Ever bought something expensive that you really wanted on sale at a massive discount? Or walked out of car dealership with a new (or used…er, previously-owned) car that you got for WAY below the asking price? That feeling is what drives sales people (of course, they tend to be on the other side of the equation, but the feeling is the same). Today, I got that feeling.
I didn’t get a new car or something expensive that I had been pining for. What I got was a discount on OEM hardware. Well, the truth is that I didn’t just get the discount…I negotiated it.
As a Product Manager, I am tasked with lots of negotiation, but for the most part, it’s largely non-monetary. I have to negotiate with Engineering to get a certain amount of features built into a release in a given release window. I have to negotiate with Support on what they see as the key bugs and enhancements and their priority. I have to negotiate with Sales on when the new features that will help them close “their biggest customer, ever” will make in into the product.
In actuality, the Product Manager spends a LOT of time negotiating, but since there is no money exchanging hands, that kind of negotiation seemed different than what I had to do with our OEM partner. It was much more nerve-wracking. I worried about what my counter-part on the opposite side of the equation would think about me. I worried that I wasn’t going to get the deal. That’s what makes getting the deal feel so good!
Contract negotiation is really a lot like gambling (and Poker in particular). Each player knows what cards they have, but they don’t know what cards the other players have and they don’t know what cards will come up from the deck. With Poker, you know that there are a finite number of combinations and to some degree, you can use statistical analysis and your gut instinct to know whether you are likely to have a good hand, but there is another element that you can use, too. The bluff.
Bluffing in Poker can turn a worthless hand into a winner. All you have to do is lie. Not in a bad way, like when you are shopping with a friend and you tell him or her that a shirt/jacket/sweater/pair of shoes look good, when in reality you are embarrassed just to be in the same timezone as them. It’s more of an omission, like when you were a kid and one of your parents (or a friend’s parents) asked you if you did something (e.g., stick your finger into your sibling’s birthday cake and scoop out some frosting…before the party started) and you said no (which was true), but you didn’t tell them who did , even though you knew (cousin Kenny, of course).
Bluffing makes your hand appear stronger and appearances are everything during negotiation. So I used a bluff to make my position vs. the OEM hardware vendor look stronger to them.
I told them that the original price and the subsequent discount that they offered was insufficient for me to commit to the deal. If they would meet my asking price at the volume I wanted, I would make sure the deal happened. If not, then I was prepared to walk away (that was the bluff). In reality, I needed the hardware and was willing to pay the price that they had originally proposed, but they didn’t know that.
But be careful…bluffing doesn’t always get you what you want and sometimes there are unintended consequences. It’s better not to have to bluff, because that losing hand that you have could stay a loser, and if it does you may lose credibility or leverage with the vendor for the next time you have to negotiate.
In this case, in the end, I got the pricing and volume that I wanted and they got the deal, so everybody wins.
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