Higher Authority

One of the first techniques I always insist my clients learn is Higher Reference.
Whether you are the CEO, the owner, the 100% shareholder of your company, admitting this straight away will leave you with a weaker hand later in the negotiation stages.

How is this so?

Let’s imagine for a moment you are the owner of a successful Furniture company and you are looking to buy furniture material from a materials company. You noticed a gap in the market and you want to offer Sofa repairs to your customers.

You tell a materials company you want the best possible deal and are willing to pay in cash if the figures are right.

The Materials Company quote you 1000 euro worth of the material you are looking for. You gasp and say “No way, I won’t pay that. 800 euro is all I can afford.”

The Materials Company respond with
“But surely, being the owner of your own business you know the value of good quality. But if you can only go to 800 euro I can show you our lower quality materials”.

You respond, “No way. I want that material for 800 euro”.
The Materials Company are now in a position to find out just how flexible you are.
“I can’t possibly do that for you for 800 euro. Tell you what, if you are seriously interested in purchasing this material then I may be able to get you a discount but I would have to check it with my boss. If I can get it for you are you interested?”

You respond energetically with
“Well of course I am interested. What sort of discount are you talking about?”…

And so the Materials Company knows they can budge you from your 800 euro budget by you agreeing to see what is in offer with the discount.

So how do we over come this negotiating tactic like the one employed by the Materials Company?

Always use Higher Authority. Tell them whatever you like, but don’t let them know you are the key decision maker.
What I often tell my clients to do is agree up front with what has ever been proposed to them. Then tell them you will have to take their proposal to your committee members/line manager or whoever you have planned as your Higher Authority.
But if you are the decision maker, don’t let your ego get in the way! Use a Higher Authority.

So let’s imagine you use this Higher Authority in the above situation.

You have agreed but have insisted you must mention the deal to your chosen Higher Authority. The ace up your sleeve here though is that you can say to the materials company, “It’s a shame we can’t get this deal sorted today. Had you come in a couple of hundred euro lower then I was given the authority to go ahead and secure the business today. Let’s see if we can do this today can we? After all, we have spent so much time on this it would be a shame for it all to fall apart right now over a couple of hundred euro”.
Discuss this Gambit over at our BLOG

In Conclusion, the use of Higher Authority in any situation is VERY important. It is one of the most fundamental negotiating tactics you can employ and when you understand how it works and can see it being used by other people, it helps take the pressure off you.