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10

Getting More in the Marketplace

One of my MBA students went to Bloomingdale’s to buy a pair of shoes. There were two pairs of shoes near each other in the shoe department. They looked very similar. One cost about $130. The other cost about $250. It was clear that the more expensive pair was much better made.

“These two shoes look very similar to one another, although the more expensive one is much better made,” the student said to the shoe department salesman. “You’re right about that,” the salesman said.

“I’ll bet you don’t move as many of these more expensive shoes. Most people probably buy the cheaper ones,” the student said. “You’re right about that, too,” the salesman said.

The student asked if the more expensive pair was going to be discontinued soon since it wasn’t moving very well. It was taking up space that could be used for a faster-selling product. The salesman saw where this was going. “We hardly ever discount merchandise,” he said.

The student heard the words “hardly ever” and realized it was a signal that sometimes things were discounted. “I can’t afford the more expensive shoes,” the student said. “But I was wondering if I could buy them for a price that still left you a profit and helped you move them.” “Move them” was a signal that the student understood the salesman’s frame of reference.

The student then said she understood the mark-up was usually 100 percent on goods at department stores (she had done her research). She wondered if she could pay about $150 or so. She ended up buying the shoes for $160: a discount of $90, or 36 percent.

From the telephone company to a billion-dollar deal, people the world over continue to have trouble buying and selling things. It appears that the world is getting tougher: there are more hard bargainers, hidden decision-makers, broken promises, and inflexible policies.

Using the strategies and tools of Getting More, thousands of people have gotten extraordinary results in the marketplace: discounts at stores that otherwise never give discounts; millions of free cell-phone minutes; buying or selling a product, service, or company for terms that seemed impossible. The purpose of this chapter is to make the seemingly impossible become possible for you, too.

The first out-of-class assignment I give students is to go out and get a discount. I don’t care if the discount is off a slice of pizza or a Tiffany necklace; I want my students to make an attempt to get more. They find that all sorts of things are negotiable with the right approach, even in the snazziest places. In most cases, all you need is a minimum of preparation, and the fortitude to ask.

When people first hear this, their most common question is, “Isn’t this manipulative?” Here you are, taking people’s hard-earned money. My response, as before in Getting More, is “not necessarily.” If you get a discount from a store, who benefits more? You will like the store more and will likely come back, giving the store more business. If you get a discount for being nice to the sales clerk, the clerk may get a huge psychological lift, as so many shoppers are mean. It may make them more motivated.

In the Bloomingdale’s example above, who benefited more? It’s not clear, is it? Items of unequal value were traded. Bloomingdale’s made a profit, and recouped its investment. It helped clear the shelves for faster-moving merchandise. Manipulation is really that which hurts other people. You don’t have to be hurting others to meet your goals.

Much of the advice on negotiating in the marketplace is one-size-fits-all advice. How to sell a house, buy a car, sell a company. By now you know, however, that negotiation is very situational; it depends on the people and process in any given situation. While some tools are used more than others in the marketplace, you still have to focus on the specific situation, the people involved, and your goals.

As such, there is no one way, or even ten ways, to buy or sell a car, or purchase accounting services, or obtain an airplane ticket. There are a million ways, depending on your goals for the situation, who the other person is, and what process you have chosen.

STANDARDS AND FRAMING

Let’s start with standards. This is the most common tool used in buying and selling things. The reason is that much (not all) of negotiation in the marketplace has traditionally been about prices and policies. Standards is not the only thing you will need. But you must master this tool to do well. This includes being able to frame the situation to fit into an acceptable standard for the other person.

We’ll address easy consumer issues first. Most people know to ask for discounts, and sometimes they get them. These are not the situations we are dealing with here. I want to show you people who succeeded after the other party says no, often repeatedly. My students don’t get frustrated or lose their composure. They just keep using the Getting More negotiation tools until they meet their goals.

Kenneth Reyes called Verizon Wireless many times to get his billing address changed. It wasn’t changed, his bills got mailed to the wrong address, and he was charged late fees. Instead of getting aggravated, he got Nicole, a customer service rep, on the phone.

“Does Verizon have high customer-service standards?” asked Kenneth, an assistant at a Los Angeles talent agency. “Of course,” Nicole answered. “Is calling four times to update a customer address in line with Verizon’s standards?” Ken asked. “No,” Nicole answered. Nicole fixed the address, then and there, and removed the late fees. “I’m a longtime customer,” Kenneth said. “Could I get something for all my trouble?” By asking, he got two months of free cell-phone service, a $120 value. It adds up quickly.

One key thing about this negotiation, as I mentioned in the standards chapter, is that you must never make yourself the issue. Just because the other side is a jerk doesn’t mean you should be a jerk. Also, the problem wasn’t Nicole’s fault. Why blame her for it? And note that Ken raised his points by asking questions.

So, you say, no big deal, Ken got $120 once. But try doing this once a day, or once a week.

Applying standards in a negotiation also means asking for exceptions to standards. Mark Perry had a Treo 750 phone that broke after thirteen months, one month after the warranty expired. He asked the salesperson in the store whether AT&T ever made an exception to the warranty. She took him aside and whispered, “Yes.” Mark, now a Singapore commodities trader, got a new version of the phone for half price. Savings: $100.

Why did the salesperson take Mark aside? She didn’t want the entire world to know. As such, whenever you ask for an exception, don’t ask in front of a lot of people. It just drives up the cost for the other side, and makes it harder for them to say yes. (This is the opposite of what you would do if you want them to meet their standards. In such an instance, you want as many people around as possible, to expose their unfairness and inconsistency.) A big part of standards is framing: asking the other person a question in which a standard is embedded. Andrew Dougherty wanted a bigger discount on a new bedroom set. Restoration Hardware offered 15 percent. He asked the store manager, Pam, if she worked on commission. She did not. He then asked her if she got any kind of bonus for anything she sold. Yes—for “exceptional sales.” Is an expensive bedroom set an exceptional sale? he asked. Result: 40 percent off. Savings to Andrew, now a banking manager in New York: $1,800.

