فصل 09

CHAPTER 9

BARGAIN HARD

A few years ago I fell in love with a red Toyota 4Runner. Actually not just “red,” but “Salsa Red Pearl.” Kind of a smoldering red that seemed to glow at night. How sexy is that? I just had to have it; getting one became my obsession.

I searched the dealers in metropolitan Washington, D.C., and I quickly realized that I wasn’t the only one obsessed with getting that truck: there weren’t any in that color in the entire area, none at all, save at one dealer.

You know how they tell you not to shop for groceries when you’re hungry? Well, I was hungry. Very hungry. Actually, I was in love. . . . I sat down, centered myself, and strategized. This lot was my only shot. I had to make it count I drove to the dealer on a sunny Friday afternoon. I sat down across from the salesman, a nice enough guy named Stan, and told him how gorgeous the vehicle was.

He offered me the usual smile—he had me, he thought—and mentioned the sticker price on “that beautiful vehicle”: $36,000.

I gave him an understanding nod and pursed my lips. The key to beginning a haggle is to rattle the other guy ever so gently. You do it in the nicest way possible. If I could thread that needle, I had a good chance at getting my price.

“I can pay $30,000,” I said. “And I can pay it up front, all cash. I’ll write a check today for the full amount. I’m sorry, I’m afraid I just can’t pay any more.” His smile flickered a little bit at the edges, as if it were losing focus. But he tightened it down and shook his head.

“I’m sure you can understand we can’t do that. The sticker price is $36,000, after all.”

“How am I supposed to do that?” I asked deferentially.

“I’m sure,” he said, then paused as if he wasn’t sure what he’d meant to say. “I’m sure we can figure something out with financing the $36,000.”

“It’s a beautiful truck. Really amazing. I can’t tell you how much I’d love to have it. It’s worth more than what I’m offering. I’m sorry, this is really embarrassing. I just can’t do that price.” He stared at me in silence, a little befuddled now. Then he stood and went into the back for what seemed like an eternity. He was gone so long that I remember saying to myself, “Damn! I should have come in lower! They’re going to come all the way down.” Any response that’s not an outright rejection of your offer means you have the edge.

He returned and told me like it was Christmas that his boss had okayed a new price: $34,000.

“Wow, your offer is very generous and this is the car of my dreams,” I said. “I really wish I could do that. I really do. This is so embarrassing. I simply can’t.”

He dropped into silence and I didn’t take the bait. I let the silence linger. And then with a sigh he trudged off again.

He returned after another eternity.

“You win,” he said. “My manager okayed $32,500.”

He pushed a paper across the desk that even said “YOU WIN” in big letters. The words were even surrounded with smiley faces.

“I am so grateful. You’ve been very generous, and I can’t thank you enough. The truck is no doubt worth more than my price,” I said. “I’m sorry, I just can’t do that.” Up he stood again. No smile now. Still befuddled. After a few seconds, he walked back to his manager and I leaned back. I could taste victory. A minute later—no eternity this time—he returned and sat.

“We can do that,” he said.

Two days later, I drove off in my Salsa Red Pearl Toyota 4Runner—for $30,000.

God I love that truck. Still drive it today.

Most negotiations hit that inevitable point where the slightly loose and informal interplay between two people turns to confrontation and the proverbial “brass tacks.” You know the moment: you’ve mirrored and labeled your way to a degree of rapport; an accusation audit has cleared any lingering mental or emotional obstacles, and you’ve identified and summarized the interests and positions at stake, eliciting a “That’s right,” and . . . Now it’s time to bargain.

Here it is: the clash for cash, an uneasy dance of offers and counters that send most people into a cold sweat. If you count yourself among that majority, regarding the inevitable moment as nothing more than a necessary evil, there’s a good chance you regularly get your clock cleaned by those who have learned to embrace it.

No part of a negotiation induces more anxiety and unfocused aggression than bargaining, which is why it’s the part that is more often fumbled and mishandled than any other. It’s simply not a comfortable dynamic for most people. Even when we have the best-laid plans, a lot of us wimp out when we get to the moment of exchanging prices.

In this chapter, I’m going to explain the tactics that make up the bargaining process, and look at how psychological dynamics determine which tactics should be used and how they should be implemented.

Now, bargaining is not rocket science, but it’s not simple intuition or mathematics, either. To bargain well, you need to shed your assumptions about the haggling process and learn to recognize the subtle psychological strategies that play vital roles at the bargaining table. Skilled bargainers see more than just opening offers, counteroffers, and closing moves. They see the psychological currents that run below the surface.

