Negotiating a Deal In Crunch Time

Author: 
Andres Lares

When Joe Mauer’s contract neared its expiration in 2010, the all-star’s agent sat with him and shared how his research revealed he could secure a contract of approximately $300 million over 10 years in the free agent market. However, Joe was more interested in remaining in Minnesota, his hometown, than he was about getting the absolute maximum amount of money. He asked his agent to get as much as he could from Minnesota and do so in a way that allows the Twins to put together a championship-caliber team.

At the same time the Twins were aware that teams like Boston or New York would likely offer well into the $200 million to $300 million range for Joe, if he got to free agency. They had a sense Joe would want to stay, but they weren’t sure how much money he would be willing to forgo.

The negotiation started with the Twins offering five years, $90 million. His agent countered with nine years, $243 million. A big gap needed to be closed and that’s where we entered. The end result was eight years, $184 million. We worked through it together and to avoid the free agency deadline because we knew at crunch time, unpredictable things happen in a negotiation.

Unfortunately, not all negotiations are textbook like this. So, when you do find yourself in crunch time, here are a few tips to help you increase your likelihood of success.

Scripting In Advance Buys You Time

Time is never more precious than when it’s running out. Therefore, using your preparation time strategically before the negotiation can help ensure you capitalize on every second when it counts. There often isn’t a chance to recess, reset or reevaluate. You must be prepared.

We recommend scripting the negotiation in advance. Jot down various contingencies, both positive and negative, and consider what it would mean for you. How might you respond to one offer or another? This exercise, completed in advance, allows you to cope more effectively in real time under pressure.

You obviously cannot prepare for every detail or surprise twist. What you can prepare, however, are various pathways and probing questions that will help you navigate those twists in conversation. These become guardrails and offer you multiple directions to pivot in the actual negotiation:

Assess decision-making criteria. If you understand their needs, you can respond better. Don’t make assumptions; ask questions to clarify (e.g., is up-front cost the most important thing to you?).

Develop and propose your response. Use the dominant value to frame your responses in context. Think of responses – including extreme limitations – in advance to understand the trade-offs you could be comfortable pursuing (e.g., know what kinds of discounts you can offer while “expanding the pie” in other areas to recoup those losses).

Control the timetable. Crunching deadlines are not always felt on both sides, but you can create urgency without being pushy. For example, maybe the offer on the table is not one of your standard packages. You can let them know the customization will require some additional paperwork on your end, so you need a decision quickly to get started. However you do it, setting a timetable (and even revising it in real-time together) can prevent the window from closing due to unnecessary delays.

This exercise prepares you for those tension-filled moments, and it allows you to consider your own limitations. What is your ideal outcome? And what is the lowest you can possibly accept? What other sources of leverage can you offer? These questions help you frame the goal posts.

Scripts Help Establish Goal Posts

Sacrifices are often made for the sake of closing a deal. Just get it done. But tactful set-up can save you at the end. We recommend identifying three options as baseline offers to your counterpart.  This allows you to effectively set a threshold on your own terms. Ideally, you won’t have to settle just because the clock is ticking.

Why three choices? In our experience, presenting a solitary offer gives them the ability to counter much lower than you’d like. Two options can push them initially towards the one that is better for them (and possibly worst for you). By presenting three, however, you psychologically establish bookends at upper and lower ranges, as well as something in the middle. It shows you are open to finding the right arrangement while giving them the sense of power to choose.

Putting the Skills to Action

None of this matters if you can’t visualize a situation in which you’d use them. So, imagine this: In the final stages of negotiation, your counterpart asks if you’ll accept $5,000 less than your standard price.  Apply what we’ve discussed:

  • Identify their values. Apparently, up-front cost is an important factor. Use one of your prepared questions to probe if it is critical to their decision-making.
  • Develop your response. Use context from the discussion to restate goal-posts, using language that reflects their values.
  • Start high. You know they want a lower cost, but you also know the value of your service. Highlight the value that comes with premium pricing as a gold standard.

Next, go low. Make the contrast and acknowledge you have heard their priorities or concerns. If you can meet their lowered request, say so, but explain the trade-off in overall value.

Trade for value. You know they value up-front savings. But your premium services can’t afford to be de-valued. Perhaps you can maintain a premium scope while offering a first-month discount (e.g., a signing-bonus) that gives them an up-front win. You could also propose an escalating renewal rate or an incentive structure for mutually agreed upon goals.

It is critical to note that, in this scenario, we assume the lowered price they requested is feasible, even if it is not ideal. Preparing a script and firm goal posts can save you from needing to reassess or recalculate numbers during crunch-time. If the $5,000 discount isn’t possible, you must articulate the lowest you can go and why.

Closing Strong

A ticking clock can be a challenge as well as a thrill in the world of sales. Strategic preparation can allow you to make the most of those moments and consistently close stronger deals by helping you maintain composure and control. The more you do these exercises and experience vastly different scenarios, the less likely it is you will ever be surprised or caught off guard.  

Andres Lares is the CEO of Shapiro Negotations Institute, a global provider of sales, influence and negotiation training and consulting.