ed asked, knowing full well how the Crystal would outclass a 1987 Cavalier.???“Nice…really nice,” she responded, “but it’s a little more than I need.”?It was obviously wise to guard her true feelings.?“How much is it?”

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Judy is showing interest in the car, but she is also being conservative in her own assessment, pointing to the fact that it may be more than she is looking for. Judy is also discovering boundaries to set the guard rails for any potential deal. ?

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7.????There, the question had finally been asked.?“The sticker price, including all options and dealer preparation, is $19,750.”?Ed noticed the immediate slumping of her shoulders.?“Of course, there is a $1,000 factory rebate or 2.9% manufacturer’s financing available.”?She was still looking at the ground.?“And you do have a trade-in. Let’s have a look!”?With that, the wind was returning to her sails, and something of her previous smile returned to her face.

Judy is avoiding a response to lead Ed on to a deeper negotiation. Taking this pause she is probing for what else Ed is prepared to throw in to keep the deal alive.

8.????“Not too bad.?I think that we could give you $1,000 for it.?Of course, I’ll have to have my “trade-in specialist” look at it.?Can I give him your keys so he can check it out more closely?”?Ed asked.?Judy handed them over and they walked back over to the Crystal GT.?This time Judy looked more closely at the sticker.?“I know what Suggested Retail Price, options, and rustproofing are, but what are the charges: $300 for A.D.M. and $200 for N.D.A.?” Ed is building a Norm of Reciprocity He is nurturing the idea of a decent trade-in and trying to build up good faith with Judy to facilitate the deal.

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Ed is also projecting confidence in Judy’s trade-in and legitimacy of the bargain. This makes Judy feel as though she is bringing something to the table and her contribution is valuable to herself. ????

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9.????“Well. A.D.M. is a dealer prep charge; for instance, cleaning and checking the car out,” he admitted, acting a bit annoyed at such an obvious question.??And the N.D.A.?” Judy persisted.??“That’s the National Dealer Advertising charge, for those ads on TV.?Advertising is very expensive for us, you know.

Ed is presenting this fees as a standard and he is justifying the fees with expensive advertising. Ed is attempting to conform to standards in order to justify the fees as a non-negotiating item and something that is a given for all car purchases.

10. Judy paused a minute.?$19,750 was a lot of money for her budget.?Finally she began to speak, “even with the trade-in, the price is …..” Sensing that the intoxicating new-car aroma was beginning to wear off, Ed interrupted, “I’ll give you the rustproofing, fabric finish, and floor mats at cost.?That’s $300 off, only $17,450 for the car after trade-in.” Ed is continuing to sweeten the deal, trying to make an impression that Judy is getting a great deal and creating a favorable climate for negotiation.

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11. “I don’t know,” Judy said, with Ed’s arithmetic going by pretty quickly.

Judy is avoiding a response to lead Ed on to a deeper negotiation. Pause and say nothing or not much in this case. Waiting out may make the other party establish a “fear of loss” for the deal in the works and, if there is genuine interest, make a step forward with another concession.

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12. “Come back into my office and we’ll work this out.”?With that, Ed led her into a small office near the rear of the dealership.?He spent the next fifteen minutes convincing her that she could not find a better deal on such a popular car.

Ed is attempting to apply some pressure to close the deal. He feels as though he is approaching a go / no-go moment. After Ed made the initial investment, he feels as though he now has vested interest that will be lost if pressure is not applied. However, he may be pressing too hard which will turn Judy off.. lets see how this ends.

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13. Suddenly, Judy interrupted with conviction.?“I really don’t need the magnesium wheels, quad stereo, or most of the options.”?Ed was surprised by her sudden assertiveness.?He explained that the car was a package and that they just couldn’t take the options out of it for her.?Judy was beginning to feel claustrophobic.?With no windows and the door shut, she wondered if she would ever get out of this small office.?With a mental start, she realized that even if she escaped, she no longer had her keys.

Judy is making a point that she would be getting more than what she needs so perhaps she should not pay for those features since she doesn’t really need them. “What do you really want?” is a moment before any deal where a party may question the needs in the first place, especially if high pressure tactics are used. ??

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14. Seeing that he wasn’t getting anywhere.?Ed decided to go for broke.?“Since you’re such a nice person, and I would like to help you out, I’ll give you the wheels and the stereo at cost if you take the car today.?That’s another $400 off, $2,700 off the sticker price, or $17,050 with your trade-in.” Ed is employing an accommodation strategy, positioning himself as Judy’s friend.?

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15. I’m not sure that I can afford that much,” Judy responded.?Judy is striking back at Ed with a na?ve “I can’t afford it” response.