Once you’ve learned to identify these currents, you’ll be able to “read” bargaining situations more accurately and confidently answer the tactical questions that dog even the best negotiators.

You’ll be ready for the “bare-knuckle bargaining.” And they’ll never see it coming.

WHAT TYPE ARE YOU?

A few years ago I was on my boat with one of my employees, a great guy named Keenon; I was supposed to be giving him a pep talk and performance review.

“When I think of what we do, I describe it as ‘uncovering the riptide,’” I said.

“Uncovering the riptide,” Keenon said.

“Yes, the idea is that we—you and I and everyone here—have the skills to identify the psychological forces that are pulling us away from shore and use them to get somewhere more productive.” “Somewhere more productive,” Keenon said.

“Exactly,” I said. “To a place where we can . . .”

We had talked for about forty-five minutes when my son Brandon, who runs operations for The Black Swan Group, broke out laughing.

“I can’t take it anymore! Don’t you see? Really, Dad, don’t you see?”

I blinked. Did I see what? I asked him.

“All Keenon is doing is mirroring you. And he’s been doing it for almost an hour.”

“Oh,” I said, my face going red as Keenon began to laugh.

He was totally right. Keenon had been playing with me the entire time, using the psychological tool that works most effectively with assertive guys like me: the mirror.

Your personal negotiation style—and that of your counterpart—is formed through childhood, schooling, family, culture, and a million other factors; by recognizing it you can identify your negotiating strengths and weaknesses (and those of your counterpart) and adjust your mindset and strategies accordingly.

Negotiation style is a crucial variable in bargaining. If you don’t know what instinct will tell you or the other side to do in various circumstances, you’ll have massive trouble gaming out effective strategies and tactics. You and your counterpart have habits of mind and behavior, and once you identify them you can leverage them in a strategic manner.

Just like Keenon did.

There’s an entire library unto itself of research into the archetypes and behavioral profiles of all the possible people you’re bound to meet at the negotiating table. It’s flat-out overwhelming, so much so that it loses its utility. Over the last few years, in an effort primarily led by my son Brandon, we’ve consolidated and simplified all that research, cross-referencing it with our experiences in the field and the case studies of our business school students, and found that people fall into three broad categories. Some people are Accommodators; others—like me—are basically Assertive; and the rest are data-loving Analysts.

Hollywood negotiation scenes suggest that an Assertive style is required for effective bargaining, but each of the styles can be effective. And to truly be effective you need elements from all three.

A study of American lawyer-negotiators1 found that 65 percent of attorneys from two major U.S. cities used a cooperative style while only 24 percent were truly assertive. And when these lawyers were graded for effectiveness, more than 75 percent of the effective group came from the cooperative type; only 12 percent were Assertive. So if you’re not Assertive, don’t despair. Blunt assertion is actually counterproductive most of the time.

And remember, your personal negotiating style is not a straitjacket. No one is exclusively one style. Most of us have the capacity to throttle up our nondominant styles should the situation call for it. But there is one basic truth about a successful bargaining style: To be good, you have to learn to be yourself at the bargaining table. To be great you have to add to your strengths, not replace them.

Here’s a quick guide to classifying the type of negotiator you’re facing and the tactics that will be most fitting for you.

ANALYST

Analysts are methodical and diligent. They are not in a big rush. Instead, they believe that as long as they are working toward the best result in a thorough and systematic way, time is of little consequence. Their self-image is linked to minimizing mistakes. Their motto: As much time as it takes to get it right.

Classic analysts prefer to work on their own and rarely deviate from their goals. They rarely show emotion, and they often use what is very close to the FM DJ Voice I talked about in Chapter 3, slow and measured with a downward inflection. However, Analysts often speak in a way that is distant and cold instead of soothing. This puts people off without them knowing it and actually limits them from putting their counterpart at ease and opening them up.

Analysts pride themselves on not missing any details in their extensive preparation. They will research for two weeks to get data they might have gotten in fifteen minutes at the negotiating table, just to keep from being surprised. Analysts hate surprises.

They are reserved problem solvers, and information aggregators, and are hypersensitive to reciprocity. They will give you a piece, but if they don’t get a piece in return within a certain period of time, they lose trust and will disengage. This can often seem to come out of nowhere, but remember, since they like working on things alone the fact that they are talking to you at all is, from their perspective, a concession. They will often view concessions by their counterpart as a new piece of information to be taken back and evaluated. Don’t expect immediate counterproposals from them.

