Recently I wrote about “anchoring” which is the first offer made in a negotiation. Someone has to start the process and sometimes that means you. The first anchor is frequently called the “opening anchor”. Generally, it is price, but it can be quality, delivery date, or quantity.
It is said that anchors claim or announce value; unfortunately, once an anchor is made you generally are stuck with it. Anchoring should be done after carefully exploring all options.
Sales people will frequently make proposals which will include multiple offers, but more often than not they will present three different offers that vary in price and configuration. An typical example of this would be a sales person presenting a range of personal computers to a buyer:
1. A basic PC with a printer ($1000.00 value).
2. A mid-range PC with a larger hard drive and a service contract ($1500.00 value)
3. A high-end PC with a larger flat panel display and a service contract ($2000.00 value)
The secret desire of the sales person is for the customer to buy the high-end package since it a better value (and more commission), but the mid-range PC is the anticipated selection. The basic PC option is a backup offer in case price is a big issue. The customer in this case is challenged to compare the value at three different prices. In effect, price becomes the pivotal issue which makes the lowest price compelling.
An alternate technique that can work better is to present “multiple equal” offers. In this case, the sales person suggests multiple options that are priced the same or that are similarly priced. The difference between the offers might be negligible to the sales person, but they may look very different to the buyer. This tactic requests the buyer to compare the merits of the different choices, rather than dickering about price. Here is an example:
1. Mid-range PC with a printer and service contract ($1500.00 value)
2. Mid-range PC with a larger hard drive and service contract ($1500.00 value)
3. Mid-range PC with a larger flat panel display and service contract ($1500.00 value)
In this case, the buyer must consider which features or which configuration represents the greatest value. Implicit in this negotiation is that the price is on target and acceptable for the buyer. Given the three options, the buyer might consider a larger flat panel display and service contract to be a much greater value. Value is what the customer perceives, not what the sales person believes.
By giving multiple equal offers, you empower the customer to choose the offer with the most value. By giving them control of the decision, it also reduces their stress in the decision process. Also, by offering three options at a similar price the sales person avoids the price war and keeps the sales amount at the desired price level.
Give it a try and let me know how it works.
John Bradley Jackson
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