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16. What if I told you I can sell you this car for less than you are paying monthly now? Ed is looking for solutions outside the box, he is distracting Judy from the real price by braking it down to monthly payments. He is also looking for low cost options.

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Ask “what if?”Ed is leading Judy on by creating possible conditions for a favorable outcome for her. Creating options for Judy, without challenging her position.

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17. “That sounds pretty good,” - responded Judy.

Consistency Trap. Ed is lying out a trap to get Judy to agree to his qualifying questions. This will make future questions to be more consistent with a yes than a no. ?

18. How much can you spend per month on your car?” Ed asked.

Ed is asking qualifying questions. He needs to firm up her needs so that he can package his end of the deal to fit her needs.

19. Under $450.”

20. Well, Ms. Berne, I will keep my word.?All we have to do is stretch the payments out to four years and that makes it only, let’s see…$437 a month.?We did it.?What do you say?”?As Ed leaned over his desk awaiting her response, Judy began to reconsider buying a new car, especially without shopping around first.?She got up to make her escape and to thank Ed for his time when he blurted out, “Are you a first-time new car buyer.”

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21. “Why….yes,” Judy answered. Ed is creating momentum, giving Judy a little more time to stretch out the deal. Ed is also, again, getting a yes to create consistency, culminating yeses.

22. “I almost forgot,” Ed announced, “I can offer you $300 off invoice just to get your business and begin what I’m sure will be a long term relationship with this dealership. Even if we don’t make anything on this car, we’re in it for the long haul.?This will bring the payments down to $429.?You can’t beat that’; the car you want at your price.?But we have to make the deal today.?There has been a lot of interest in that particular car and I’m not sure how long it will be around.”?That was just enough to halt her exist; besides, at this point, Ed was really trying to help her out.?Judy took the deal.

Ed is creating competitive pressure. He knows the car has been on the lot for a while with no interested party but he wants strike while the iron is hot and close the deal, so he is creating time pressure and stirring up urgency where there is none. Ed is creating an urgency and scarcity effect.

23. “Just let me clear this with my sales manager,” Ed explained as he left the room.?When he returned, he was solemn.?“He didn’t go for it.?He got after me for getting carried away, especially with the new buyer discount.?Bottom line, he says you can’t have the new car buyer discount and the options at cost.”?Judy was angry with the sales manager, but empathized with Ed’s predicament and agreed to his suggested solution of giving up the magnesium wheels. After a quick check, Ed indicated with evident relief that the sales manager had accepted.

Joe is using the power of authority card. His sales manager is being the authority and Judy being the victim. Ed may have never talked to the sales manager or doesn’t have one. Ed is also creating a “progression of loss” where it appears that the deal is slipping away, parts of it are lost, but Judy may still be able to get the car with slightly worse conditions.

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24. Now it was time for the paperwork.?Ed began by filling in the sales discount. Judy noticed an $80 processing fee, but she did not mention it because it was printed on the form and therefore must have been a standard charge.?She also noticed the $120 "etching" fee.?Ed filled in the proper price, $19,870, and the $1,000 factory rebate, but then wrote in a mysterious $105 charge.?“What’s that?” Judy inquired.

Test of Fairness. If Joe is successful in throwing this “etching” curve ball at Judy, he will assume that she is a lamer and will throw in more curve balls like he does with extra warranty, life insurance, paint sealant, fees and extras.

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25. Oh, I forgot about that.?That’s the paint sealant we put on all our cars to protect our customer’s investment,” Ed answered.

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26. And what is the etching fee?

These extras leverage Judy’s fear of loss. Ed has tested Judy and found her to be soft on extras, so now he is leveraging that to throw more stuff in.

27. That's for theft protection; it gets you a major discount on your insurance

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28. Judy responded, "I think I remember my employer having a program last year where the police come to the parking lot and do the etching for $15. Judy is doing a decent job at exposing tricks, but she is not doing enough to fend them off. Judy is also creating substitutions for items outside the deal already reached. ?

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29. Ed countered, "it's pre-printed on the sales sheet here; we provide the service and it's standard; all our customers get it.?Your insurance company needs this.

Ed is presenting this as a normal procedure, nothing out of the ordinary; this technique is know as Normative leverage or “the Johnes effect”

30. The next line was the trade-in value of which Ed had to check with his trade-in specialist. Ed left the room and returned with the specialist who stated that the 1987 Cavalier was in worse shape than Ed had thought and the dealer could only offer $500 for it and would probably lose money even at that price.?Judy though back to the morning.?Five hundred dollars was close to what her mechanic said it was worth, so she had to agree.

Ed is using the trade-in specialist as an expert witness and an audience to justify giving Judy half of what he originally assessed she would get for her car.

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