Charles Chen was renewing his phone plan with T-Mobile. There were five users on his family plan. He was told that T-Mobile limits family renewals to three free phones. Charles researched T-Mobile’s standards. He found that each new customer gets a free phone.

So he asked the sales rep, “Does T-Mobile treat new customers better than existing customers? Haven’t we, as existing customers, spent a lot more money with T-Mobile?” Of course T-Mobile’s goal was not to treat existing customers worse than new customers. So Charles, who works for a cross-border consulting firm in Taiwan, got five free phones, in return for an additional year on his contract.

This is a big issue: companies often offer new customers better terms than existing customers. As a customer, you should key on the relationship. T-Mobile responded in kind, asking Charles to prove his relationship value by making another one-year commitment. Nothing wrong with that.

HBO was offering a great six-month, $6-a-month rate to new customers. Chris Hibbard, already an HBO customer, asked the service representative if HBO could give him the same rate. He pointed out that the selling costs to HBO are $0 for him, whereas they are more expensive for new customers. The sales rep did him one better. She gave him a free six-month trial.

Why did she do that for him? Because Chris, a supply chain manager in New Jersey, was friendly, mentioned his loyalty, and wasn’t greedy. Many consumers, frustrated by something or someone else in the company, blame the rep who happens to answer the phone at that moment. And the rep hears this all day long. Being nice in a potentially hostile situation—even while using standards—is key.

Igor Cerc went to a store to have a clock engraved. It was a gift he was taking to a wedding the day he was picking it up. But when he arrived at the store, he found that the technician had broken the glass of the clock during the engraving process. They offered to replace the entire clock, after they got money from their insurance company.

But Igor needed the clock now. He realized it would not serve his goals to get upset. He calmly said he needed to go to a wedding in thirty minutes; the clock was his wedding gift. He noted there was similar glass in other clocks in the store. Couldn’t the store take apart another clock to fix his? He was calm and polite throughout. “The clerk thanked me for not yelling at her as other customers do,” said Igor, now a customer analytics expert for a Seattle financial services firm. “I realized that she would do everything she could for me as long as I remained polite.” The clerk took apart another clock and quickly replaced the glass, and Igor went on his way.

By not making yourself the issue, you can ask companies hard questions about their service standards. But remember, ask: questions are more powerful than statements.

Comcast installed the wrong cable TV and Internet equipment at Alexandre Costabile’s apartment. He called up and asked the service rep if these were Comcast’s standards. No, they weren’t, he was told. “How can Comcast restore my confidence in the company?” Alexandre asked. The result? The price of his service dropped from $127 per month to $67 per month for the first year, and he got a $45 discount on the equipment. Savings: $765. This is the sort of thing you should do routinely.

Alexandre, a consultant in Philadelphia, did something else that was key. He found the right person to negotiate with. Alexandre was looking for a friendly voice. When dealing with large companies, their size can work in your favor. If a customer rep treats you badly, call back until you find a friendly one.

Are you manipulating the situation? How? You’re one person trying to navigate a major corporation over the phone. Why shouldn’t you look for someone to be your advocate? Besides, you end up happier with the company and are more likely to come back.

Kenneth Ziegler saved $100,000 a year for his computer company using the other party’s standards. He researched the slogan of a vendor that his company did business with: “Enriching life by enabling reliable and affordable communication anytime, anywhere.” He showed the vendor the prices of their competitors and mentioned that for his company, the current prices were not “affordable,” a key word in the company’s slogan.

Then, he gave the problem back to the company. He said, “Find a way to make your prices affordable, meeting our needs at the same time.” The company restructured its services. It found a way to provide similar services to Ken’s company for $100,000 per year less. “I use standards whenever I can,” said Ken, who is now chief operating officer of the company.

The ability to frame (or reframe) things creatively is a huge advantage in most successful negotiations. Learning this doesn’t happen overnight. It comes with practice and preparation. Miranda Salomon Pearson and her husband, Larry, were charged $124 a month each as the “standard rate” at the New York Health & Racquet Club. That’s $248 a month, or around $3,000 a year.

Miranda did some research and found out that health clubs often have a corporate rate that is half the individual rate. So she mentioned to the sales rep at the New York club that although she and her husband are not corporations, they work for corporations. This was reframing. Corporate memberships are intended to pull in a lot of people from the same companies. Miranda, a lawyer in New York, framed the couple’s membership as accomplishing the same thing, through referrals. The result for Miranda: a savings of $1,500 a year.

Devin Griffin’s fiancée, Sarah, asked him to buy gifts for the bridesmaids in the couple’s upcoming wedding. A store wanted $975 for several bridesmaid’s gifts. “I asked the retailer if they ever give discounts for customers with high-dollar orders,” he said. Answer: yes. So Devin pointed out that there is no difference between buying ten items that total $975 or one item that totals $975. A sale’s a sale, right? Point taken. Devin, who works in the digital media division of the Chicago White Sox, got a 20 percent discount.

A major professional sports team declined to sell sponsorship rights to Jeff Bedard’s company because, they said, the offer was too low. Jeff said the team was exactly right—if all rights were being sold. “We only wanted to buy some rights,” he said: national rights, not local rights. “Our offer was better than industry standards for that.” He supplied sources to confirm it. Jeff was able to buy the rights. That is the value of reframing.

