Buying a New Car

Ahhh… buying a new car. I’ve attached a video I recorded some 6 years ago on this very subject. Nothing has changed, except I no longer maintain which I reference several times in the video. You are holding an auction in which new car dealerships compete for your business. Assuming you’ve already decided the vehicle you’re interested in, here’s a quick summary of the process.

  1. Locate 8 or 9 dealers in your area (within 50 miles or so)
  2. Contact each dealer, ask if they have your vehicle in stock or can get one
  3. Tell them you are buying the car this week (very important), and the lowest price gets the business
  4. Tell them you’re contacting several dealers in the area to solicit bids
  5. Give them the format to submit their bid. I always have them include at least the MSRP and the sale price. The MSRP helps you compare the cars between dealers, it should be identical if it’s the same make, model, and option package. I will take bids over the phone or email.
  6. Tell them you will get back to them within 24 hours with a decision (very important)
  7. After you’ve received all the bids (you only need 2 or 3 bids for this to work), start calling them back
  8. START WITH THE HIGHEST BID FIRST!! (most important step) You want to give them a chance to improve their offer before you make a decision
  9. I say, “You were close, I want to do all my service at your location, if you can match $XX,XXX you will get the deal”. Please note, I always subtract an additional $1,000 from the lowest current offer (i.e. if I have 3 bids $50k, $49k, $48k I will set the target at $47k). Call all bidders highest to lowest, say exactly the same thing. Even the lowest bidder gets a chance to improve their offer.
  10. Pick the best offer, and tell them to prepare the paperwork you’re on your way to pick up the vehicle

This process will save you 5% -10% off any price you’re able to negotiate in person and it will only take you about 90 minutes to complete. I also compare bids along the way to Truecar or Costco pricing to make sure it’s competitive. On occasion you will find a better price through Costco depending on the car you’re interested in purchasing.

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Another Pristine Example of a Verbal Slip

In this video the buyer and seller are negotiating over a restored antique sign.  Captured on TV, this example is your typical Hard Bargaining negotiation.  It’s a one off transaction that is all about price.  There is no trust or any need for trust.  This transaction has little bearing on future transactions.  I’ve heard the same exact verbal slips in countless professional situations ranging from purchasing an asset or buying a company to buying a car or haggling at the farmer’s market.  Full descriptions of the slips are listed below the video.

Full Analysis

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When “No” means “Yes”

Convicted for killing his parents by bludgeoning them with a baseball bat, Ernie Sherrer’s denial of the crime when questioned presents a prime example of an emblematic slip as his head shakes “Yes” when asked if he did it.  It’s chilling how cold and calculated this killer is even thanking detectives after the interview.  You would expect an ex-poker player to be able to control his unconscious body language, yet there it is.

Emblems are specific gestures that convey a precise meaning universally recognized within a cultural group.  The meaning of an emblem stands without any words.  Emblems are almost always performed deliberately, as the performer is consciously aware of the action. Examples include; Head shaking yes, shoulder shrug, wave hello, etc.  Emblematic slips are a fragmentation of the full gesture and never performed in usual presentation position.  Slips occur when the performer unconsciously leaks the gesture.  Usually indicating a feeling or expression the performer is trying to conceal.

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Excellent Examples of the Science of Negotiation

This video has some fantastic examples of deception detection techniques including verbal slips, manipulators, and emblematic slips.  I love reality TV, for continually pumping out more and more shows with pristine examples of people negotiating under real circumstance.  I’ve witnessed this exact same scenario along with all of the “slips” occur off camera countless times.

Here’s a summary of the highlights:

  1. Manipulation – at 0:25 seconds into the video the seller gentle rocks back and forth before delivering his opening offer.  This subtle shift is caused by his own discomfort with his opening offer.  In his mind he is willing to accept a lower figure.  If you’re able to pick up this information, you know his offer is “soft” or “movable”.
  2. Emblematic Slip – The buyer rubbing his hands together like he’s about to “dig in to Continue reading
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I Can’t Get No……Satisfaction

Alexander Hamilton lost his life on July 11th, 1804 so that Aaron Burr could get some satisfaction.  The famous duel in Weehawken, NJ occurred because of disparaging remarks made by Hamilton at a dinner party.  I hope images of one gentleman slapping another gentleman with ladies gloves flashes through your mind.  While we’ve moved past the era of challenging someone to a duel at 20 paces the sentiment lives on in many of our behaviors.  Most deals are won and lost because of this very idea.  Skilled negotiators understand that you have to provide the other side with some satisfaction in order to ink the deal.  In the far east, they have a similar concept around the idea of “Face” or “Saving Face”.