People like this are skeptical by nature. So asking too many questions to start is a bad idea, because they’re not going to want to answer until they understand all the implications. With them, it’s vital to be prepared. Use clear data to drive your reason; don’t ad-lib; use data comparisons to disagree and focus on the facts; warn them of issues early; and avoid surprises.

Silence to them is an opportunity to think. They’re not mad at you and they’re not trying to give you a chance to talk more. If you feel they don’t see things the way you do, give them a chance to think first.

Apologies have little value to them since they see the negotiation and their relationship with you as a person largely as separate things. They respond fairly well in the moment to labels. They are not quick to answer calibrated questions, or closed-ended questions when the answer is “Yes.” They may need a few days to respond.

If you’re an analyst you should be worried about cutting yourself off from an essential source of data, your counterpart. The single biggest thing you can do is to smile when you speak. People will be more forthcoming with information to you as a result. Smiling can also become a habit that makes it easy for you to mask any moments you’ve been caught off guard.

ACCOMMODATOR

The most important thing to this type of negotiator is the time spent building the relationship. Accommodators think as long as there is a free-flowing continuous exchange of information time is being well spent. As long as they’re communicating, they’re happy. Their goal is to be on great terms with their counterpart. They love the win-win.

Of the three types, they are most likely to build great rapport without actually accomplishing anything.

Accommodators want to remain friends with their counterpart even if they can’t reach an agreement. They are very easy to talk to, extremely friendly, and have pleasant voices. They will yield a concession to appease or acquiesce and hope the other side reciprocates.

If your counterparts are sociable, peace-seeking, optimistic, distractible, and poor time managers, they’re probably Accommodators.

If they’re your counterpart, be sociable and friendly. Listen to them talk about their ideas and use calibrated questions focused specifically on implementation to nudge them along and find ways to translate their talk into action. Due to their tendency to be the first to activate the reciprocity cycle, they may have agreed to give you something they can’t actually deliver.

Their approach to preparation can be lacking as they are much more focused on the person behind the table. They want to get to know you. They have a tremendous passion for the spirit of negotiation and what it takes not only to manage emotions but also to satisfy them.

While it is very easy to disagree with an Accommodator, because they want nothing more that to hear what you have to say, uncovering their objections can be difficult. They will have identified potential problem areas beforehand and will leave those areas unaddressed out of fear of the conflict they may cause.

If you have identified yourself as an Accommodator, stick to your ability to be very likable, but do not sacrifice your objections. Not only do the other two types need to hear your point of view; if you are dealing with another Accommodator they will welcome it. Also be conscious of excess chitchat: the other two types have no use for it, and if you’re sitting across the table from someone like yourself you will be prone to interactions where nothing gets done.

ASSERTIVE

The Assertive type believes time is money; every wasted minute is a wasted dollar. Their self-image is linked to how many things they can get accomplished in a period of time. For them, getting the solution perfect isn’t as important as getting it done.

Assertives are fiery people who love winning above all else, often at the expense of others. Their colleagues and counterparts never question where they stand because they are always direct and candid. They have an aggressive communication style and they don’t worry about future interactions. Their view of business relationships is based on respect, nothing more and nothing less.

Most of all, the Assertive wants to be heard. And not only do they want to be heard, but they don’t actually have the ability to listen to you until they know that you’ve heard them. They focus on their own goals rather than people. And they tell rather than ask.

When you’re dealing with Assertive types, it’s best to focus on what they have to say, because once they are convinced you understand them, then and only then will they listen for your point of view.

To an Assertive, every silence is an opportunity to speak more. Mirrors are a wonderful tool with this type. So are calibrated questions, labels, and summaries. The most important thing to get from an Assertive will be a “that’s right” that may come in the form of a “that’s it exactly” or “you hit it on the head.” When it comes to reciprocity, this type is of the “give an inch/take a mile” mentality. They will have figured they deserve whatever you have given them so they will be oblivious to expectations of owing something in return. They will actually simply be looking for the opportunity to receive more. If they have given some kind of concession, they are surely counting the seconds until they get something in return.

If you are an Assertive, be particularly conscious of your tone. You will not intend to be overly harsh but you will often come off that way. Intentionally soften your tone and work to make it more pleasant. Use calibrated questions and labels with your counterpart since that will also make you more approachable and increase the chances for collaboration.

