For most of us, who’s professions are not in high pressure sales, the task of negotiating a package of benefits in a new role does not come naturally. Similarly, if you are freelancing and negotiating rates or prices, you may find yourself unprepared. Well, here is the inside scoop on driving a hard bargain!
If you are anything like me, trying to drive a hard bargain feels like you are being mercenary and money grabbing. The thing that I had to learn when I became a consultant though, was that we all have a finite amount of time on this planet, and it is measured in minutes and seconds… every single minute you spend performing a task of any kind, is a minute you can never get back!
Now, let’s all promise never to undersell ourselves again! In this post, I have drawn on the lessons I learned whilst consulting and combined them with some absolute gems of psychological insights that are detailed in a book by Robert Cialdini Ph.D. called, ‘Influence, the psychology of persuasion’.
Taking shortcuts
In our busy lives we must take short-cuts when making decisions. If we weighed up every decision for every element of our lives, we would never leave the house. This world bombards us with information and choices that, if we aren’t careful, will overwhelm us. We all have these in-built shortcuts which are triggered by certain stimuli. They are learned responses that have been passed down through the generations, and allow us to make decisions based on only superficial analysis of available information. Cialdini quotes Philosopher A. N. Whitehead, “Civilisation expands when we can extend the number of operations we can perform without thinking about them”. Here Whitehead gives us a clue about how civilisation has developed by having pre-programmed responses to specific inputs. Its these responses that people who are trained in high pressure sales tactics capitalise on.
We are using pre-programmed unconscious responses when we decide on purchases, or when making a commitment to a course of action. These responses are automatic and involuntary. We must learn how to harness these short-cuts to bolster our negotiating power. By using simple psychology we will get the best deals possible!
Be sure to be positioned well
Before we begin. If you are negotiating a new salary package, you must be in the best bargaining situation. The first tip here is, never discuss the salary of a new position at the end of an interview. This certainly isn’t one of the topics you want to raise in response to the, “Do you have any questions for us?” part of the interview. Apart from looking like your primary motivator is the salary, you are also setting yourself up for disappointment. You see, at this point, the recruiter has not landed on you as their preferred candidate, no matter how it may have come across during the interview.
Sometimes recruiters get carried away during an interview if they like you as a person give you the impression you are home free. It is a trap. Even though they have stopped asking you knotty questions, you are still being assessed. If you get the call telling you that you are the preferred candidate, there have been deliberations behind the scenes. Discussions between panel members will have focussed on the pros and cons of each interviewee. They will have hopefully convinced themselves that they can’t do without you. For you to be at the top of the merit list, they will have found more negative points about other candidates than they did about you… which puts you in a stronger position to negotiate.
The technique menu
What follows is a selection of tried and tested techniques you can mix and match to make you a hardened negotiator. Dr Cialdini offers mountains of empirical evidence for the effectiveness of these methods, and I have had successes using many of them too. So, let’s jump on in and get the inside scoop on driving a hard bargain!.
Your first shortcut
When you want to buy something you must decide between lots of different versions of that type of product. Now, unless it is something you are expert in, lots of research is necessary to make your choice. It is unlikely you have time to do this for everything you need to buy, so subconsciously we employ a learned shortcut. In Cialdini’s book he describes a jewellery seller based in a tourist area who couldn’t shift a new line of lower priced semi-precious stones. No matter what she did, tourists weren’t buying them. Infuriated, she instructed her staff to mark them down to half price. A miscommunication meant the store manager doubled their price instead. Guess what? They sold out within a week! How could this be?
The jeweller had unknowingly activated a subconcious shortcut in her customers. When we know little about a product, and have no time to learn about them, we often fall back on the expensive equals good shortcut. You are selling a product, and that product is you! This shortcut should give you the confidence to pitch yourself high. Triggering the expensive equals good shortcut in the recruiter or the company you are pitching to is your first step to confident negotiation.
By comparison
The next tool in your armoury that you’ll recognise from any high street retailer, is the comparison technique. This method of upselling comes in various forms and is so commonly used, you may not even see it for what it is when faced with it. It’s a very easy method to use in a salary or contract negotiation and extremely effective.
