Your boss tells you to get more for your product; your client tells you to cut the price. What can you do? A simple but powerful negotiation concept can reveal dozens of valuable answers- and literally revolutionize whole industries^^
Interests First. To solve the puzzle, start by asking, “what are my customer’s interests?” That is, what are the underlying concerns or needs your customer has? Why, for example, does he want a lower price? What else besides price is he concerned about? Why? (For example, one reason your client may want a lower price is because he finds himself short of cash. Another might be because he’s under pressure from his buyers to produce more efficiently.) List several answers.
Then ask, “what are my firm’s interests?” List several answers, including both the material and the intangible.
Options. Then, for each interest, brainstorm at least six different creative options that might satisfy it. Each option is a possible way to satisfy your boss or client without raising- or lowering- the price.
Example- A Plastics Deal? For example, imagine your plastics manufacturing firm wants to sell one ton of plastic pellets- a virtual commodity- to Bob’s plastic container plant this week. In the past, you simply negotiated price and quantity with your buyer. Now, though, your boss wants you to raise prices. Bob insists on lower prices. You want to find ways to create more value for your firm and my plant.
Using the strategy I sketched above, you first list several interests Bob’s firm may have. Here are seven possibilities: (1) Produce, compete more efficiently, (2) Help with Cash Flow Problems (3) Reduce Risk of Buying Too Much, (4) Convenient, Inexpensive Form of Payment, (5) Better Selection or Quality, (6) Cheap, Convenient Delivery, and (7) More Durable Containers of Plastic Pellets to Avoid Losses Due to Damaged Containers.
You then list several interests your firm has. These might include: (1) Expand Market, (2) Increase overall revenue, (3) Improve Reputation, (4) Keep Costs Down During Seasonal Production Schedule Changes, and (5) Produce More Efficiently.
You then take the first interest you’ve listed for Bob’s firm and generate at least six different creative options that might satisfy it. For example, to help Bob’s firm “Produce, compete more efficiently, “ you could (a) offer to help Bob’s firm line up prospective end users, (b) offer to help create a joint plastic information web site for end users, (c) offer Bob’s firm technical assistance about how to better use plastic, (d) offer is firm marketing data (such as recent trends in packaging), (e) offer better payment terms so Bob’s firm has more time to pay or less of a finance charge for later payment, and (f) offer technical assistance about how to storing plastic more inexpensively. You could offer many of these things for a fee, or you could offer them to justify a higher price, to name just two possibilities.
You then repeat the process for each interest Bob’s firm has, and for each interest your firm has. Here, that’s (7 interests x 6 options/interest) + (5 interests x 6 options/interest) = 42 + 30 = 72 options. Most of these options will be unhelpful, but a handful very likely will hold the key to a bright, attractive solution.
A Shocking Result- “You Saved Our Industry.” We ran this very exercise in a class several years ago, generating 72 creative options for the plastic problem in about 20 minutes. Then a student raised his hand and said, “I’m in the plastic industry, and we’ve had this very problem for years. It took us five years to realize we couldn’t just negotiate price any more. We’ve finally developed a set of creative ideas that helped save our business, and most of them are on the board. It took you 20 minutes to find solutions it took us five years to discover.”
Focusing on interests instead of just price is not a novel idea. In his book Passion for Excellence, Tom Peters includes a chapter entitled “No Such Thing As A Commodity.” There he considers several industries that once seemed to be commodity businesses where the only issue was price. Each was transformed when one company asked What else besides price do our customers care about besides price?” (Examples include Perdue Farms chickens and Dow specialty chemicals.)
Challenge. I challenge you to run through the Interests and Options exercise and see if can’t uncover vast new opportunities that way. It may make you a hero this very week.
Typical Interests. If you’d like a jump start spotting hidden interests your clients and customers may have, here are some suggestions:
- Increased revenue
- Legitimately reduced taxes
- Increased profit
- Better long term opportunities for growth
Repeat business (conserve marketing costs)
- Improved cash flow
- Market share
- Business practices that are in harmony with your beliefs
- Cost control
- Avoidance of legal problems (such as antitrust claims)
- Better, more committed workers (morale)
- Help competing effectively with competition
Here’s wishing you good luck. You have what it takes to be a hero to your organization and the people you serve.