We’ve seen how each of these groups views the importance of time differently (time = preparation; time = relationship; time = money). They also have completely different interpretations of silence.

I’m definitely an Assertive, and at a conference this Accommodator type told me that he blew up a deal. I thought, What did you do, scream at the other guy and leave? Because that’s me blowing up a deal.

But it turned out that he went silent; for an Accommodator type, silence is anger.

For Analysts, though, silence means they want to think. And Assertive types interpret your silence as either you don’t have anything to say or you want them to talk. I’m one, so I know: the only time I’m silent is when I’ve run out of things to say.

The funny thing is when these cross over. When an Analyst pauses to think, their Accommodator counterpart gets nervous and an Assertive one starts talking, thereby annoying the Analyst, who thinks to herself, Every time I try to think you take that as an opportunity to talk some more. Won’t you ever shut up?

Before we move on I want to talk about why people often fail to identify their counterpart’s style.

The greatest obstacle to accurately identifying someone else’s style is what I call the “I am normal” paradox. That is, our hypothesis that the world should look to others as it looks to us. After all, who wouldn’t make that assumption?

But while innocent and understandable, thinking you’re normal is one of the most damaging assumptions in negotiations. With it, we unconsciously project our own style on the other side. But with three types of negotiators in the world, there’s a 66 percent chance your counterpart has a different style than yours. A different “normal.” A CEO once told me he expected nine of ten negotiations to fail. This CEO was likely projecting his beliefs onto the other side. In reality, he probably only matched with someone like-minded one of ten times. If he understood that his counterpart was different from him, he would most surely have increased his success rate.

From the way they prepare to the way they engage in dialogue, the three types negotiate differently. So before you can even think about bargaining effectively, you have to understand your counterpart’s “normal.” You have to identify their type by opening yourself to their difference. Because when it comes to negotiating, the Golden Rule is wrong.

The Black Swan rule is don’t treat others the way you want to be treated; treat them the way they need to be treated.

(I’ve got a complementary PDF available that will help you identify your type and that of those around you. Please visit http://info .blackswanltd.com/3-types.)

TAKING A PUNCH

Negotiation academics like to treat bargaining as a rational process devoid of emotion. They talk about the ZOPA—or Zone of Possible Agreement—which is where the seller’s and buyer’s zones cross. Say Tony wants to sell his car and won’t take less than $5,000 and Samantha wants to buy but won’t pay more than $6,000. The ZOPA runs from $5,000 to $6,000. Some deals have ZOPAs and some don’t. It’s all very rational.

Or so they’d have you think.

You need to disabuse yourself of that notion. In a real bargaining session, kick-ass negotiators don’t use ZOPA. Experienced negotiators often lead with a ridiculous offer, an extreme anchor. And if you’re not prepared to handle it, you’ll lose your moorings and immediately go to your maximum. It’s human nature. Like the great ear-biting pugilist Mike Tyson once said, “Everybody has a plan until they get punched in the mouth.” As a well-prepared negotiator who seeks information and gathers it relentlessly, you’re actually going to want the other guy to name a price first, because you want to see his hand. You’re going to welcome the extreme anchor. But extreme anchoring is powerful and you’re human: your emotions may well up. If they do there are ways to weather the storm without bidding against yourself or responding with anger. Once you learn these tactics, you’ll be prepared to withstand the hit and counter with panache.

First, deflect the punch in a way that opens up your counterpart. Successful negotiators often say “No” in one of the many ways we’ve talked about (“How am I supposed to accept that?”) or deflect the anchor with questions like “What are we trying to accomplish here?” Responses like these are great ways to refocus your counterpart when you feel you’re being pulled into the compromise trap.

You can also respond to a punch-in-the-face anchor by simply pivoting to terms. What I mean by this is that when you feel you’re being dragged into a haggle you can detour the conversation to the nonmonetary issues that make any final price work.

You can do this directly by saying, in an encouraging tone of voice, “Let’s put price off to the side for a moment and talk about what would make this a good deal.” Or you could go at it more obliquely by asking, “What else would you be able to offer to make that a good price for me?” And if the other side pushes you to go first, wriggle from his grip. Instead of naming a price, allude to an incredibly high number that someone else might charge. Once when a hospital chain wanted me to name a price first, I said, “Well, if you go to Harvard Business School, they’re going to charge you $2,500 a day per student.” No matter what happens, the point here is to sponge up information from your counterpart. Letting your counterpart anchor first will give you a tremendous feel for him. All you need to learn is how to take the first punch.