I found success with this method when negotiating consultancy work. I would pitch my highest package right out the gate. Sell it hard and try and push all of its benefits. “I will be at your beck and call 24/7 to offer advice and assistance, I will respond immediately if you have a workplace incident, and represent you when the inspectors arrive… and this deluxe retained service will ensure that you are protected the best way you can be… all for just…” It was an expensive option, and I had a strong suspicion that they wouldn’t take it. The thing was, if they did, what a fantastic result right? But if they didn’t, I was now going to employ the comparison principle, my second-tier service, my Goldilocks package which by comparison to the costlier package seemed far less expensive… and juuuuust right.
The truth was, I was hoping to sell the second-tier service in the first place, as I couldn’t really be all things to all people every time, I’d be spread way too thinly. In salary negotiations, this principle is effective and simple. Pitch yourself high at first and be happy to slide down a little to where you wanted to be in the first place, I’ll explain how this will pay you additional dividends later on.
By contrast
In retail outlets, salespeople are instructed to pitch the most expensive items first, contrary to what you would think would be common sense. You’d think if someone had just spent a large sum to buy an expensive dress, they’ll be reluctant to spend more to buy a matching handbag right? Wrong. Retailers know that in line with Dr. Cialdini’s contrast principle, they should sell the expensive dress first, and then direct the shopper to the less expensive handbags next, as their prices won’t seem nearly as high in contrast. In their 1967 book, ‘The new psychology of persuasion and motivation in selling’ Robert Whitney, Thomas Hubin and John Murphey discuss this phenomenon.
Through analysis of spending data, they determined that expensive items when bought first will lead to more money being spent on the accessories to accompany that item later, rather than if the less expensive items were bought first. They observe that, ‘The interesting thing is if a man enters a store with the express intention of buying a suit, he will almost always pay more for any accessories that go along with the suit if he buys them after the expensive suit purchase, rather than before.’ Here we bring in our extras to the package negotiation or the consultancy contract.
If you have just landed the salary, or the gold standard contract you were pitching, the tendency here is to quit while you are ahead. But that would be a mistake, and a wasted opportunity to utilise the contrast principle. Compared to the salary they have just offered you, the little extras you now need to pitch them will, by contrast, seem insignificant, and small fry.
The trick here is to pitch each little add on separately. A fuel card? A personal use mobile phone? An extra percentage on your pension contributions? When each is pitched separately during the conversation, they will all seem to be tiny incremental steps, that are of little consequence after the salary has been agreed.
The social obligations
Anthropologists Richard Leakey and Roger Lewin identified in their 1978 work, ‘Origins of Mind’ a social obligation structure which they believe is the very bedrock of our society’s functioning to this day. Modern day humans developed our society on the principle of indebtedness. We are indebted to reciprocate acts of generosity with repayments of at least equal and often greater value. This meant that individuals could give away resources, confident that they would receive services in kind. Our ancestors could devote time and attention to learning their specialism and the whole group benefited. The very survival of our species and its development to where it is now is dependent on this principle. For that reason, the obligation to reciprocate is hard wired into our brains. How does this help us in our becoming effective negotiators?
Well, through a 1971 experiment Professor Dennis Regan demonstrated that by indebting the person you are negotiating with to you, you set up an incredibly powerful social pressure for them to return the favour. Regan also established that the size of the gift can be massively smaller than the return favour you can expect to receive.
Reciprocity in action
Throughout your interactions with the recruiter, you will be engaged in conversations. These conversations are a gold mine to the savvy negotiator. During the recruitment process look out for nuggets of information that can help you in a later meeting. We are looking for opportunities to establish a very low-level amount of indebtedness.
Perhaps you learn your recruiter is a fan of a well-known sports personality, a chance comment that you too admire that person seems irrelevant at this stage of course… Later, you are asked back as the preferred candidate, and at this meeting you’ll be negotiating your salary for at least the next 3 months.
