How to Use Anchoring to Your Advantage When Negotiating
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Transcript of How to Use Anchoring to Your Advantage When Negotiating
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ANCHORINGHOW TO USE
TO YOUR ADVANTAGE WHEN NEGOTIATING
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Making the first offer in a negotiation acts like an anchor
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Both parties will rely on "the anchor" when
making decisions
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When you have insufficient information about your buyer's willingness to pay - let them go first
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And use these tactics to protect yourself from the worst effects of a buyer's
anchor
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Tactic: Ignore the Anchor1
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When confronted with an aggressive opening position…
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…deflect it and don't respond directly by suggesting you either agree or disagree
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For example: “… I think we may be looking at this contract renewal in very different
ways. Let’s try and find some common ground by discussing…..”
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Tactic: Counter-Anchor2
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You can also counter offer to offset the anchoring effect of the buyer’s first offer
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For example: “Ten percent discount? Actually, we just implemented a five percent price increase on all contract renewals based on our increased costs…”
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Tactic: Separate Leverage from Information3
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When the buyer tells you what they want (information) and why you should accept it (leverage)…
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Focus on how to best differentiate your offering from the
competition
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For example: Buyer: “XYZ Corp has offered the same thing for 20% less.” You: “I am not sure what it is you are asking for...” or “ What commitment have you made to XYZ Corp?”
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Tactic: Clarity4
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Respond to a buyer’s attempt to anchor by asking clarifying questions, rather than counter-anchoring
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Probe for more information regarding the buyer’s position and the motivations behind it
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Develop creative options that you can offer later in the discussions
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Don’t dwell on the buyer’s anchor, and change the
subject to regain control of the negotiation
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Tactic: Reject the Anchor5
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If the buyer’s position is
so extreme
that it’s too far outside your
planned positions…
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Be prepared to reject their opening position
as not even a basis to negotiate
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Back up your position
with one or two reasons…
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…then propose what would be an acceptable
basis to negotiate (Counter-Anchor)
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Preparation and research is
essential to determine
when to make the first offer
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And remember that you must
first understand your buyer’s
willingness to pay.
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