Josh Porter couldn’t get a promotional discount rate from Comcast cable TV because he had already gotten one. So he asked the Comcast service rep if he could tell him the names of other discounts. This was after he expressed get-well wishes to the rep, who clearly had the flu. The rep told him to ask for the “retention rate.” John, now a director at a private equity fund in Tokyo, did so—and got the discount. If you make friends with the other party, they will look for ways to help you meet your goals.

Consumers usually know a lot less than the seller does about the goods or services being offered. Don’t be afraid to ask the other party what they have done for others in the past. They will tell you enough of the time that you will profit greatly.

Jared Weiner asked Sprint what it did when loyal customers had trouble with their reception. As a result, he got a year’s worth of free text messaging (6,000 of them), worth about $200. “I then asked for and got the same deal for my mother and sister,” said Jared, now a money manager near Philadelphia. “All family members should be treated the same.” (Framing.) Yan Li asked a Philadelphia jewelry store salesperson if she was empowered to give discounts other than those listed. The salesperson said yes. The result: Yan was given an instant 15 percent discount. Most people don’t ask. Asking such questions will put a lot more money in your pocket by the end of the year.

Many people know to ask for discounts: coupons, seasonal sales, frequent buyer or flier, age (young and old). But this just scratches the surface: the list is long and intriguing. There are discounts for geographic residence, disabilities, smokers and nonsmokers, stranded travelers, professional groups, and even “friends and family” for people that store personnel like.

Airlines give discounts for funerals (bereavement), weddings, students, teachers, active and veteran military personnel and families, meetings, and conventions, among others. Anyone who buys almost anything without asking about discounts will waste money. Even billionaires say they ask for discounts. You should too. Be creative on the Internet.

As with other negotiations, the more you walk people through the details of their proposal, the more you will get.

Jason Weidman hired a San Francisco Conservatory group to play for an hour at his upcoming wedding. Their agent, Marcia, wanted to charge double the quoted price—two hours—because of travel time. The wedding was to be held in Tiburon, on the other side of the Golden Gate Bridge.

“I asked if the performers normally are paid for travel time if the performance is in San Francisco,” said Jason, the marketing vice president of Medtronic, the medical device company. Marcia said no, but added that the wedding was in a difficult location. So Jason spelled out for Marcia how easy the commute was: “The group takes the ferry, the wedding party picks them up at the ferry stop. How is that difficult?” Indeed, although outside San Francisco, Tiburon was closer to the Conservatory than some parts of the city. Result: the agent dropped the travel charge.

Keep asking questions until you find the real decision-maker: the person who can meet your goals. Max Prilutsky needed to change his conference tickets from Friday to Saturday. But Ticketmaster cited its “no refunds/no exchanges” policy. Max, a researcher in Philadelphia, thought: Who’s the real decision-maker here? It’s not Ticketmaster, which is only an agent. The real decision-makers are the organizers of the conference that Max wanted to attend. So he called an organizer and walked him through the details, step-by-step. The agent said, “No problem.” Documentation is key to using standards in negotiation—either in writing or in descriptive detail. Ask for copies of things they claim; provide copies demonstrating proof of your request.

Laura Prosperetti bought a lot of merchandise at Douglas Cosmetics in Philadelphia. But she never seemed to get the free samples her friends got. Perhaps the clerks didn’t realize she was a loyal customer? She thought it unlikely that the small shop would have the computer records to make her case. So she brought in her charge card bills for the previous year.

“I got a big gift,” said Laura, now an attorney at Clearly Gottlieb Steen & Hamilton in her native Rome. She said that several years later, she still has the “big, shiny green purse” once filled with the full-sized samples. The key, she said, was combining a relationship with evidence collaboratively presented, and, of course, deciding to negotiate.

PERSONAL CONNECTIONS

In conjunction with standards, make as many personal connections as you can. Buyers will pay you more; sellers will take less. The personal connection is a kind of psychic payment that substitutes for money in a world in which aggravation seems rampant.

Ruben Munoz wanted a car rental discount from Hertz. Giovanna, the counter agent, said no promotions or discounts were available. Ruben, who had his two-year-old daughter with him, noticed that Giovanna was pregnant. He asked her if she had any other children. She said she had two boys and was hoping to have a girl. They chatted for a bit more, and Ruben told her about bringing up girls.

“Are you a member of any professional group?” she asked him, looking up. “Yes,” Ruben said. “The American Bar Association. But I don’t have my card with me.” Too bad, Giovanna said. She couldn’t give an ABA discount without proof. They chatted a bit more, and Ruben asked if the computer would allow a discount without proof. “She didn’t respond, but typed something in the computer.” Moments later, Ruben had a 30 percent discount for his two-day rental. She had overridden corporate policy.

Carlos Vazquez simply gave Jane, a store manager, his business card and said he was an Xbox fan. He wanted a 10 percent discount. He got a 40 percent discount. “It’s the personal connection,” said Carlos, a Goldman Sachs vice president.

Pick a few places where you like to shop, eat, and otherwise frequent. Then get to know as many people there as you can. It doesn’t take much time to strike up conversations. In my experience, store personnel will be glad to go the extra distance for you if they know you.

Joaquin Garcia was a regular customer at Applebee’s. So when he was organizing a birthday party, he called the maître d’ to arrange for the party there. And he asked for a discount. He was told that Applebee’s does not give large-party discounts. So Joaquin called the restaurant’s marketing director. He noted his frequent business and his desire to host the party. He noted that restaurants often give discounts for large parties. The marketing director gave him a 50 percent discount on appetizers and desserts. Joaquin, now involved in his family’s business in Chile, used linkages, found the decision-maker, and was persistent.

