He suddenly interrupted me and asked:
"And how much does it cost for the package?"
I was so nervous. It was the first time I was charging a client for a project at this price. I swallowed my saliva, took a deep brief breath and said with a not so confident voice: "Euuh, Two thousand dollars”.
He immediately responded: "Ok, well I am not going to pay you two thousand" and proceeded to a moment of silence. During this short time (which felt like an eternity), my face started completely decomposing to the idea of starting a negotiation with this experienced business owner.
He added: "I will pay you $3000."
If you want to know the best secrets of negotiating and want to know why this client decided to pay me one thousand dollars more on my first big marketing gig, then keep reading.
If you want to keep losing money on the table every day of your life then just go back to work or browsing Facebook and disregard this blog post.
"You will never make as much money as you do when you are negotiating."
Why don’t they teach us negotiation at school?
Just like selling, negotiation is something we use every single day of our lives. Negotiating is an art, and with a lot of preparation and practice, it can become an extremely valuable skill in life.
Being a great negotiator offers amazing advantages in both your personal and professional life. However, the general public perceives negotiation as something reserved for certain limited circumstances in life like lawyers, the corporate world, politics, sales, etc. But in reality, this is something we use every single day in so many areas of our lives such as business, relationships, parenting, family, friends, and during almost every conversation we have both personally and professionally.
Mastering negotiation is not only learning the skills that pay the most amount of money in the minimum amount of time, it is about being able to live the life you want.
I have read dozens of books, articles and have taken a number of courses on the subject to curate and gather the best tips and techniques that you could apply to your daily boat sales activity.
So without further due, let’s dive in!
Firstly, I would like to share my 2 personal best tips on negotiation:
1) The best way to negotiate is to set yourself up in a situation where you don’t have to negotiate at all.
Let me explain.
It was about 10 years ago. I was a boat broker but had started a small digital company on the side with my friend and business partner Michael Hrustaliov. We wanted to sell brochures, websites, and virtual tours to people in the boating industry.
One day, a client who had listed a brokerage boat with me asked if we could do a project for him. (Website+ virtual tour of his boat for a new charter company he was starting).
It was our first large project. The client was just starting a local boat charter company and asked what we could do for him. We were so thrilled and enthusiastic to serve him so we started enumerating all we wanted to do for him.
The time finally came to sit down and talk about numbers, so he asked me, “How much will it be?” I hesitated and said: "Well John, for a project like this, with everything included, it would be $2000."
He immediately responded: “Well, I am not going to pay you $2000!” and then proceeded to a few seconds of interminable silence.
He then added: "I will pay you $3000."
What in the world! My first big project just got transformed from a 2k project to a 3k.
John was so impressed by our enthusiasm and the amount of work that we wanted to do for him that he decided to pay us 33% more.
You see, the most important element in any negotiation is the people negotiating. Win their heart and it will make your negotiation a breeze by either not wanting to negotiate at all or even better, giving you more than what you want.
Let me now share my second best tip:
2) Sometimes you are just better off avoiding negotiation and actually offering a bit more to your negotiating party to receive the absolute best value.
Here is an example:
A couple of years ago, I hired a copywriter for my business. I was on the phone with him and after asking lots of questions about his service and what he could do for us, I finally asked how much he would charge. He said $750. I said, "Well, I am not going to pay you $750. I will give you $825.00. I want to pay you 10% more.” It only cost me 10% more but the guy worked so hard, I am convinced that he put 50% more effort and attention to detail into his work!
I have done this a few times since then and I am always thrilled by the results it brings.
Would you rather save 10% and be treated like a regular customer or invest an extra 10% and be treated like a king?
So now that I have shared my best 2 tips with you, let's dive in.
Before we start, let’s lay the 5 fundamentals of becoming a great negotiator down:
"You must always be ready to negotiate, but never negotiate without being ready.” Nixon
The easiest money during negotiation can be made by being prepared. The goal of the preparation is to establish your plan of action based on knowing exactly what you want to achieve during your negotiation but also be ready to face all the different outcomes of the other party. Because if you don’t know exactly what you want, you will be forced to compromise which will lead to you not getting what you want.
Gather as much information as possible. The more information you have about the people with whom you are negotiating, the stronger you will be.
Who will you be negotiating with? Do some research on them (I like to use Charlieapp, Rapportive or social media.)
Come up with an ideal outcome AND a minimum outcome. Always be willing and ready to walk away if you don’t achieve your minimum outcome.
