So if you’ve been watching the hit series on Netflix, House of Cards, then the title of this post gives you a clear indication of the caliber of a negotiator I’m taking about. If you’re not familiar with the series, Frank Underwood, played by Kevin Spacey, is the main character of the drama and is a walking manifestation of the best selling book 48 Laws of Power by Robert Greene.
Now let me clearly state I AM NOT advising you or endorsing any type of evil acts of trickery in becoming a successful negotiator. But there are some simple principles of negotiation that need to be understood if you are going to be a successful negotiator in business, or in life in general.
Frank Underwood always remains calm in a negotiation. Not because he’s a laid back guy but because he goes into every negotiation, big or small, with a plan. Frank understands that negotiation is an art and a science. It’s not all psychology; your charm and character play a major role as well.
So what does this have to do with business?
It doesn’t matter what business you are in; online, offline, retail, wholesale, eBooks or cattle for that matter, you will have to negotiate at some point. How do you do it effectively while remaining refined and in control? This post is going to be your practical guide to negotiating in business like a pro. Get what you want, be in complete control while keeping everyone happy. First, let’s define what exactly we mean by a negotiation, and then how to do so like a seasoned veteran like Frank.
What is a Negotiation?
By definition, a negotiation is a dialogue between two or more people or parties, intended to reach an understanding. In business, the stakes are often high. You’re not haggling at a flea market here. You are trying to reach an agreement that is perceived as fair to both parties. After all, you’ll be negotiating with people vital to the success of your business- your clients. Notice I said “perceived as fair.” Negotiation in business is all about perception. Perceptions are formed in the negotiation process. In essence a negotiation is a form of sales. The party you are negotiating with forms their perception of what they are receiving in the exchange solely based on what you tell them. So making sure you fully convey your value is vital. More about that later.
How To Act When Negotiating
When negotiating in business, you need to remember that the client has come to you because they want something that you offer. Automatically, that gives you the upper hand. You are the one in demand. Yes, you need clients and their money but how much you need them is a complete mystery to them. Master salesperson and good friend, Chris Johnson, taught me a critical rule: If the other party gets a whiff of any scent of desperation on you, you have lost before you have even begun. This is not to mean you treat your customers with arrogance and haughty aloofness. Always remain humble yet confident. Never cocky. You have to believe that what you are offering is worth far more than what the client will be paying. Even if you are selling a product that has a market price, the experience of buying it from you is more valuable than getting it elsewhere. Price is just one factor in the negotiation process. And for many, it’s not the most important. Remember that even before you enter the negotiation process with your clients.
Your Guide to Negotiating in Business Like Frank Underwood
Rule #1: Focus on the first 5 minutes
According to a study by The Journal of Applied Sciences, the first 5 minutes of a negotiation can predict the outcome. In this first 5 minutes people decide what direction they will take in the negotiation. More audibles are called here than in a New York Jets game. How you greet them, in person with a handshake, or on an email with your opening line, sets the tone. Make sure you smile and are likeable. If you’re doing business online, make sure your communication is positive and friendly. It’s a lot harder to say no to someone you like. Get right into why you think working together is a good idea and how their work/ business/ idea is a good one. Yes, people like praise but they love it when they feel someone understands them. A feeling of connection makes your value skyrocket. Frank is always on his ‘A Game’ the first 5 minutes of a negotiation. He only resorts to other options if he hasn’t won them over and is in complete control by the first 5 minutes.
Rule #2: Appearances still matter
Yes we are in an age of 20 year-old CEO’s, with their definition of dressing for a meeting being a hooded sweatshirts and track pants. But that’s a huge minority. If you’re negotiating in person make sure you look like you’re worth more than what you are negotiating over. Your get up for a baseball game with friends isn’t appropriate. Clean, ironed clothing that you would wear on a night out with your better half is however. This is a job interview of sorts. Looking sharp gives you an advantage from the get go. If business is being done online or over email, make sure your avatar is respectful and respectable. If you are not a kitten wearing Ray Bans then you may want to consider putting a photo that is more becoming. Yes, Frank works in the most professionally dressed profession on the planet but he’s always looking sharp when he enters a negotiation. Sleeves never rolled up, shoes always shined, not a crease in sight.