Satisfaction unfortunately is intangible and therefore difficult to create and trade.  Satisfaction isn’t like price or volume, it encompasses the whole process as well as the individuals involved.  It’s closely related to “How” you handle the entire negotiation.  Emotional outbursts, heavy-handed tactics, personal challenges, disparaging remarks all destroy satisfaction.  Building satisfaction is different for every negotiation and every person.  Respect and dignity are common themes when trying to build high levels of satisfaction.  Here are two important concepts for establishing satisfaction while negotiating. Continue reading

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Questions Put You in Charge

One of the most important elements of a robust negotiation strategy is your question strategy.  Questions put you in charge during a negotiation.  Questions accomplish the following:

  • Establish baseline responses
  • Allow you to direct the issues discussed
  • Apply pressure to the other side as they attempt to respond
  • Unlock information by getting the other side to talk
  • Create momentum and continue the discussion

Many people are familiar with the classic question funnel as a strategy.  I’ve modified the funnel and added a preliminary level called “Baseline”.  It is critical to establish baseline responses for the other party in all styles of negotiation.  You want to establish what a genuine “No” sounds like, feels like, and looks like.  The theory is simple, ask questions that A) you know the answer or B) a reasonable person wouldn’t lie.  Small talk is great for establishing a baseline.  Great baseline questions are conversational and immaterial to the actual negotiation.  Questions about hobbies, television, sporting events etc. work well.  Ask questions you are fairly certain will receive a “No” response.  For example when negotiating with a male counterpart I might ask:

Continue reading

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Internal Negotiations: Win, Lose, or Collaborate

Internal negotiations can include:

  • Resource allocation discussions
  • Project management and implementation
  • Labor relations
  • Influencing and persuading
  • Recruitment and promotion
  • Etc.

The problem starts with the structure of most corporate firms.  Decisions tend to follow a pyramid like hierarchy, even in flat or modular organizations.  As a result, disputes and conflicts are escalated for resolution.  The two sides submit their conflicting views and recommendations for consideration.  The decision maker chooses.  One side wins, and one side loses.  At the risk of over-simplifying the problem, this process creates win-lose outcomes when clearly win-win is appropriate given the circumstance.  (see Wheel of Negotiation)

Change the Decision Process

In order to avoid a win-lose outcome, the first step is to begin treating the discussion as a negotiation.  Instead of relying on delegated authorities to solve the conflict or issue, agree with the parties involved to reach a consensus as a group.  Leave escalation as a means for resolving deadlock or last resort.  If deadlock occurs, a “last best offer” style for the decision can be very effective at minimizing the lose factor.  In treating the issue as a negotiation a formal process needs to be followed to maximize the potential result. (Details below)

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How to Influence Power in Any Situation

Power is a fundamental aspect of every negotiation.  Power determines options.  If you have it, you have more options.  So how can you change the balance of power?
Power is made of of two essential ingredients
  1. Time – if you have more time than the other party, you have the ability to increase your options, you have more power.
  2. Circumstance – extenuating factors effecting the parties’ level of need or desperation.

Change either the time or circumstance and you change the value of everything.  There are countless examples of case studies where parties have drastically changed the balance of power by introducing or changing these two factors.  Two pristine examples: Continue reading

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Anything You Say, Can and Will Be Used Against You

No I’m not arresting you, yet I will absolutely punish you if you forget this rule.  In negotiation everything you say delivers information to the other party.  The more you say, the more information you provide.  Make no mistake, INFORMATION IS POWER!  When you are negotiating there are three levels of information available voice, verbal, and visual.  I am going to explore the information provided in the verbal content during discussions.  Verbal content is available in both face to face and telephone communications.  Quite simply, the verbal content is made up of the words someone uses to transmit an idea.  The verbal aspect is “How” you phrase your sentence.

