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 with “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 Reference. 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 Reference.
But if you are the decision maker,
don’t let your ego get in the way! Use a Higher Reference.
So let’s imagine you use this Higher
Reference in the above situation. You have agreed but have
insisted you must mention the deal to your chosen Higher
Reference. The ace up your sleeve here though is that you
can say to the deal proposor, “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”.
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