One of my Georgetown MBA students, a guy named Farouq, showed how not to fold after being punched when he went to hit up the MBA dean for funds to hold a big alumni event in Dubai. It was a desperate situation, because he needed $600 and she was his last stop.

At the meeting, Farouq told the dean about how excited the students were about the trip and how beneficial it would be for the Georgetown MBA brand in the region.

Before he could even finish, the dean jumped in.

“Sounds like a great trip you guys are planning,” she said. “But money is tight and I could authorize no more than $300.”

Farouq hadn’t expected the dean to go so quickly. But things don’t always go according to plan.

“That is a very generous offer given your budget limits, but I am not sure how that would help us achieve a great reception for the alums in the region,” Farouq said, acknowledging her limits but saying no without using the word. Then he dropped an extreme anchor. “I have a very high amount in my head: $1,000 is what we need.” As expected, the extreme anchor quickly knocked the dean off her limit.

“That is severely out of my range and I am sure I can’t authorize that. However, I will give you $500.”

Farouq was half-tempted to fold—being $100 short wasn’t make-or-break—but he remembered the curse of aiming low. He decided to push forward.

The $500 got him closer to the goal but not quite there, he said; $850 would work.

The dean replied by saying that she was already giving more than what she wanted and $500 was reasonable. At this point, if Farouq had been less prepared he would have given up, but he was ready for the punches.

“I think your offer is very reasonable and I understand your restrictions, but I need more money to put on a great show for the school,” he said. “How about $775?”

The dean smiled, and Farouq knew he had her.

“You seem to have a specific number in your head that you are trying to get to,” she said. “Just tell it to me.”

At that point Farouq was happy to give her his number as he felt she was sincere.

“I need $737.50 to make this work and you are my last stop,” he said.

She laughed.

The dean then praised him for knowing what he wanted and said she’d check her budget. Two days later, Farouq got an email saying her office would put in $750.

PUNCHING BACK: USING ASSERTION WITHOUT GETTING USED BY IT

When a negotiation is far from resolution and going nowhere fast, you need to shake things up and get your counterpart out of their rigid mindset. In times like this, strong moves can be enormously effective tools. Sometimes a situation simply calls for you to be the aggressor and punch the other side in the face.

That said, if you are basically a nice person, it will be a real stretch to hit the other guy like Mike Tyson. You can’t be what you’re not. As the Danish folk saying goes, “You bake with the flour you have.” But anyone can learn a few tools.

Here are effective ways to assert smartly:

REAL ANGER, THREATS WITHOUT ANGER, AND STRATEGIC UMBRAGE

Marwan Sinaceur of INSEAD and Stanford University’s Larissa Tiedens found that expressions of anger increase a negotiator’s advantage and final take.2 Anger shows passion and conviction that can help sway the other side to accept less. However, by heightening your counterpart’s sensitivity to danger and fear, your anger reduces the resources they have for other cognitive activity, setting them up to make bad concessions that will likely lead to implementation problems, thus reducing your gains.

Also beware: researchers have also found that disingenuous expressions of unfelt anger—you know, faking it—backfire, leading to intractable demands and destroying trust. For anger to be effective, it has to be real, the key for it is to be under control because anger also reduces our cognitive ability.

And so when someone puts out a ridiculous offer, one that really pisses you off, take a deep breath, allow little anger, and channel it—at the proposal, not the person—and say, “I don’t see how that would ever work.” Such well-timed offense-taking—known as “strategic umbrage”—can wake your counterpart to the problem. In studies by Columbia University academics Daniel Ames and Abbie Wazlawek, people on the receiving end of strategic umbrage were more likely to rate themselves as overassertive, even when the counterpart didn’t think so.3 The real lesson here is being aware of how this might be used on you. Please don’t allow yourself to fall victim to “strategic umbrage.” Threats delivered without anger but with “poise”—that is, confidence and self-control—are great tools. Saying, “I’m sorry that just doesn’t work for me,” with poise, works.

“WHY” QUESTIONS

Back in Chapter 7, I talked about the problems with “Why?” Across our planet and around the universe, “Why?” makes people defensive.

As an experiment, the next time your boss wants something done ask him or her “Why?” and watch what happens. Then try it with a peer, a subordinate, and a friend. Observe their reactions and tell me if you don’t find some level of defensiveness across the spectrum. Don’t do this too much, though, or you’ll lose your job and all your friends.

