Not sure if you do, but I love watching the hit television show, “Pawn Stars”. If you are unfamiliar with the series, it features an owner of a Pawn Shop on the strip in Las Vegas. The main character of the show is a gentleman named Rick Harrison along with his son and a few employees. The premise of the show is that they get people coming into their shop mainly to sell items of value, memorabilia, and in some cases historic significance. A variety of things have made their way into the production from a Grammy Award to a New England Patriots Super Bowl ring. There is never a dull moment on the show. Before someone enters the store, the producers interview them and the seller usually talks a little about the item, what they expect to get for it, and their walk-away price. I chuckle when I hear them say things like. “I won’t take less than $1,000.” Or something to that effect.
In watching the show for some time now, I realized just how bad people are at negotiations. Despite their plans, the sellers go into the process with most capitulating quickly to Rick and his staff. Many seem to leave lots on the table by not having an end game or even knowing what they could obtain on the open market for their items. It seems like the lure of the TV lights takes over and all common sense leaves their bodies. Being in sales, we are called upon to negotiate frequently, so what does that mean for us, and do we act like Rick’s customers and just give it away.
The three main things I believe about the negotiating process is that people are first of all not good at this skill because they are afraid. Secondly, negotiating does not have to be this complex, long-drawn-out process as it is often not. We are somewhat tainted by a version of Labor negotiations we have heard about with words like “marathon sessions” and “Into the Night” attached to them. These may add to our fear that negotiating is this sinister process to be avoided at all costs. Rubbish! And finally, most negotiators break the cardinal rule of the process in giving twice or negotiating against themselves.
Early in my sales career, a wise sort told me, if you do not ask for it then you never get it. I sold a Payroll service at the beginning of my sales career. In the sales process I could but would never ask a customer for a setup fee for the product. It was a discretionary amount, of which I would earn 30%. Not asking for it was guaranteeing that I would receive 30% of nothing. One day I changed and overcame the fear of asking for it. Few if any ever questioned it, let alone negotiated it. And had they, I could have always cut it in half or worst-case scenario eliminated it. There were many fallback positions from which to call upon, but I had conquered my fear of entering a negotiation, I now welcomed it. Additionally, just because we might negotiate does not mean that it will be complex and drawn out. Sure, there may be times when this does occur on large deals that have extenuating circumstances but the vast majority of what we do every day can be dealt with in shorter order by offering options to our customers.
Once upon a time, I remember a very large prospect of mine, we were in negotiations on an agreement. They read my then companies’ terms which stated that they would be paid by a certain date. This was simply unacceptable to them and they wanted to be paid faster. I thought about it for a little, consulted with some internal types, and offered them an option. They could have the accelerated term, but we would have to charge them a nominal fee for it or things could stay the way we had originally presented them. The ask soon went away and they accepted the original offer. Getting what they wanted with the additional cost was less appealing. In fact, what did it do, it revealed they never really needed it in the first place? Now had they pushed hard; we probably would have granted them the concession, but we did not have to with the option offered. Despite my fear that I could lose this deal, I had to get rid of that fear to have a worthy seat at the negotiation table.
If you do tune into “Pawn Stars” you will see that many of the sellers negotiate against themselves. They will tell Rick they have to get $1,000 or whatever their price is. He will always tell them that that is too much and asks them their bottom line. This is a skillful tactic used to make a seller give twice without the buyer revealing their position. Now I know it is a TV show, edited for time and all that but most of the sellers give him another number before he ever commits to a price, thereby hamstringing their position. In my opinion, the correct response to Rick should be. “So, Rick, if it's not worth $1,000 what are you willing to pay for it?” This would change the balance of the negotiation and force a counteroffer, helping them avoid capitulation.
Next time you’re watching the show, don’t be like me, getting angry at the Television. Take stock in what you see and use it to help you avoid the pitfalls of unsuccessful negotiation. And if you’re in Las Vegas say hello to Rick for me, but whatever you do don’t give twice.
Roger McNamara Bio:
Roger is a 25+-year veteran of the Payments Industry, most recently as the Director of Business Development with American Express in the US. He has worked on the largest Acquisition targets for acceptance across multiple industries and across the globe that include: Airlines, Communications, Technology, Cruise Lines, Entertainment, Fractional Jet, Freight, Government, Healthcare, Insurance, Oil & Gas, Residential Rent, Restaurants, QSR’s, Retail, Services, Supermarkets, Travel, Vehicle Sales, B2B and Wholesale. Over that time, he has sold more than $200 Billion worth of Card processing and became an expert in Bankcard Interchange and Discount Rates, how they are calculated and what merchants pay to accept Credit, and how this is dramatically different from what they believe they pay. He is an expert in Merchant Statement analysis and payment processing and the rules and regulations associated with payments and the associations. Roger has also developed the insight for Merchant Services Salesforces and salesforces, in general, to be able to better position their products and gain share, particularly in B2B. Let him show you how you can too. He can be reached at Guide2Interchange@gmail.com