Whenever Daniel Hu asked for a discount for less than a case of wine at his local wine shop, “I was harshly rejected,” he said. So one time Daniel sought out the owner, George, and Jessica, the sommelier. He asked their opinions about various wines. He asked about their wine-buying philosophy. They gave him a detailed tour of the store and were pleased to share their knowledge with him. Few people ever ask, they said.

Daniel noted that he often shopped there, although neither George nor Jessica remembered him. So Daniel mentioned some of the wines he had bought. They were impressed. He asked for recommendations, which they gave him. Daniel said he normally buys six bottles at a time, but he buys often. As a result, they gave him the case discount price, 10 percent. Daniel, now a debt specialist in Beijing, said that sharing information and making a personal connection are negotiation tools he uses daily.

Annie Hindley asked the name of the cashier at an Au Bon Pain at the University of Pennsylvania. The cashier said that students never ask her name, that she feels like a servant at an Ivy League school. Annie, now a financial analyst at Disney, got a $3 drink for $1.

“What if everybody did it?” you ask. Well, they don’t. Besides, if everybody started being nicer to each other, we’d have a better world, as I’ve mentioned. Wouldn’t you like to see that world?

How do you make a connection with the other person? By asking questions and looking for signals. Shikhil Suri wanted free next-day shipping for his repaired laptop. The customer service clerk said no. Shikhil asked the clerk where he was from. “New Delhi,” he said. “So am I,” Shikhil said. They talked about New Delhi. “Does the company ever give free next-day shipping?” Shikhil asked. The clerk answered, “Not normally.” “Not normally” is a signal that most people miss; it means that free next-day shipping is sometimes provided.

Shikhil, now an attorney at Cromwell & Moring in Washington, D.C., asked if the clerk could fit him into the free-shipping category. No problem. In addition, the clerk gave him a $100 discount on the repair.

It is easier to make a people connection if you prepare. Alexander Gitnik’s wife wanted a doula for the birth of their child. Alex researched doulas and found that fees were $500 to $800. A doula he liked wanted $800. He didn’t respond to the fee, but instead peppered her with questions, showing respect and appreciation for her background and profession.

“I realized how important mutual trust and respect are. And she was clearly impressed with my competency,” said Alex, now an investment professional in Boston. The doula accepted $500.

How much do you notice about those around you? That is, the ordinary people who influence, over time, the resources you have and the sum of your experience?

“I tried to get a discount on a book at the Penn bookstore,” said Lital Helman, now a scholar at Columbia Law School. “They don’t give discounts unless it’s already marked. I noticed the salesperson. He seemed lonely and tired. So I started a conversation with him. I asked if he could help me with a discount. He took my new book and sold it to me for less than the price of a used book.” I sometimes get questions about whether this is fair. My view is, the bookstore got a happier customer and a more motivated employee. What if a billion conversations were different? Would that not have a net positive effect on the entire society?

François Hall wanted to join AT&T long distance. They had a set rate. “I had no history with them,” he said. He is from France and speaks with a French accent. He asked the sales rep, “Have you ever been to France?” The rep had, and loved France. They struck up a conversation. Result: hundreds of dollars in annual savings.

“I had little leverage,” said François, director of product management for Motorola in Brazil. “I am one customer in millions. But I made a personal connection and it was worth a lot of money.” Sometimes, the affiliation doesn’t have to be you. It can be someone you know or an organization you belong to. Stephanie Lyras hoped to get a 15 percent student discount on a suit she bought from J. Crew the year before. This was long after the store’s policy allowed.

Stephanie mentioned to the clerk that Wharton Women in Business, to which she belonged, recently had an event at J. Crew. The clerk was interested in WWIB, and the two chatted about it. Stephanie asked the clerk if she would reconsider her request. She did, and Stephanie got the discount. “In-person negotiations make a difference,” Stephanie said. “The connection was essential. Attitude is important, too.” Now, this doesn’t always work. Some vendors refuse to negotiate, frequent customer or not. But you’ll get a discount more often than if you don’t try this.

Stacey Brenner made a people connection nonverbally. She wanted a discount on a $130 pair of shoes at Steve Madden, a stylish shoe store. She walked in wearing a pair of Steve Madden shoes. She talked to the sales clerk about the various shoes on display. She was offered 25 percent off everything in the store. What Stacey did was value everyone in the store with her every step.

“This is dangerous!” said Stacey, now a physician in San Francisco. “I never expected to get 25 percent off of everything.”

It should be evident by now that a combination of tools is often better—and necessary—than relying on one tool alone. Using personal connections as well as standards gives the other party a specific reason to say yes, after they feel good about you.

Rebecca Kolsky wanted to use an expired 20 percent discount certificate to buy yoga shorts from J. Crew online. Rebecca told Sandy, the customer service rep, that she wanted to get the shorts to keep physically fit through yoga. She asked Sandy if she ever did yoga.

Sandy didn’t, but said that she had lost 222 pounds. Rebecca, then a med student, was impressed. They chatted for several minutes about what Sandy did: water aerobics, spinning class, medical considerations. Rebecca asked Sandy her career goals; Sandy wanted to go into pediatric health. Rebecca offered her some advice.

Rebecca then said she had missed the deadline for the 20 percent discount, but knew J. Crew’s goals of customer excellence. It was a no-brainer for Sandy; in fact, she added free shipping. “Connecting with someone, sharing a bit about myself, and asking more about them, made a HUGE difference,” said Rebecca, now a pediatrician in Seattle. “Sandy offered me things that I wasn’t even asking for.” TRADING AND LINKAGES

Rebecca did at least three other things of importance in negotiating with Sandy. She traded information, providing career advice. She linked this negotiation with many others. In other words, Rebecca provided things of value back to Sandy—both implicitly and explicitly.