The only time I say, “Why did you do that?” in a negotiation is when I want to knock someone back. It’s an iffy technique, though, and I wouldn’t advocate it.

There is, however, another way to use “Why?” effectively. The idea is to employ the defensiveness the question triggers to get your counterpart to defend your position.

I know it sounds weird, but it works. The basic format goes like this: When you want to flip a dubious counterpart to your side, ask them, “Why would you do that?” but in a way that the “that” favors you. Let me explain. If you are working to lure a client away from a competitor, you might say, “Why would you ever do business with me? Why would you ever change from your existing supplier? They’re great!” In these questions, the “Why?” coaxes your counterpart into working for you.

“I” MESSAGES

Using the first-person singular pronoun is another great way to set a boundary without escalating into confrontation.

When you say, “I’m sorry, that doesn’t work for me,” the word “I” strategically focuses your counterpart’s attention onto you long enough for you to make a point.

The traditional “I” message is to use “I” to hit the pause button and step out of a bad dynamic. When you want to counteract unproductive statements from your counterpart, you can say, “I feel __ when you __ because ___,” and that demands a time-out from the other person.

But be careful with the big “I”: You have to be mindful not to use a tone that is aggressive or creates an argument. It’s got to be cool and level.

NO NEEDINESS: HAVING THE READY-TO-WALK MINDSET

We’ve said previously that no deal is better than a bad deal. If you feel you can’t say “No” then you’ve taken yourself hostage.

Once you’re clear on what your bottom line is, you have to be willing to walk away. Never be needy for a deal.

Before we move on, I want to emphasize how important it is to maintain a collaborative relationship even when you’re setting boundaries. Your response must always be expressed in the form of strong, yet empathic, limit-setting boundaries—that is, tough love—not as hatred or violence. Anger and other strong emotions can on rare occasions be effective. But only as calculated acts, never a personal attack. In any bare-knuckle bargaining session, the most vital principle to keep in mind is never to look at your counterpart as an enemy.

The person across the table is never the problem. The unsolved issue is. So focus on the issue. This is one of the most basic tactics for avoiding emotional escalations. Our culture demonizes people in movies and politics, which creates the mentality that if we only got rid of the person then everything would be okay. But this dynamic is toxic to any negotiation.

Punching back is a last resort. Before you go there, I always suggest an attempt at de-escalating the situation. Suggest a time-out. When your counterparts step back and take a breath, they’ll no longer feel that they are hostage to a bad situation. They’ll regain a sense of agency and power. And they’ll appreciate you for that.

Think of punching back and boundary-setting tactics as a flattened S-curve: you’ve accelerated up the slope of a negotiation and hit a plateau that requires you to temporarily stop any progress, escalate or de-escalate the issue acting as the obstacle, and eventually bring the relationship back to a state of rapport and get back on the slope. Taking a positive, constructive approach to conflict involves understanding that the bond is fundamental to any resolution. Never create an enemy.

ACKERMAN BARGAINING

I’ve spent a lot of time talking about the psychological judo that I’ve made my stock in trade: the calibrated questions, the mirrors, the tools for knocking my counterpart off his game and getting him to bid against himself.

But negotiation still comes down to determining who gets which slice of the pie, and from time to time you’re going to be forced into some real bare-knuckle bargaining with a hard-ass haggler.

I faced bare-knuckle bargaining all the time in the hostage world. I haggled with a lot of guys who stuck to their game plan and were used to getting their way. “Pay or we’ll kill,” they’d say, and they meant it. You had to have your skills drum-tight to negotiate them down. You need tools.

Back at FBI negotiation training, I learned the haggling system that I use to this day. And I swear by it.

I call the system the Ackerman model because it came from this guy Mike Ackerman, an ex-CIA type who founded a kidnap-for-ransom consulting company based out of Miami. On many kidnappings we’d constantly be paired with “Ackerman guys”—never Mike himself—who helped design the haggle.

After I retired from the FBI, I finally met Mike on a trip to Miami. When I told him I also used the system for business negotiations, he laughed and said he’d run the system by Howard Raiffa, a legendary Harvard negotiation guy, and Howard had said it would work in any situation. So I felt pretty justified by that.

The Ackerman model is an offer-counteroffer method, at least on the surface. But it is a very effective system for beating the usual lackluster bargaining dynamic, which has the predictable result of meeting in the middle.