- Be confident and enthusiastic about the upcoming negotiation
- Believe in your own worth and the position you’re negotiating
- Practice being confident at all times
- Avoid being intimidated
- Stand your ground, especially when working with someone who is manipulative
- Set a time and place to meet that is favorable to you so you are more in control of the situation
- Practice professionalism at all times – don’t let your emotions get in the way and stay calm
Desperation is easily identified – it's not something you can hide because of the tension and physical symptoms but also strong unconscious signals.
Some people might tell you to visualize and practice affirmative self-talking (affirmations). We all know the importance of having the right attitude and practicing positive thinking. Motivational gurus have for years encouraged us to visualize achieving our goals. However, thinking positively can backfire on you.
Recent research by Doctor Gabriele Oettingen, a psychologist at NYC University, said that 'the better you are at visualizing your goals the less likely you are to achieve them.' Visualization can cause your brain to relax. It thinks the hard work has already been done. As a result, you lose focus and clarity making it much harder to reach your goals. Instead, Oettingen found that mental contrasting works better than positive thinking alone.
So here is the trick- visualize 2 things at once:
1. How great it would be to close that big sale (goals)
2. All the obstacles that stand in the way of achieving those goals
The incredible power of negative thinking is needed to actually prevent epic failure while channeling your good feelings is needed to maximize success.
We all know the old saying: "The more you sweat in practice, the less you bleed in battle.’"
Negotiation will occur daily and should, as a result, be practiced daily. Practice as much as you can- In front of the mirror, with your spouse, kids, coworker, even in your mind while buying a coffee. Next time you go buy coffee, try this line: “Can I have 10% off my regular order?” You will be surprised by how much money you can save every year if you constantly use this line.
4) Listen to the other side
Good negotiators are good listeners and good communicators, not just good talkers. By listening, observing behavior and body language, you can learn things that will help you so much in negotiation. You'll learn more by asking good, open-minded questions than you will by cross-examining the other side. Remember that if you want to be heard, you will have to listen and never assume that the other party is finished with what they are saying.
You can become an effective listener by allowing the other person to do most of the talking. Follow the 70/30 Rule – listen 70 percent of the time, and talk only 30 percent of the time. Encourage the other party to talk by asking lots of open-ended questions – questions that can't be answered with a simple "yes" or "no."
Shut up and listen. This is probably one of the most known sales techniques for one simple reason: it works. You will be surprised at the amount of money that you will make by actually not saying a word and being silent!
Empathy is seeing through the eyes of another, listening with the ears of another, and feeling with the heart of another.
By showing some empathy, there's a better chance of working towards a better outcome for you. Think of the negotiation as a problem that both sides are working to solve together.
Don't take the issues or the other person's behavior personally. All too often negotiations fail because one or both of the parties get sidetracked by personal issues unrelated to the deal at hand. Successful negotiators focus on solving the problem, which is: 'How can we conclude an agreement that works for both parties?'
Boat Broker Negotiation checklist:
1) Never go against the client
Client keeps asking for another discount.
Common mistake: “Sorry, I cannot go lower than this.“ or “Sorry, I cannot give you a discount.”
Solution: Put a monetary value on the discount you give them by saying this instead: “I don’t have any more money to give you.” (They will perceive the discount as real money and it will help you in your negotiation).
2) Client is buying a boat over budget
Common mistake: Trying to justify the full price of the boat.
Solution: Selling on the difference and not the total value. This is one of the most common mistakes salespeople make. Let’s assume your client has a $100k budget for a boat. You have the model of their dreams but you are actually over their budget as it is selling for $120k. Do not sell the boat at $120k, but sell it on the difference: the $20k. You can even divide the difference into 10 upcoming years if you know they will keep their boat for the next 10 years.
So instead of selling a $120k boat today, sell them on $2k a year for the next 10 years or $5 a day.
3) Always finish in writing
It is important to always get your agreement in writing and signed.
Do not end a negotiation verbally.
Things will get messy and you will have to start the negotiation over again.
4) Never use the word FREE
Avoid using the word free as it totally devalues the effort you are making in your negotiation. Something “free” is automatically perceived as no value added for the customer.
Receive a free set of lifejackets.
Receive $360 worth of life jackets at no cost to you.
5) Use hundreds instead of thousands
If your product is worth three thousand five hundred, say 'thirty five hundred', it will look cheaper. Now on the opposite side if you give a $1500 discount say 'one thousand five hundred' and not fifteen hundred.