We saw earlier the power of this tool: using intangibles; linking your negotiation to other needs and interests not necessarily part of the deal. This expands the pie and makes it more likely that the parties can reach an agreement. It’s especially true when there is a disparity over money. Here are some ways this can be applied in the marketplace.

Every time you buy something, make it a larger deal than just the transaction at hand. A repeat customer is a volume customer. You are buying multiple things at different times. Frame it as such.

Ena Hewitt bought a Nikon digital camera from Ritz Camera in Philadelphia. “While Ritz matches any lower price found in Philadelphia, I could not find a lower price,” Ena reported. Otherwise, Ritz does not discount.

Ena told Chad, the manager, that she wanted to learn more about photography and buy more equipment as she got better. What could he do to support this? He gave her, for free, a $200 photography course and a two-year international warranty (instead of the standard one-year U.S. warranty). Ena, who now lives in Pretoria, South Africa, didn’t just get a discount on the things she needed: she got them for free.

Even when you buy just two big items, you should ask for a volume discount. Dean Krishna, one of my law students, decided to frame buying two flat-screen TVs at Best Buy as a “volume discount” situation. First, he found the decision-maker, Justin, who managed the department. Then Dean asked how he got to be department manager.

“He was proud of the fact that he had a master’s degree,” Dean said. “After a few minutes of conversation, I asked him what incentives he could give me to buy two TVs today.” Justin used his employee discount to provide an additional 10 percent discount. Dean is now an Iowa tax attorney.

Fresh from his success with T-Mobile, Charles Chen went to Tiffany’s to get an engagement ring for his fiancée, Arisa. He asked the sales rep for her opinion on several rings. Charles said he hoped this was the first of many purchases from Tiffany’s. He asked for her business card and said he was glad to have a knowledgeable contact there. As a result, he got a 7 percent discount on his ring, worth $770.

Companies will give you discounts in return for longer-term contracts. Pursue this routinely.

Vikas Bansal wanted to enroll his three-year-old daughter, Vani, in a class at The Little Gym. “Who can I talk to about an enrollment discount?” he asked the assistant when he walked in. He was directed to Joseph, the franchise owner. Vikas wanted a discount, but realized it was unfair to ask for one unless he could do something for Joseph. What might that be? It turned out that Joseph had a class that was only 60 percent full. Vikas said he would spread the word to three other families with small children in his condo building. He got a 25 percent discount and two free classes ($40).

You have to try to figure out the pictures in the other person’s head in order to create a vision of the longer-term benefits to the other person. Some years ago, Mark McCourt wanted to buy a 41⁄3-octave padauk wood marimba, a percussion instrument related to the xylophone. The list price was $3,200.

The store owner, Dan, would drop the price only a few percent. Mark wanted to show the store manager that he would be a frequent customer. He did research and found out the wholesale price was about $1,600. So Mark offered just over that. But he also offered to give the store $200 more as a credit against future purchases. The store owner sold the marimba for $1,600, a 50 percent discount from the retail price.

Who benefited most? Hard to tell. After the marimba, Mark bought clarinet lessons and drums for his children at the store, as well as guitar straps and strings and other musical items. His son learned the marimba and became a first-chair percussionist at the state high school competition and later a drum line captain at the University of Arizona. “We still have the marimba,” eight years later, said Mark, a regional vice president for Oracle.

If you just go through the process, you will often be surprised that you can get much more. Stephane Dufour asked the sales manager at a new hotel for pricing on an events room for his Wharton club. Price: more than $1,000. Stephane then asked what was possible if the club promoted the hotel on campus. Price: free.

These tools work for businesses, too. Igor Cerc, mentioned earlier in this chapter in connection with the wedding clock, saved $600,000 for his company by getting a supplier of raw materials to roll back a price increase for six months. He did this by committing to more volume during that period. The vendor’s sales rep was willing to lower the price because the rep’s bonus depended as much on volume as price. And the sales rep was right in the middle of the bonus measurement period. “I looked for the behavior drivers of the other party,” Igor said.

As a business vendor, you can use your ability to deliver volume to help keep customers. Larry Bowskill was faced with a customer prepared to take its business to a competitor with a lower price. Larry contacted other divisions of his company that also sold to this customer, and negotiated a package that, overall, met the competitor’s price. Larry made it a larger deal.

A client complained to Patrick Hennon of Advent Software in San Francisco that the company’s pricing was unfairly high. Patrick dug deeper. He found out that there had been relationship issues in the past, including unkept promises about product performance. “The real issues were not price,” said Patrick, now a health insurance advisor. “It was about trust.” Once Patrick addressed the trust issues, the complaints stopped and sales rose.

In business, people usually care as much or more about job security and career success as they do about raises or bonuses. Dan Streetman, a manager at Amdocs, the telecommunications technology company, was having trouble with a sale. The customer wanted only two of the three products that Dan was selling. The customer didn’t see the value of the third. Dan wanted to sell the third product, which was much more expensive, to complete the suite. And he thought the customer would genuinely benefit in the long term.

In thinking more about the negotiation, Dan used role reversal to put himself in the customer’s shoes. Dan found out that the customer liked the third product a lot. But the customer was nervous that if he bought it, someone else in his company would use it, benefit from it, and look better than he did.

“So we told him that we would recommend him to the company’s CIO [chief information officer] as the project owner,” said Dan, now senior director of business development at C3, LLC, a San Francisco energy research and management company. “We also gave him assurances that the project would be owned by him only if it was a success. If it was a failure, we would take responsibility.” The customer bought the product, and it turned out to be very successful. Dan had found the real problem and a creative solution.