Rule #3: State what they are ACTUALLY getting
The value you offer is not immediately obvious. You know your business very well so you think what you offer and what value you give is obvious. Know that it is not. It’s your job to make sure that your customer knows even well before you discuss money, what they will actually be getting when working with you. It is not only the product or service you will be delivering but the manner in which they will receive it. Your business may be more conveniently located, you may offer outstanding service, you may have a better return policy, or simply genuinely care more about your customer. Whatever it is, the value you offer needs be completely clear so that when price is mentioned, your price is not only justified, it’s a steal. Frank, never undersells what he is offering- just the opposite. He paints the picture of the other party’s new reality after they agree on the deal. How they will appear amongst their peers and how it will make them look. He makes sure he focuses on benefits rather than features.
Rule #4: State your price. Don’t ask for permission.
Now that you have conveyed the value you are offering, you must state what you are worth. When quoting your price be cautious of how you deliver it. This is applicable in person or over email.
How NOT to do it:
We would have to charge $10,000 for a website like yours. This is because we want to do the very best job on your project. How does that sound? So why is this unfavorable? Firstly, “we would have to” sounds like you are doing something that is painful for them when in fact you are giving them a value-laden bargain. Secondly, associating your fee with the quality of work, “best work” in this case, implies that your work has a quality to price scale. It implies you can do the job for less but it just won’t be as polished. Lastly, ending with “how does that sound?” puts you in a position of weakness. Why would you need to ask for the client’s permission to give them amazing value at an incredible price?
How to do it:
Given all the details we discussed, our fee is $10,000. We are excited to begin work on your project. Once a deposit is paid we can schedule to begin work this week. Frank does nothing weak. His tone of voice is firm yet friendly. Yes, he has the advantage of having a South Carolina accent but you can smile just as widely as he does.
Rule #5: Know when to stop talking
After you state your price, STOP TALKING. Don’t begin a ramble of justifications and reminders as this makes you look needy and unsure of yourself. Allow your client to think and ask questions. This keeps you in a powerful position. If there is a gap of silence, don’t feel the need to fill it with any kind of chatter. The ball is in their court so if anyone is obliged to speak, it’s them. Keep calm, positive and wait. Frank always uses awkward moments of silence to his advantage; forcing the other party to break it with agreeing on the deal. He never feels forced to talk. Everything is accounted for.
Rule #6: Create Urgency
If there is no pressure to close the deal, there is no reason for the client to take action soon. Make sure you are honest with them and let them know, as shown in the example of stating your price, the deal is time-sensitive and it may not be available if they don’t act quickly. That’s why every retail store’s sale has a deadline. You may want to do the same. Jay Abraham teaches this point brilliantly in his book Getting Everything You Can Out of All You’ve Got. I highly recommend it. Frank always makes the other party feel like his offer is a once-in-a-life time opportunity and if not acted upon quickly, their moment of glory will be gone. Missed opportunities are painful; Frank knows this and uses it to his advantage when negotiating.
Rule #7: Create Scarcity
Make sure your clients know you get booked up quickly or your products get sold out very fast without looking like a shyster. Again, just be honest: “I know as of today I’m available the last 2 weeks of February to work on this project. But this may change tomorrow.” Frank always makes sure the other party understands that not everyone has the opportunity to work with him and those who do never regret it. Even his enemies know it.
Rule #8: Allow room to make them feel like they got a deal.
Some people just don’t feel like they got a deal unless they get some sort of discount. They want to go home feeling they got a bargain. This is why it’s wise to leave a 5-10% buffer in your price. You don’t want to give it to them as soon as you see some resistance. If they don’t immediately accept your offer, you may want to just ask them what their budget is. Their ‘budget’ will be the price they want with the ‘bargain discount’. This will be a bit lower than your pre-buffered price but meeting somewhere at your buffered price will be the sweet spot. Frank always makes the other party feel like they are in control and that the decision they make is theirs. The reality is he is the one that sets the options; so no mater what the other party chooses, he wins.
Remember, just because it’s business and big stakes may be involved, it doesn’t need to be stressful. Knowing that you have a plan puts you way ahead of the pack. You can now go into your next negotiation with a new set of skills and the confidence of a seasoned veteran like Frank Underwood.
Follow up Reading
Your negotiation training doesn’t end here. Here are a few books you should pay serious attention to.
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