Stress and aggression trigger the brain’s threat system
So many negotiations are unsatisfactory because we dive into money and numbers before uncovering the needs or hot buttons of the other side. Negotiation then becomes a battle of wills to see who can squeeze the most from the other side. This makes negotiation a stressful, negative experience, triggering the brain’s threat system. This can undermine long-term trusting business relationships, creating a win-lose mentality rather than win-win.
What’s important to the other party?
Before negotiations begin in earnest, it is essential to find out what is important to the other side. It is also the time for you to demonstrate real listening and ask questions to show that you fully understand their needs. This will help maintain rapport and activate the brain’s reward circuitry, getting negotiations off to a healthy start. Think for a moment about the last time you chose a builder to work on your house. You may have told them that price was critical, but in actual fact, there would have been many other factors that influenced your choice, for example, their reputation, trustworthiness, guarantees, quality of workmanship, personal recommendations etc. Similarly when you choose a web designer or marketing expert, price is in the mix, but probably not at the top.
Before negotiations begin in earnest, it is essential to find out what is important to the other side.
This is backed up by research by Neil Rackham showing that business-to-business purchasing decisions are based firstly on the vendor relationship, then vendor stability, followed by responsiveness. Price is only fourth on the list. However when we are the seller, and the other side tells us that price is the key driver of the purchasing decision, it is all too easy for us to accept the statement at face value and offer concessions out of fear of losing the deal.
Find out their interest vs position
Asking questions and listening provides a much gentler and less hostile start to the negotiation. It helps to reduce the fear factor on both sides. It gives both parties a clear understanding of each other’s needs and helps to uncover the interests behind the position as demonstrated by the following story:
Two sisters were fighting over an orange. After a lot of arguing, they took half each. One sister ate her half and threw away the peel. The other grated her half of the peel to make marmalade and threw away the flesh.
How many opportunities for a win-win deal are you throwing away through insufficient or too narrow discussion? Next time you negotiate, make sure you spend a significant proportion of the time discussing the interests at play, rather than haggling over your position.
So what are tradeables?
Let’s take an airline as an example. In years gone by you bought a ticket and that was that. Today, we have to consider how much hold luggage, hand baggage, meals, how flexible the ticket is, penalties for changes, speedy boarding, allocated seats, airmiles payment and redemption, loyalty points and the list goes on. Airlines were forced to change their pricing strategy because of market pressures introduced by the low-cost flyers. Yet many businesses I talk to today stick to inflexible pricing strategies and then moan that their customers think they are too expensive.
In the case of a one-off purchase, for example buying a car, the relationship element is less important than when we are dealing with a customer, supplier or third party over time. In this case the relationship is just as important as the negotiation outcome itself. What’s at stake is future business, reputation and of course the ease of working together after the negotiation. The key error that most of us make is not spending enough time identifying our tradeables. As a result the relationship can suffer.
What neuroscience says…
Imagine you’re selling website design services, your tradeables might be licence fee, training, maintenance, guarantees, hosting, periodic upgrades, support etc.
Being clear about exactly what you’re selling puts you in a much stronger position if the customer demands a discount. Without tradeables you will either have to agree to a discount which will directly impact your bottom line, or you will have to say no, which risks spoiling the relationship and could even blow the deal.
Tradeables allow you to provide options for the other party. And neuroscience demonstrates that options create a sense of control which triggers the brain’s reward system. Whereas being told sorry, that’s our bottom line triggers our threat system and impacts the relationship negatively. In essence what you’re trying to achieve in any negotiation is to find something that will cost you little but is of significant value to them, and vice versa. Thus win-win!
All too often people believe they have no option other than to yield to price concessions - with a certain amount of resentment or resignation. However, careful consideration of your tradeables and pricing options provides a route to better outcomes and better relationships.
Give them options
We were recently negotiating with a large corporate to roll-out a global training programme. Their procurement department was trying to squeeze us on price. We knew if we started yielding, that would be the thin end of the wedge! So instead, we offered them a series of pre-prepared tradeables – online follow-up, certification, refresher webinars. So rather than saying no to a discount (which would have triggered a threat response), tradeables enabled us to demonstrate flexibility and a willingness to work with them to arrive at a mutually beneficial agreement.
All too often people believe they have no option other than to yield to price concessions – with a certain amount of resentment or resignation. However, careful consideration of your tradeables and pricing options provides a route to better outcomes and better relationships.