PERCEPTIONS AND RISK

If you can reduce the other party’s perceived risk, you will usually get a better deal. Gene Yoon was trying to hire an investment bank to buy a company for him. The bank wanted a big nonrefundable retainer up front to reduce its risk.

Gene reminded the bank that his group had previously closed two deals with them. He and the bank were “already friends,” so were different from the normal case. The bank signed the engagement letter with no retainer. “We used both relationships and standards,” said Gene, now a private equity director at Goldman Sachs in New York.

Reducing the other party’s perceived risk can be worth millions of dollars. These tools work for businesses, too.

Anytime you confront perception of risk in negotiations, you should immediately think, “Be incremental.” By being more incremental, you lower the perceived risk. This means splitting sales into trial periods, and setting up tests and trials.

CARS

Negotiating to buy or sell a car doesn’t have to be a drag. Many resources are available. Most of you already know the drill. But here are some things in a negotiation context.

First, anyone who doesn’t check the Internet for dealer costs and car values, and use it for negotiation, is likely to be throwing money away. This goes for new and used cars and is necessary preparation. Even my assistant knows about checking the Vehicle Identification Number for the history of an individual used car. Look up “buying a new car” or “buying a used car.” There is a lot of great advice.

Aravind Immaneni, the financial services senior vice president, also excels in personal negotiations (good negotiations are process experts for any subject). Aravind wanted to buy a particular used Lexus model. “Only one such car was available in Richmond,” where he lived, and was priced at $24,500, he said. “This was $2,000 more than I could afford.” So Aravind did his research. On carmax.com, he found the model in Atlanta for $21,200, or $3,300 less. He saw that the Kelly Blue Book value was $23,000. He faxed all of this information to his Richmond dealer. The result? He didn’t even have to make his case in person. The dealer offered the car over the phone for $21,900, a savings of $2,600 for a couple of hours’ effort.

Aravind’s research also found that the manufacturer offered a three-year, 100,000-mile warranty for $1,500, and that the dealer’s cost was about half that. So he suggested that he pay the $21,900 asked by the Richmond dealer, but that the price include the extended warranty at wholesale. Thus, the dealer would match the carmax price ($21,200) and sell the warranty for $700 more. The dealer agreed. “No hassle at all,” he said.

For new cars, find out the promotions being offered to existing customers, the “friends and family” rates, and other sales coming up. Dealers will sometimes tell you about these, especially if you create a vision of a relationship or the possibility of referrals.

Ask for the meaning of every term on the invoice and check it. For example, “dealer prep” may involve only a couple of hours’ work so would not be worth a few hundred dollars. Shipping costs and licensing fees are often inflated. Demo models are often a terrible buy. Assume the other party may lie; check every statement. The interest rate on leases is often inflated. Higher base prices are used on leases and “0% financing.” The information readily available on the Internet is astonishing, and you will eventually wish you had read it beforehand if you haven’t.

Whatever standards you get, it is still about the people first. Make the connection, and try to make the negotiation broader. If you don’t feel comfortable with the salesperson, don’t buy from that person. Ask for someone else. Anytime someone tries to sell you an add-on, ask for its wholesale price, and then check.

Be careful of ploys, such as a buyer criticizing the seller’s car to get a cheaper price. This tactic just devalues the seller and makes them defensive. Use standards instead.

All of these methods also work for dealers in their treatment of buyers. You build trust by disclosing information and using fair standards. If someone makes an extreme offer, ask them, in a nice way, to justify it.

Rafael Rosillo bought a car from Ron’s Used Cars in an “as is” condition, meaning no guarantees. Within a month, the car needed a $700 transmission repair. Rafael went back to Ron, explaining that his family had a really limited budget. He asked Ron to cover half the repair bill.

“I asked Ron if they had ever covered any part of a major repair in an ‘as is’ sale if there was a hidden defect before the car was sold,” Rafael said. “Not usually,” Ron responded. “Not usually” was a signal: it meant “occasionally, under the right circumstances.” Rafael told Ron that he was a Penn Law alumnus and was orienting eighty new students that month. He’d be glad to mention how Ron fixed his used-car problem at 50 percent off. In all, Rafael, now an attorney in New York, used four separate negotiation tools—making a personal connection, being calm, not arguing over who was right, and not asking for too much. The result—Rafael got the $350 he asked for.

It’s another instance of human relations trumping the terms of a contract. The two anecdotes here show how the tools of Getting More can turn an often uncomfortable transaction into an easier one.

Your checklist should also include these resources:

Car rental agencies, banks, and loan companies sell used cars. Auctions are usually dominated by professionals, since you need cash and a mechanic on the spot. The National Highway Safety Administration has a toll-free number where you can check defects or recalls. The Better Business Bureau (BBB) and state Attorney General often list unresolved complaints against dealers. You can use this to try to negotiate additional warranties. Unless you are a car mechanic, it’s foolish to buy a used car without having it checked by such an expert.

When you see something you don’t like, STOP. Take a break. Regroup and start over. No one is forcing you to do this today. Control the process to get more. Finally, one of the smartest things you can do is hire a car sales rep who has left the business (or dealership) as your “consultant” on buying, or even selling, a car. For a few hours’ fee, they can save you thousands. It might not be easy to find such a person. Ask around. You will eventually be rewarded.

CREDIT CARDS

Billions of dollars in extra credit-card interest is paid annually because consumers do not know how to negotiate effectively. Below is a list of things you can do. Do them all, every month, until you are satisfied. Treat it like a part-time job. It will pay as well as one.