This is an important conversation for you isn’t it!? Picking up an autobiography of the sports personality won’t cost you the earth and may significantly help your next negotiations. As you arrive and shake hands, way before any conversations about money take place, a casual, “Hey, I read this recently, and thought you might enjoy it” will seem a pleasant gesture… but a social obligation is now established. The gesture doesn’t even need to be as grand as a book, a simple cup of coffee is often all that is needed to trigger the subconscious response. Cialdini gives the example of the Hare Krishna devotees soliciting donations in airports after thrusting a ‘gift’ of a flower into your hand. You don’t want the flower, obviously, but having received it, the social pressure to fish in your pocket for a donation is immense, isn’t it?
You might think that this is a clumsy and obvious tactic which can be spotted a million miles away. And you’d be right! But here is the incredible part, it really doesn’t make any difference if it is clear that you are trying to win favour, the need to reciprocate will still work faithfully.
Concession
Earlier on we established that your first pitch should be higher than the one you want so you can drop back to a lower level, making Cialdini’s comparison principle work for you. You have made a concession to them which will also utilise the social obligation principle of reciprocation. This second technique of the reciprocation principle has been studied in depth and labelled the Rejection and Retreat method. By suffering an initial rejection, we have made a concession to the other person, and again in effect, they are now indebted to us.
The reciprocation principle means that they are obliged to make a concession to us in return. Here is where we offer our lesser option (not giving the other person opportunity to counter offer). They are now obliged to accept our lower proposal, in order to fulfil the obligation they’re under to reciprocate our initial concession. You are taking away their choices.
Satisfaction guaranteed
There is a superb second benefit here too. By being beaten back in the negotiation, we cause the other person to feel responsible for the newly arrived at sum. This is no small thing and an incredibly powerful tool. It generates some fantastic advantages. Social psychologists at UCLA conducted an experiment where they had subjects engage in negotiations for small sums of money. The subjects were unaware that the person they were negotiating with was a stooge. They were split into three groups, the stooge was instructed to either start off with a high initial demand and climb down to a result which still favoured him more than the subject, start off with a moderate demand and hold his ground, or start off with a low demand and negotiate upwards.
The results were surprising. Subjects reported being more satisfied with the outcome of the negotiations when they ‘talked down’ the stooge from his initial high demand, to one which still wasn’t as favourable to them as the sums the people received in the other two groups. What this means for us is that by pitching too high and being negotiated down, we have caused the other person to feel more responsible for and therefore more satisfied with the outcome, even if the final sum is more than they wanted to pay. The Rejection and Retreat technique has an uncanny ability to solicit a positive response and leave people open to further negotiations in your favour in future.
Perhaps your concluding sentiments following this ‘climb down’ could include a request to review the salary after the three-month probationary period. You are offering the recruiter a final way to relieve themselves of the concession debt they may feel they are under…
Consistency
How we want to portray ourselves to other people has a powerful effect on how we behave. In 2006, Daniel Howard published, ‘The Influence of Verbal Responses to Common Greetings on Compliance Behavior: The Foot‐In‐The‐Mouth Effect’. He established that if a charity worker asks you how you are at the beginning of a call, they can double their success rates in obtaining a donation for people less well off than you.
The key here is the pressure we place on ourselves to act in accordance with societal expectations. If asked, “how are you this evening” Howard discovered that the vast majority of people will say, “I’m doing fine” in response. Imagine the pressure those same people will feel now, when the caller says, “I’m glad to hear it, so I’m sure you’d want to give a small amount to help people who aren’t doing so well?” The pressure they would be experiencing is that to make their actions consistent with both how they perceive themselves, and how they wish others to perceive them. This negotiating tool calls for a little groundwork.
When meeting with someone who you know will be deciding on how much they want to pay you, you may wish to direct the conversation a little. During an initial meeting, comment on how you have researched their organisation and learned that they retain their employees well, with fair and equitable conditions and generous remuneration packages. By agreeing with you as they naturally will, they are committing verbally to being a fair and generous employer… ideals they will then feel some pressure to live up to during later negotiations.
Social Proof
When we don’t know what to do in a situation, we look to others for cues. This is another shortcut we rely on to help us choose a course of action. For example, you are just about to disembark a flight and still have rubbish tucked in the seat pocket in front of you. Do you take the rubbish with you, or leave it for the flight crew? You slyly dart your eyes around the plane to see what the other passengers are doing and notice most have rubbish in their hands… shortcut satisfied, you collect your rubbish and take it with you. Social proof.
