A Pyrrhic Negotiation Victory Versus Customer Relationship-Building

Many individuals view negotiations as an adversarial, zero-sum process in which manipulation, gamesmanship and intimidation are effective and worthwhile tactics. Perhaps you have even heard one of your counterparts brag about “drawing blood” or beating the other party.

This philosophy is illustrated by the classic movie Glengarry Glen Ross, where the sales manager (played by Alec Baldwin) beats his sales reps relentlessly to do anything they can to close deals. Manipulation, intimidation and lies are encouraged. During Baldwin’s tirade, he yells at Jack Lemmon’s character: “Put. That coffee. Down. Coffee’s for closers only.” The theme of the movie is that the legitimate needs of the prospective customer are not to be considered … just do what’s necessary to close the deal.

While this movie’s portrayal is a cynical example, there are instances where those with good intentions can act in ways that produce short-term gain and long-term pain. The so-called negotiation victory can turn out to be “pyrrhic,” which Merriam-Webster defines as “a victory that is not worth winning because so much is lost to achieve it.” This loss can come in many forms: squandered goodwill, decreases in future revenue and the inability to use that client as a reference.

Listen To The Problem

Behavioral economics and interest-based or integrative negotiations are prime factors at work. In a crisis environment, emotions can run high and the willingness to listen and patiently work through a problem can erode. But if we are willing to take a breath and step back, it is actually easier to listen to the problem we and the other side are trying to solve, and then work jointly on solving it. This is far preferable to the alternative — taking a position and beating each other up over our respective positions.

A personal example will illustrate the concept. Say my wife and I are discussing (negotiating) which movie to watch. I may be in the mood for an action-adventure, while she may prefer a romantic comedy. A win-lose attitude here will likely lead to a negative outcome. However, if we take the time to identify the criteria that makes a good movie for each of us, then we can find an acceptable compromise. Even if one of us concedes, we will feel that our needs have been heard.

Your Task: Separate The Means From The Goals

Remember that means are merely ways of reaching goals. Customers often articulate their means instead of their goals. This can cause negotiations to get bogged down, especially if they state requests as if they were mandatory.

In the business arena, we may hear something like “I need supply guarantees” from a stakeholder. The sales rep runs to management and says, “They need supply guarantees.” And management says, “We can’t give them supply guarantees.” This creates an impasse that satisfies no one.

The impasse could have been avoided if the seller had simply asked the stakeholder, “Why do you need supply guarantees?” Perhaps the answer is, “We have been burned in the past with this problem.” At the same time, the seller’s management feels they may not be able to give supply guarantees because of other commitments and their economic inability to build a separate line to manufacture “just in time.”

If you know these rationales, you can find a number of potential solutions. For example, if it’s important enough to the buyer, perhaps they can finance some inventory up front or can provide guarantees in return for an allocation that still provides sufficient supply to meet the seller’s other commitments.

Understand The Importance Of Principled Concessions

Prospective customers will sometimes ask for things that are unreasonable or that come as a surprise. Such requests that do not have a reason (or where you do not understand the reason) are a staging point for “unprincipled concessions” — which I define as concessions that are not tied to credible business rationale. My experience in this area has shown that agreeing to unnecessary concessions can cost companies double-digit percentages while jeopardizing successful implementations and service quality — a large price to pay.

An example of an unprincipled concession is when a prospect says, “Give us a 20% discount and we can get started.” This is a negotiation inflection point at which the way you react can keep the process on a path to success or one headed for failure. Your perception of unreasonable demands can cause reactions ranging from annoyance to fear and panic. You may concede and wish you hadn’t or perhaps get into a heated exchange with your negotiation counterpart. So, what is the alternative?

Just as in our supply guarantee example, the alternative is to ask that simple but profound question: Why? Before becoming defensive, you need to uncover whether they have legitimate price concerns, are not sold on your value or are fishing for a better deal. By searching for the “why,” you can separate the means from the ends and give yourself more time to craft the appropriate relationship-maintaining response — perhaps a change in scope and outcome or alteration of terms.

Just as your prospect can request an unprincipled concession, sellers sometimes offer arbitrary concessions in a misguided attempt to get a deal moving — e.g., they provide a substantial discount to make a deal happen faster. Be careful because it can signal to the prospect that you lack confidence in your value and encourage them to ask for more. You could end up with a delayed deal with reduced revenue and a client who knows you will concede on pricing issues in the future. The goal is always to maintain your value, credibility and positive leverage.

Focus On Positive-Sum Negotiations

Here is the bottom-line. Every person who participates in the selling and negotiation process needs to remember that negotiations are conversations that help parties find mutually beneficial solutions for their problems and creative avenues to grow their businesses. If this attitude is reflected in your speech and in your actions, you can create relationships that are profitable and productive for years to come.

Note: this article originally appeared in July, 2020 on Forbes.com. You can view the original post here.