Ask for the best rate they offer customers. When do they give that rate? What if you always pay on time? Not counting promotions, credit card interest varies from 4 percent to 23 percent for on-time payers, according to a 2010 study. Key on something the credit card company values. Kenneth Reyes told a Citicard rep, “I’ve been a loyal customer for more than ten years.” He got his interest rate cut from 22 percent to 15 percent, or $500 per year—in a five-minute phone call. American Express promises “world-class service” and “integrity.” Discover offers “the most rewarding relationship consumers and businesses have with a financial services company.” Use these standards with them. Make a human connection. Cleo Zagrean asked Marcy at Citibank where she was from. Marcy said South Dakota. Cleo had visited there recently, and they chatted about it. Marcy gave Cleo 0 percent interest for six months. In a sense, it was a payment for treating her like a person. Ask if any lower interest rates are available for people in your category. Call back and talk to someone else if the rep you speak to doesn’t offer you a lower rate. Ask for the credit card company’s card retention department. John Vang did so with Bank of America, asking, “Can you help me remain a customer of BofA?” He noted he was getting lower interest rates at other banks. BofA promptly reduced his rate by 3 percent. It saved John, a New York public interest attorney, several hundred dollars per year. Read your credit card agreement carefully to ensure they are adhering to their standards. Read the Fair Credit Billing Act and the Fair Credit Reporting Act; you can find them online. Use all of this for negotiation. Almost all credit card companies allow reduced payments if you run into trouble. Become familiar with “how to file a complaint against credit card companies” (or “credit reporting agencies”). Type these phrases or something similar into an Internet search engine. The Office of the Comptroller of the Currency (COC) and the Federal Reserve, which are U.S. agencies, also work on consumer complaints against banks that issue credit cards.

Sometimes you will not know at the start of a negotiation which tool will work best: being persistent, being incremental, making a human connection, or invoking a standard. Try different approaches. Send the credit card companies copies of all complaints you make to agencies, including local Better Business Bureaus, Consumer Affairs departments, the Federal Trade Commission, and, in Britain, the Financial Ombudsman Service.

Of course, you should do all of this incrementally. After each letter, see if they want to negotiate. And, before going through the effort, quote their service standards to them. At first, it will take some effort to collect the information and set up some files and phone numbers. But once you do it, you will be a prepared negotiator who is getting more at the end of the year: both in money and in satisfaction.

For people who work for credit card companies and their bill collection agencies, here is some advice. If you treat consumers fairly and don’t put unreasonable people on the phone, you won’t get as many complaints, more people will pay on time, and maybe even Congress will put less pressure on you. The tools of Getting More will work for you, too!

REAL ESTATE

Buying or selling a home is usually the biggest deal most people ever make. It is another negotiation most people hate. Home buyers and sellers are often afraid they will be hoodwinked. That won’t happen if you use the right negotiation tools.

When Pamela Bates-Christensen filled out her mortgage application, someone at the mortgage company told her the interest rate lock-in period was sixty days. But when she got her approval, the lock-in period specified was only thirty days.

“I had taken notes of all phone calls, personnel, phone numbers, even before there was a problem,” said Pamela, now a senior advisor with the U.S. State Department in Paris. She next got the company’s mission statement, which listed various standards, including the importance of customer service. When the mortgage company supervisor failed to return several phone calls, Pamela documented that: date, time, message left, etc. She continued to log the company’s bad behavior while going up the chain of command at the bank. Within a few days, she got the extra thirty days back.

Do you have to go to these lengths to get what was promised to you? Sometimes, unfortunately, you do. Carry a pen and a notebook with you. If you are nervous about the other side keeping their promises or when the stakes are high, take down details. It may seem excessive, but the first time you need it, you’ll realize it was worth all the trouble.

Real estate commissions for brokers across the country vary from 1 percent to 6 percent. People who negotiate with brokers stand to save thousands of dollars. Above 4 percent is considered excessive by most; many think above 2 percent is excessive. Wouldn’t you rather have those extra funds in your pocket? On the sale of a house for $300,000, a 2 percentage point lower commission is worth $6,000. That’s not chicken feed!

Century 21 offered to sell Jay Chen’s home for a 3 percent commission. He did some research on the Internet and found that ziprealty.com charged only 2 percent. Jay, an equity analyst near Philadelphia, preferred to sell his house through Century 21 because they were local, so more accessible. But he would do so only if they dropped their commission. They did, offering to sell it for a 2.5 percent commission. Savings on a $500,000 house: $2,500. Negotiation time: five minutes. Tool used: standards.

If you are worried that your real estate agent won’t try as hard if you pay less, try being creative. Offer incentives. Let’s say you and your broker have looked at comparable sales and agree your house will sell for about $400,000. So you offer a 2 percent commission for any sale up to $400,000, and 20 percent of everything over $400,000. If the agent sells the house for $450,000, the commission is $8,000 for the first $400,000 and $10,000 for the extra $50,000. The total commission of $18,000 comes to 4 percent overall.

Does the thought of paying the extra money bother you? If so, you have to get out of that mind-set. The extra $40,000 net that you received over $400,000 is found money. Think about meeting your goals, not about winning over someone else.

You can pursue other creative options. One is a flat fee. Another is an hourly fee ($75 to $150 usually), with a cap. Each of these needs performance standards; the agent actually has to sell the house.

The more of a personal connection you make with everyone involved, the more likely you are to meet your goals. Try to meet the other party. Make small talk. Find out if they have intangible needs. Introduce your children to their children. This is also important because if anything goes wrong in the sale, the relationship is a cushion to prevent the deal from tanking.

A participant in one of my courses went to look at a house in San Francisco. The place was jammed with potential buyers. When he got a moment with the owner, instead of talking about price, the buyer asked the owner why he was selling, where he was moving, etc. After about twenty minutes, the seller kicked everyone else out and sold the house to this guy for less than the highest offer.

