The Power of Investment

by Graham Denton

Herb Cohen, a former trial attorney who styles himself "the world's greatest negotiator," says that in conducting negotiations, the power of investment can be the difference between an ultimatum that works and one that doesn't. What he means is the other side's investment in the negotiated situation-the time, money, or energy that they have already put into it, and that they will perceive as a sacrifice if they pull out now.

In his book You Can Negotiate Anything, Cohen gives a great sales example. Suppose, he says, that as you are about to enter negotiations with a customer, you are told by your boss that the price is not on the table. "You can compromise on anything else, but get this figure." It's a familiar situation to many salespeople. Here's how Cohen advises that you deal with it.

In any negotiation, he says, there are multiple talking points. In using the power of investment, your sales call strategy should be to get the prospect or customer to invest up front-that is, in the early stages of the meeting-by talking first about issues that are more easily resolvable, and leaving the potential sticking points until the end of the call. If price comes up early and it causes "much travail and irritation," ask to defer it. Suggest that you return in a moment to what is obviously a difficulty, and move on to areas where you find yourself in greater agreement, or where you can utilize the compromise that your boss has allowed you.

It doesn't really matter, Cohen implies, what these areas are. You could talk about delivery schedules or financing arrangements or contributions to productivity or bells and whistles. The point is to get the customer involved in the negotiations, to get him or her investing time and energy, while at the same time you're demonstrating, at every step of the way, that two of you are obviously capable of working things out. If you follow this plan, Cohen says, with a little luck when you find yourself near the finish line, the prospective customer will suggest that you compromise on the price. At that point you can say honestly that this is just not possible. And you can say it without coming across as totally inflexible, because you've just spent a considerable amount of your valuable time proving to the customer just how flexible you are.

If the customer breaks off with you at this point, Cohen observes, "he loses his entire time-and-effort investment. He has to begin again with someone else." Because he know that another person may not be as flexible as you are, he's going to be inclined to meet your price.

"Inclined," of course, doesn't mean "happy" or "eager." Cohen's tactic is a good one in many situations. But be wary. When you use the power of investment, you're making the assumption that the customer's price, unlike yours, is negotiable. If it turns out that this is not true, you may have squandered your investment.