The systematized and easy-to-remember process has only four steps:

1. Set your target price (your goal).

2. Set your first offer at 65 percent of your target price.

3. Calculate three raises of decreasing increments (to 85, 95, and 100 percent).

4. Use lots of empathy and different ways of saying “No” to get the other side to counter before you increase your offer.

5. When calculating the final amount, use precise, nonround numbers like, say, $37,893 rather than $38,000. It gives the number credibility and weight.

6. On your final number, throw in a nonmonetary item (that they probably don’t want) to show you’re at your limit.

The genius of this system is that it incorporates the psychological tactics we’ve discussed—reciprocity, extreme anchors, loss aversion, and so on—without you needing to think about them.

If you’ll bear with me for a moment, I’ll go over the steps so you see what I mean.

First, the original offer of 65 percent of your target price will set an extreme anchor, a big slap in the face that might bring your counterpart right to their price limit. The shock of an extreme anchor will induce a fight-or-flight reaction in all but the most experienced negotiators, limiting their cognitive abilities and pushing them into rash action.

Now look at the progressive offer increases to 85, 95, and 100 percent of the target price. You’re going to drop these in sparingly: after the counterpart has made another offer on their end, and after you’ve thrown out a few calibrated questions to see if you can bait them into bidding against themselves.

When you make these offers, they work on various levels. First, they play on the norm of reciprocity; they inspire your counterpart to make a concession, too. Just like people are more likely to send Christmas cards to people who first send cards to them, they are more likely to make bargaining concessions to those who have made compromises in their direction.

Second, the diminishing size of the increases—notice that they decrease by half each time—convinces your counterpart that he’s squeezing you to the point of breaking. By the time they get to the last one, they’ll feel that they’ve really gotten every last drop.

This really juices their self-esteem. Researchers have found that people getting concessions often feel better about the bargaining process than those who are given a single firm, “fair” offer. In fact, they feel better even when they end up paying more—or receiving less—than they otherwise might.

Finally, the power of nonround numbers bears reiterating.

Back in Haiti, I used to use the Ackerman system ferociously. Over eighteen months we got two or three kidnappings a week, so from experience, we knew the market prices were $15,000 to $75,000 per victim. Because I was a hard-ass, I made it my goal to get in under $5,000 in every kidnapping that I ran.

One really stands out, the first one I mentioned in this book. I went through the Ackerman process, knocking them off their game with an extreme anchor, hitting them with calibrated questions, and slowly gave progressively smaller concessions. Finally, I dropped the weird number that closed the deal. I’ll never forget the head of the Miami FBI office calling my colleague the next day and saying, “Voss got this guy out for $4,751? How does $1 make a difference?” They were howling with laughter, and they had a point. That $1 is ridiculous. But it works on our human nature. Notice that you can’t buy anything for $2, but you can buy a million things for $1.99. How does a cent change anything? It doesn’t. But it makes a difference every time. We just like $1.99 more than $2.00 even if we know it’s a trick.

NEGOTIATING A RENT CUT AFTER RECEIVING NOTICE OF AN INCREASE

Eight months after a Georgetown MBA student of mine named Mishary signed a rental contract for $1,850/month, he got some unwelcome news: his landlord informed him that if he wanted to re-up, it would be $2,100/month for ten months, or $2,000/month for a year.

Mishary loved the place and didn’t think he’d find a better one, but the price was already high and he couldn’t afford more.

Taking to heart our class slogan, “You fall to your highest level of preparation,” he dove into the real estate listings and found that prices for comparable apartments were $1,800–$1,950/month, but none of them were in as good a building. He then examined his own finances and figured the rent he wanted to pay was $1,830.

He requested a sit-down with his rental agent.

This was going to be tough.

At their meeting, Mishary laid out his situation. His experience in the building had been really positive, he said. And, he pointed out, he always paid on time. It would be sad for him to leave, he said, and sad for the landlord to lose a good tenant. The agent nodded.

“Totally in agreement,” he said. “That’s why I think it will benefit both of us to agree on renewing the lease.”

Here Mishary pulled out his research: buildings around the neighborhood were offering “much” lower prices, he said. “Even though your building is better in terms of location and services, how am I supposed to pay $200 extra?” The negotiation was on.

The agent went silent for a few moments and then said, “You make a good point, but this is still a good price. And as you noted, we can charge a premium.”

Mishary then dropped an extreme anchor.

“I fully understand, you do have a better location and amenities. But I’m sorry, I just can’t,” he said. “Would $1,730 a month for a year lease sound fair to you?”