The more you tell, the less you sell!
The human brain is designed to solve problems. Imagine in our hunter/gatherer days solving the problem: how do I find food during a harsh winter. This would clearly give us an evolutionary advantage. Our experience of pleasure from solving problems is the brain’s way of rewarding survival-based behaviours.
This explains why sales people are so keen to pitch their products at the slightest whiff of a customer problem – solving problems is highly satisfying because it triggers the brain’s dopamine reward system. The trouble is, it is the sales person that experiences the pleasure, not the customer. In fact it could have an adverse effect on the customer who will likely push back (perhaps for no other reason than it wasn’t their idea). It is this subconscious effect that gives rise to what is called a sales objection.
If pitching doesn’t work, what else can the eager sales person do?
The answer is to help the customer come up with the solution themselves. When someone solves their own problem they are rewarded with a release of dopamine in their brain, a neurotransmitter that creates positive emotions and satisfaction. It follows that if you are able to create positive feelings in your clients they are more likely to want to deal with you.
So instead of pitching, the best sales people devise a carefully crafted series of questions that allow clients to come up with the solution themselves. Good questioning will lead the customer to your offering. Research by Huthwaite, amongst others, shows that this approach is far more successful, and results in 65% fewer objections than traditional selling.
Solving your client’s problems may make you feel good, but helping them solve their own problems makes them feel good.
Ask more questions; speak less!
One of the hardest things for a sales person is to bite their tongue – to suppress their evolutionary instinct to offer their solution. All the research shows that pitching early in the sales cycle has little impact on the customer, whereas inhibiting your urges until the prospect has reached their own conclusion has a high impact on the customer’s likelihood to buy. It’s no wonder that the most successful sales people think of selling as ‘joint problem solving’. They listen more, ask more questions, and speak less!
Solving your client’s problems may make you feel good, but helping them solve their own problems makes them feel good. If you can make them feel good, they will naturally want to put their business with you!
Discover the latest insights from neuroscience into what makes people buy
Is it natural talent, or could you too play guitar like Jimi Hendrix?
As far back as I can remember, I fancied myself as a rock star! So when I turned 13, I persuaded my reluctant parents to buy me an electric guitar. I was convinced I’d be the next Jimi Hendrix; I thought I’d be a natural. I wouldn’t need to practice much – in fact, if I had to work at it, that would mean that I wasn’t naturally talented.
As you can probably guess, I never became a rock legend. I gave up the guitar, dismayed at my lack of progress. My rock and roll dreams were consigned to the dustbin of history!
Nature or nurture?
Most of us have been brought up to believe that talent is innate, for example Mozart was born musical, Tiger Woods was born a golfer, Einstein a physicist, etc. We believe that our abilities are governed by our genes – our DNA is our destiny! Prof Carol Dweck of Stanford University labels this type of thinking a fixed mindset – either you’ve got talent or you haven’t. In my case, I clearly fell short when it came to the guitar, so there was no point trying to improve as I’d never make the grade.
By contrast, a growth mindset understands that talent and ability grow with practice, and innate ability is overrated. Research shows that a growth mindset goes hand-in-hand with high performance and happier, healthier individuals.
Managers with a growth mindset get double the productivity from their staff compared with fixed mindset managers
Dweck’s research is backed up by neuroscience findings that show that the brain actually grows and changes structure as we learn new skills. This was first discovered in 1999 at University College, London, where MRI brain scans of London taxi drivers showed that their hippocampus (the part of the brain used for spatial navigation) was much larger than in ordinary people. The longer they’d been taxi drivers, the larger their hippocampus.
There are also many well documented cases of stroke victims who have made almost complete recoveries because the brain rewires itself to reallocate the processing from the ‘dead’ part of the brain.
In the workplace, it’s been estimated that managers with a growth mindset get double the productivity from their staff compared with fixed mindset managers.
As for me, I decided to give the guitar a second chance at the age of 40. This time my mindset was definitely growth. Armed with a good teacher, the right kind of practice and mental attitude, I managed to achieve a very competent standard. Okay, I’m no Jimi Hendrix, but I am now achieving my rock and roll ambitions… and loving every minute I’m performing with my band on stage.
A word of caution – there is a continuum between a fixed and growth mindset. People can also have a growth mindset in general, but a fixed mindset in specific areas.