6) Never talk about the “price” in front of a client
Instead, use the term “value”. Never give the price alone by itself.
Bracket your “value” between 2 benefits. Jean-Marie Brücker, International Sales trainer, calls it the Macaron Technique. Referring to the sandwich-like French macaron pastry. It goes something like this:
“Madame, this timepiece comes from our finest Switzerland workshop and it has a value of twenty seven thousand dollars. If you invest in it, your children are sure to enjoy it for generations to come.”
7) Don’t be vague when providing pricing
When asked to give a quote or how much it costs, never give a range like “Between $5000.00 to $6000.00”. Be confident in your pricing and back it up with some strong value-added phrases.
For example, quoting $5645.50. It will get you closer to sealing the deal and will be perceived as more honest by your client. If you say between $3000 to $4000, any dollar added after $3000.00 will be perceived as extra in your pocket in the eyes of your client.
8) Don’t oversell
The longer you talk after the other person has said yes (either verbally or in their mind), the more there is a chance that doubt will set in their mind. They will question themselves while you speak, they will run back over the deal in their head, looking for weaknesses. Don’t push too hard or you could lose all that you have worked for.
9) Take your time
Never respond too quickly to an offer. Pausing or even suspending negotiations can convey that you’re not desperate to close the deal and that you have other options. Silence can force a surprising amount of pressure on the other party as well (there is a correlation between the response time and the desperation to sell).
10) Don't give anything away without getting something in return
Whenever you voluntarily give something up or away, try to always get something back in return. We all know the classic "I'll do this if you do that." If you don't try and get something in return, the other party will see it as an invitation to ask for more concessions. If you give them something for nothing in return, they feel entitled to that concession and will not be happy until they get even more out of you.
11) Always be ready to collect a deposit
When a client tells you they can send you money, give them your Fedex number so they can express post a check to your account. You can even send a pick up driver to their house or office to pick it up. You have to make it super convenient and easy for them to pay the deposit.
12) Acknowledge their offer
Taking time to reformulate their offer or objection will always help you in the negotiation process. It will put you in a position of power and give you more confidence and clarity to achieve your desired outcome.
"So you are asking for this, this and this, correct?"
You can also ask a question. "Would you take $120k for it?"
"Are you offering me $120k for it?"
Negotiations are not about cheating someone. If the other party feels taken advantage of, they may not follow through or do business with you again in the future. Enter every discussion with an optimistic attitude, but never be manipulative. You will close more deals when you aim for a double win, than if you try to screw people over.
14) Replace ‘Can’ by ‘Lets’
Using the word ‘can’ makes you appear inferior but also in a position of conflict.
Replace “Can you do better than this?” by “Let’s do better than this.”
“Can you lower the price?” by “Let’s lower the price.”
“Let's find a solution that benefits us both.”
15) Work on the relationship
The only difference between a contract and a contact is the “R". And the R stands for relationship. We saw it in my first example. Because the guy really liked us he didn’t negotiate and paid us $1000 more.
16) Use decimals
Putting decimals at the end of your price will help you gain power during negotiation. We always tend to round prices off to the closest figure. An item priced at $3554.50 might be rounded to $3600 when an item priced at $3650 might be rounded to $3600.
17) Use the proper words
Professor Dr. Roman Trötschel at the Leuphana University of Lüneburg in Germany, conducted eight studies involving a total of 650 subjects and consistently found that when people constructed sentences where the focus was placed on what the other party stood to gain as opposed to what they stood to lose, they achieved more favorable results.
“Give me the boat for $19,800.”
"I will give you $19,800 for the boat."
18) Avoid using 'Best'
When it comes to discussing price, the word ‘lowest’ is better than the word ‘best’. The ‘best’ price in the mind of the supplier will not likely be the ‘best’ price in your mind, right? Say, "Let’s give me your lower price” instead of "Can you give me your best price?" (best is for them vs lowest is for both)
19) Do not reveal your cards
If you use any sales or negotiation techniques, never reveal your game.
"A tactic known is a tactic blown." General Mac Arthur
20) Do not freak out about objections, just ask the clients to repeat
If the client says, “Oh it is too much, I can’t afford it”, calmly say, “What do you mean by you cannot afford it?” and listen. You will be surprised by the multiple ways you can handle price objection if you take the time to hear your clients and go deeper into their feelings and position.
I separated this blog post into 2 sections. I will post the second part in 2 weeks with 30+ more negotiation tips to help you sell more boats.