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David Matsumoto on ABC – How to spot a Lie

Dr. David Matsumoto appears on ABC’s news broadcast discussing micro-expressions. I am a fan.

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Tiger Woods Video Analysis

Below are my observations of the Tiger Woods press conference.
Overall, Tiger’s emotions, non-verbal communication, and words were very much aligned. He was truthful as he represented his feelings at the press conference. I did notice a couple of occasions when additional emotions leaked out.  There was a subtle undertone of anger throughout spots of the press conference, I believe this to be Tiger’s disposition as a result of having his personal life subject to scrutiny.  So without further adieu here are my observations.

  • 0:38 Tiger’s initial apology “I am deeply sorry….”, you can see the relief in his body as his shoulders droop ever so slightly indicating his genuine remorse. Yet, directly following his statement he flashes a partial emblem “No” as his head moves side to side.  I’m torn – what do you think?
  • 2:12 Tiger mentions letting “Those of you who work for me” down with his action.  I pick up a hint of anger during this statement.  One can only speculate why he’s angry at Team Tiger.  I don’t know enough to engage in any speculation.
  • 3:40 Tiger again reiterates his apology for all his actions. His statements are genuine and his actions are consistent with his words.  You will see a hard swallow, exhale, drooping shoulders, all consistent with his statement
  • 4:18 When he discusses Ellin’s grace and poise.  This statement appears to be false.  Tiger displays a flash of anger followed by a distinct “No” emblem (head shaking back and forth) as he claims Ellin deserves praise not blame.  Perhaps Tiger blames Ellin subconsciously for some of their marital problems, pure speculation.
  • 4:52 “I stopped living by the core values that I was taught to believe in”.  During this statement Tiger displays a subtle increase in his non-verbal manipulators as he rocks back and forth shifting his weight.  I’m not sure Tiger believes his statement.
  • 5:46 “I don’t get to play by different rules”, again an increase in non-verbal manipulation indicates he doesn’t believe this statement.  After all, if you’ve got $500 million in the bank, I’d say you’ve got a different set of rules than the rest of us.
  • 7:20 “It’s hard to admit I need help”, very subtle expression of disbelief across his mouth and eyes.  Although it could be a swallow as he prepares for his next statement, it was hard to distinguish because his head was tilted down towards his notes.
  • 8:01 When discussing whether Ellin and Tiger will stay together a subtle expression of doubt creeps across his face.  I don’t blame him, given what they have been through, doubt is a reasonable reaction here.
  • 8:28 Finally when Tiger denies taking performance enhancing drugs, his statement appeared to be truthful.

Overall, Tiger was genuine in his comments and showed a great deal of disappointment in his actions.  It is not uncommon for someone to conceal their emotions even when they are being honest.  I’d love to hear your comments and thoughts as well.

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Viacom’s attempt to Position vs. Music Industry

February 12th Philippe Dauman, Viacmon’s president and CEO, issued the following statment:

As we go forward, we are continuing to focus more on software than hardware, looking to reduce the cost structure associated with Rock Band, being selective in the music titles that we choose for Rock Band based on their cost. The music industry will assist with this category to make sure that it can continue on a profitable basis in the future and then finally we think we have the best games in the category, we’ll continue to rollout exciting products.

An obvious signal to the Music Industry as he begins the negotiation by creating his position through the media.  It is even more effective when followed by a letter/email/phone call to each company with his offer.  Effective positioning helps to shift the frame of reference before the negotiation technically begins.  Philippe is preparing the industry to receive his demands. To truly shift their expectations you need to deliver an offer, effectively dropping an anchor.

The Music Industry would be wise to attempt to shift the focus back onto their position with a preemptive strike.  Instead of allowing Viacom to open the discussions with some ridiculous offer like 50%, they need to provide an anchor of their own to begin the discussions around their position.  By opening first the initial expectation is set.  This is definitely shaping up into a classic Hard Bargaining negotiation.  I’ll keep my eye on any developments.  What do you think?

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