We’ve all seen the adverts, ‘act quickly, these are flying off the shelves’… but are they really? Social proof suggests to us that if others are buying this thing, they must know something we don’t, we’d better get one too quick! In a negotiation setting we can utilise this social proof principle, but only if we are clever. We want to give social proof to the person we are negotiating with. We can shift the focus of the conversation away from our merits determining the value of the package we are being offered, over to what similar organisations are offering. Have examples ready of organisations in the same field, of roughly the same size. Do a little research and give a summary of what their peers are doing for people at your level. Obviously, cite examples that are high end.
You are carefully sowing a seed in their minds that perhaps others know something they don’t, and if they aren’t careful, they may lose the option to secure such a sought-after candidate.
Are you likeable?
Its an undeniable fact that we all prefer to say yes to people we like. Think about when a charity worker calls at your house, it’s far easier to say no if they are a stranger. This is why charities ask people to canvas in their own immediate neighbourhood. If you know the person from just down the street… its really hard to say no isn’t it? How can we tip the odds in our favour that the person we are dealing with will like us enough to give us a favourable outcome? Cialdini gives us a few insights here too:
Likeability – physical attractiveness
In one study conducted in Pennsylvania fake negligence compensation cases were set up to see how subject jurers would act. Where the defendant was better looking than the victim, the average compensation awarded was $5623. But, when the victim was better looking than the defendant, the average compensation awarded was $10,051! This phenomenon is equally affective on both sexes too, regardless of whether they are the opposite sex to the person being judged.
Regardless of the moral implications of the fact that the better looking you are the greater social advantages you have; it is to our benefit to try and maximise on our potential. Here I would suggest that you groom yourself to the highest standard you know how, and make sure to look out for the fine details, like how clean your shoes… and ears are!
Likeability – similarity
It is also true that we respond much more favourably to people who seem similar to us, regardless of whether that makes any sense or not. For example, style of dress is a key indicator of social similarity. This was proven in an experiment back in the 1970s when experimenters asked college students if they could loan them money to make a phone call. When the experimenter was dressed in a similar fashion (either as a hippy or not) as the subject, in over 75% of the instances, they secured a positive result. When dressed in a dissimilar fashion, they only received the money for the call in just over half the attempts.
Do your research and present yourself in a manner which will give you the strongest likelihood of being viewed as similar to those people you are trying to influence. You never know, copying that pair of R.M. Williams boots that you noticed the recruiter wearing could just be your ticket to a bouncing salary…
Likeability – background and Interests
Did you know that when a car salesman is checking out your car for its trade in value, he is looking for clues about your lifestyle or where you are from? You may not realise it, but if he notices camping gear in the back, he may drop into conversation that he is hoping to go camping over the weekend. Why would he do this? Because he has been taught that by establishing a common ground with you, you are far more likely to see him as a like minded individual and form a subconscious bond with him.
As superficial and actually underhanded as this seems, there have been many studies that show it just plain works. And so, perhaps if you happen upon any information about the person you are negotiating with during conversations, establishing similarities in background or interest throughout the conversation will work very much in your favour.
Likeability – flattery
Another automatic subconscious response that we cannot control is how we feel about flattery and compliments. Even when we know why the person is complimenting us, and even if we don’t even believe the compliment to be true, we cannot help but subconsciously respond favourably to it. Throughout the conversations, be very liberal with your positive observations on their business, the team and any other (professional) element of the situation you find yourself in. I cannot overstate the effectiveness of this.
Over to you!
The techniques and approaches that I have discussed in this article all have strong scientific research to attest to their effectiveness. Dr Cialdini has gone to great pains to provide evidence for each of them (and more not covered here). The key to all of this is to do a little research and prepare yourself as best as possible to have these strategies at your disposal right from your first contact with the company you are interested in.
I realise that some of these strategies may come off as sneaky. All I can say is, if you have a genuine desire to have a long lasting and good working relationship with people in business, then make it your aim to research your approach and mean what you say. Show genuine interest and follow through on any promises to be sure to maximise the benefits of these approaches into the future. Honestly, just knowing what you now know will give you an underlying confidence to approach negotiations from a position of greater power.
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