Anchoring

I’ll start off part 2 reiterating the point that every negotiation is different.  As a point of reference I will refer to what I call The Wheel of Negotiation as a guide to help establish what type of negotiation you are involved in. Many of the tips I am including in this series “5 Tips etc…” will vary to a degree depending on the type of negotiation. You can read about each style or type of negotiation independently if you wish by visiting the Negotiation Basics page.

 

Anchoring – A simple way to describe anchoring is to use a sport’s analogy.  Anchoring is akin to home field advantage.  Anchoring is the process of shifting the focus of the discussion to center around your position.  By doing so, you statistically increase the likelihood of a favorable outcome (that means more for you).  Anchoring begins to shift the expectations of the other party as they start to change their thought process from “how do I get what I want” to “how can I get them to move”.  You want the other party focused on your position at all times.  Referring to the diagram, in scenario #2 you spend all of the discussion talking about their position.  You can hear it in the words of your questions and statements, “How’d you get that figure”, “That’s not good enough”, “You’re outside of the ballpark”, and my personal favorite “Your gonna have do better than that”.  The more you discuss their position (even when you are disparaging it), the more credibility it gains as the negotiation becomes anchored around it.  You are now effectively trying to pull them off of their position in an attempt to move them closer to your position.  Instead try discussing YOUR position.  In scenario #1, you continually shift the focus back to your proposal or next proposal.  Don’t waste your breath discussing their figures, instead get them to dismiss and discuss your position.  Ultimately you want them to try and pull you from your position instead of vice-versa.  In doing so, you will ultimately increase the statistical probability that the settlement point is closer to your position.  Here are some effective techniques:

  • Always open first! (see post on Opening)
  • Watch the words you choose when responding to their proposals, here are several examples of how to change the phrasing effectively:
  • Use “how close can you get to my proposal?” instead of, “you are gonna have to do better than that”.  It’s a subtle change, but very effective way to anchor back to your proposal.
  • Use counter proposals instead of overt rejections, “Here’s what I’m able to do…..”
  • Make your concession conditional, “provided you are able to accept delivery by the end of the week, I can agree to lower the price by 5%”
  • Ask questions about what in your proposal is unacceptable, “I hear you unable to agree to that, which parameters are  specifically causing you difficulty?”.  By default the implication is the other parameters are somewhat acceptable or at least closer.
  • Get them to discuss your proposal even if only to tell you how god awful it is.

Now, that being said, anchoring DOES NOT mean that you refuse to to move and continually restate your initial position.  Quite the contrary, you are going to keep moving in order to create momentum utilizing the “law of reciprocity”.  I will discuss how to plan and execute your moves in the the next post.  A final word about opening positions and anchoring, remember the goal of your opening position and anchoring is to create a subtle shift in the mindset of the other party so they begin to consider how they are going to move you from your position.  Don’t let your anchoring weigh you down and deadlock the deal.  You will still need to provide movement in order to gain agreement.  Tell me what you think by posting a comment, or if you have questions on the application post a question.  Next up is planning your moves.

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