Concede Like a Pro

By Heather Baldwin

In the 1995 movie Clueless, the lead character, a likeable ditzy blonde played by Alicia Silverstone, tells her lawyer father not to worry about her less-than-stellar report card. The report card, she says dismissively, is simply a jumping-off point to start negotiations. Your clients likely feel the same way about your prices and product or service options. So if you want to sign these negotiators as clients, you might need to make some concessions – an art that takes skill and practice. Here’s how to do it, says Harry Mills, CEO of The Mills Group (www.millsonline.com) and author of The StreetSmart Negotiator (AMACOM, 2005).

1. Trade for advantage. In other words make all concessions conditional on getting something in return. Do this by using the if-then formula: If you will pay within seven days, then I’ll increase your discount to 27%. Using the if-then formula requires you to determine the answer to three questions before making any concession: What value is the concession to the other party? What will it cost me? What do I need in return? If you’re dealing with multiple offers and concessions, keep track of everything. You’ll start to notice patterns that will reveal insights into the other party’s priorities that you can use to your advantage in negotiating.

2. Start high, concede slowly. The most successful concession strategy is to start high, then gradually concede to the moderate point. Negotiators who use this strategy, says Mills, close more deals, make more money per deal and make the people with whom they negotiate much happier with their agreements than those with whom negotiators refused to budge, even from the moderate point. So don’t open with your best discount offer. Make an initial offer and let the client negotiate with you to move you to a better discount, even if that better discount was one you were prepared to offer in the first place. Here are some more tips from Mills.

  • Signal when you are reaching your limit by sharply cutting the size of your concessions.
  • Make a series of small concessions instead of one or two large concessions.
  • Hold some concessions in reserve for last-minute demands.
  • Never make a concession without getting a concession in return; remember that “if/then” formula.

3. Build momentum. It’s easy to lose momentum in negotiations and get stuck in a deadlock. Avoid that trap by doing these four things.

  • Reward concessions. When the other side grants a concession, say I appreciate that rather than that’s not good enough.
  • Avoid making statements such as: This is my final offer. Such statements communicate a take-it-or-leave-it mindset. Remember that you want the prospect as a client, so you must communicate that you’re willing to work with him or her to find a mutually-agreeable solution.
  • Shift issues when you start getting bogged down in one area. This keeps things moving and builds momentum that should continue when you come back to the sticky issue.
  • Handle ridiculous offers with care. Rather than storm out or lock up, stay calm and polite.