Sales Negotiation: Open With Our Best Shot

Shifting a little, uncomfortably, on the conference room chair, the Relationship Manager swallowed.

“And, $7,500,” the RM continued, “is the loan fee.”

Looking up from the bank’s commitment letter on the table before him, the borrower’s CEO paused, then said, lightly, “…OK.”

As in, “OK, that’s fine,” or “OK, no worries, mate,” or “OK, I’ll have the chocolate.”

The RM stared across the table.

“What’s next, then,” asked the CEO?

Note to self: If our “asking  price” or “opening position” elicits no more than an airy “OK, what’s next?”, we’ve probably left things on the table, money chief among them. The question is: Do we care?

In any negotiation, we should set priorities about what’s important to us and identify negotiating points that are “important to the other side” and “less important to us” on which we’re prepared to concede to “grease the skids,” to create movement or build some good will. The rub comes on high-impact issues, important to both sides.

In a current banking relationship, or in discussions with a prospective new client, we can choose an opening position on any issue in the following range:negotiation article

When we’re negotiating fees or other conditions from the position of “concerned about losing a deal or a relationship,” we’re tempted to open in the range box 2 (“borrower is comfortable”) or the low end of box 3 (“borrower is just slightly uncomfortable”).

“Our offer is reasonable,” we think, “and they’re a good customer and we want to be a good partner; I don’t want to rock the boat,”  i.e. we negotiate against ourselves.

We should, instead, open with conditions that are most favorable to us in the range of box 4, “borrower is definitely uncomfortable.”  If we encounter no resistance, we have given up what we might have had if we’d asked for more.

If a borrower thinks our box 4 position is too high, they can (and should) say, “That’s too much,” and counter-offer.  Give-and-take follows and, as long as both parties end up in a position above their BATNA (best alternative to a negotiated agreement), they reach agreement.

So, said another way: Throwing the long bomb may not win the game, but neither does continually falling on the ball so as not to offend anybody.

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