Why? Because trust was established. A lot of people play games when buying or selling things. Others don’t keep commitments. In this case, the seller felt comfortable that the deal would actually happen with this one buyer, who made the effort to get to know him.

Often an agent won’t let you near the other party. That’s because the agent thinks you will go around them and negate the commission. Ask a reluctant agent if that is their fear. Offer to sign a specific non-circumvention agreement that guarantees the commission if the deal goes through.

Even if an agent refuses to let you meet the other party, keep peppering the agent with questions about them. The more you find out, the more likely a connection will surface, even through a third party. Remember, the difference between success and failure is small.

Many states require disclosure statements by the seller. There can be stiff penalties for incompleteness. After reading the statement carefully, insist on getting an inspector to go through the house. If the seller refuses, be suspicious! Ask them how you can pay a lot of money for something that isn’t inspected. Any price you offer before the inspection should be subject to the inspection. If the inspector finds major issues, you can negotiate the price downward.

This happened in buying our house. The inspector found a lot of non-disclosed issues. The agent said, “Too bad, the price stays.” I said, “What are you going to do with the next buyer?” The agent said she wouldn’t change the disclosure statement. I said that she now had knowledge of defects in the house, and if they weren’t on the disclosure statement, she could lose her license.

It was a hard-bargainer situation, but we used standards and a vision of the future in order to be successful. I did not threaten the agent directly. I said that we were willing buyers right there, why start over again? We bought the house for 19 percent below the asking price in a strong market.

As a seller, this means you don’t want to hide things. Give bad news up front. If the buyers can get past it, you will have a good sale, especially if they trust you. Mention the bad with the good; give them your ideas on how to fix the bad, like a list of local contractors you like. It adds credibility.

FAMILY BUSINESS

No chapter on buying and selling would be complete without looking at family businesses. More than 80 percent of the world’s employees work for businesses owned by families. A third of the U.S. Fortune 500—about 170 firms—are owned by families. Family-owned businesses produce more than 65 percent of the U.S. gross national product and more than that internationally.

These are astonishing numbers. Most business schools and economists don’t deal much with the dynamics of buying and selling involving family-owned businesses. So many business leaders are ill-equipped to deal with most business enterprises. And most of those in family-owned businesses do not deal well with the dynamics involved, either.

I’ve advised on family-owned business deals; I’ve owned my own business; I’ve been a partner in family-owned businesses; I do cases in class on family-owned businesses, and have written cases on family-owned businesses. So I’ve experienced the dynamics firsthand as well as studied them. Here are the dynamics of concern in any negotiation involving these kinds of businesses—that is, most of the world’s businesses.

FAMILY BUSINESS—SOME TRAITS

Pride, emotion, strong egos People fighting old battles Many feel undervalued, unappreciated Centralized decision-making An organizational structure that may not reflect actual power or influence Assets overvalued due to personal effort for decades Less shareholder driven Personal finances may cloud company finances Not so easy to fire people Intangibles are very important Less reliance on outside expertise The “culture” of company is key Competence is not necessarily key for job Clearly, emotion, the enemy of effective negotiations, is much more prevalent in family-owned businesses. Many of those in such businesses take almost everything personally. They feel undervalued. They fight about yesterday. They do not make decisions based on logic. They do a lot of things that do not result in good deals. They have a harder time meeting their own goals. And their goals are often not just about money.

When one deals with a family-owned business, one has to pay extra attention to whether emotion is driving decisions, to whether intangibles must be provided, and to whether emotional payments must be made. Ask yourself to what extent ego might influence price.

That’s true whether you are buying a hand-crafted statue in South America or an entire company in Chicago. It’s true whether I’m selling an idea to three brothers in Atlanta or trying to sell someone’s coffee plantation in Africa. People who are emotional listen less and often get distracted more easily from their goals.

The tools in Getting More will help managers deal effectively with such issues. As with cross-cultural negotiations, it starts with finding and valuing the perceptions of the other party.

Michael Farley, an investment banking partner in the former accounting firm Arthur Andersen, was having a hard time buying an apparel company for a client. “The owner’s expectations were altogether unrealistic,” Michael said.

Little by little, Michael and his group were able to peel the onion. “It was very emotional for him,” said Michael, now a director of a Miami-based real estate acquisition company. “By putting ourselves in his shoes, we found the answer.” They found out that the owner wanted to stay on for three years with various perks. He wanted half a percent equity (worth $2 million) in the company. He wanted use of the company jet, particularly to take him to and from his eight weeks of vacation each year. His employees needed to be able to stay on. In return for these intangibles, Michael was able to buy a company worth more than $400 million for only $42 million in cash and a lot of stock.

One buyer had an even more difficult emotional conflict with the seller of a privately held company. One owner wanted to sell. The other owner didn’t want to sell. When asked why not, the owner who didn’t want to sell said, “I want to die at my desk.” These are the kind of visceral issues for which one must be prepared. To go forward, the buyer created an active and meaningful role for what he called the “die-hard founder.” In return, the buyer got the price of the company lowered. “Emotions were much more important than money or anything else,” said the buyer.

Finally, from the sublime to … Small talk is almost always effective. It makes you more human in the myriad negotiations of your life. And it will get you more.

Josh Alloy went to a deli on Sunday. He wanted the Tuesday special: a turkey hoagie with fries and a drink, half price. No deal. He ordered it anyway—at full price, no complaints. “How about these Phillies?” Josh asked the sandwich maker. Baseball talk ensued. Josh put a $1 tip in the jar. As they chatted, the sandwich and fries grew in size. Then the server gave him the Tuesday deal on Sunday, and a lot of food. “The key was forming a personal connection,” said Josh, now an attorney. To everyone else, it was just a conversation at the deli. To Josh it was a negotiation that resulted in getting more.