The agent laughed and when he finished said there was no way to accept that number, because it was way below market price.

Instead of getting pulled into a haggle, Mishary smartly pivoted to calibrated questions.

“Okay, so please help me understand: how do you price lease renewals?”

The agent didn’t say anything shocking—merely that they used factors like area prices and supply-and-demand—but that gave Mishary the opening to argue that his leaving would open the landlord to the risk of having an unrented apartment and the cost of repainting. One month unrented would be a $2,000 loss, he said.

Then he made another offer. Now, you’re probably shaking your head that he’s making two offers without receiving one in return. And you’re right; normally that’s verboten. But you have to be able to improvise. If you feel in control of a negotiation, you can do two or three moves at a time. Don’t let the rules ruin the flow.

“Let me try and move along with you: how about $1,790 for 12 months?”

The agent paused.

“Sir, I understand your concerns, and what you said makes sense,” he said. “Your number, though, is very low. However, give me time to think this out and we can meet at another time. How does that sound?” Remember, any response that is not an outright rejection means you have the edge.

Five days later the two met again.

“I ran the numbers, and believe me this is a good deal,” the agent started. “I am able to offer you $1,950 a month for a year.”

Mishary knew he’d won. The agent just needed a little push. So he praised the agent and said no without saying, “No.” And notice how he brilliantly mislabels in order to get the guy to open up?

“That is generous of you, but how am I supposed to accept it when I can move a few blocks away and stay for $1,800? A hundred and fifty dollars a month means a lot to me. You know I am a student. I don’t know, it seems like you would rather run the risk of keeping the place unrented.” “It’s not that,” the agent answered. “But I can’t give you a number lower than the market.”

Mishary made a dramatic pause, as if the agent was extracting every cent he had.

“Then I tell you what, I initially went up from $1,730 to $1,790,” he said, sighing. “I will bring it up to $1,810. And I think this works well for both.”

The agent shook his head.

“This is still lower than the market, sir. And I cannot do that.”

Mishary then prepared to give the last of his Ackerman offers. He went silent for a while and then asked the agent for a pen and paper. Then he started doing fake calculations to seem like he was really pushing himself.

Finally, he looked up at the agent and said, “I did some numbers, and the maximum I can afford is $1,829.”

The agent bobbed his head from side to side, as if getting his mind around the offer. At last, he spoke.

“Wow. $1,829,” he said. “You seem very precise. You must be an accountant. [Mishary was not.] Listen, I value you wanting to renew with us and for that I think we can make this work for a twelve-month lease.” Ka-ching! Notice this brilliant combination of decreasing Ackerman offers, nonround numbers, deep research, smart labeling, and saying no without saying “No”? That’s what gets you a rent discount when a landlord wanted to raise his monthly take.

KEY LESSONS

When push comes to shove—and it will—you’re going to find yourself sitting across the table from a bare-knuckle negotiator. After you’ve finished all the psychologically nuanced stuff—the labeling and mirroring and calibrating—you are going to have to hash out the “brass tacks.” For most of us, that ain’t fun.

Top negotiators know, however, that conflict is often the path to great deals. And the best find ways to actually have fun engaging in it. Conflict brings out truth, creativity, and resolution. So the next time you find yourself face-to-face with a bare-knuckle bargainer, remember the lessons in this chapter.

? Identify your counterpart’s negotiating style. Once you know whether they are Accommodator, Assertive, or Analyst, you’ll know the correct way to approach them.

? Prepare, prepare, prepare. When the pressure is on, you don’t rise to the occasion; you fall to your highest level of preparation. So design an ambitious but legitimate goal and then game out the labels, calibrated questions, and responses you’ll use to get there. That way, once you’re at the bargaining table, you won’t have to wing it.

? Get ready to take a punch. Kick-ass negotiators usually lead with an extreme anchor to knock you off your game. If you’re not ready, you’ll flee to your maximum without a fight. So prepare your dodging tactics to avoid getting sucked into the compromise trap.

? Set boundaries, and learn to take a punch or punch back, without anger. The guy across the table is not the problem; the situation is.

? Prepare an Ackerman plan. Before you head into the weeds of bargaining, you’ll need a plan of extreme anchor, calibrated questions, and well-defined offers. Remember: 65, 85, 95, 100 percent. Decreasing raises and ending on nonround numbers will get your counterpart to believe that he’s squeezing you for all you’re worth when you’re really getting to the number you want.