Master Effective Negotiation
As a trial lawyer with over 35 years of courtroom experience, John Patrick Dolan negotiates for a living.
“[Negotiation] is basically problem solving,” Dolan says.
Dolan is the author of Negotiate like the Pros, a book devoted to his negotiation strategy and tactics, and gives in-depth presentations on negotiation to businesses around the world, including one at January’s Collision Industry Conference (CIC) meeting in Palm Springs, Calif.
Dolan says that no matter the business, negotiation is a daily occurrence.
“When you watch people in the retail market, [or] when you look at people in the collision industry, almost every day, the give-and-take process is at play,” Dolan says. “So it seems like something that is a pretty general topic, but you can apply it to just about every specific area of human behavior.”
Dolan recently spoke with FenderBender about how shop operators can improve their negotiation skills and, consequently, their shop’s bottom line.
Why is effective negotiation important for shop owners?
Well, what’s the alternative? If you don’t have effective negotiation, you’re less profitable. You lose business. You lose customer loyalty. You have relationships that are strained. It makes it harder to do business.
Effective negotiation skills allow you to get along better in the office, to get along better with insurers and to have less difficulty in doing business.
What are some of the common negotiation most mistakes shop owners make?
The first common mistake is that people treat negotiation like it’s a contest or adversary experience, rather than a collaborative experience.
It has to do with your state of mind—your attitude toward the process of negotiation. Are we here to fight somebody? Are we here to try to take advantage of somebody? Or are we trying to collaborate between the shop and the customer? Or between the shop and a vendor or insurer?
The first mistake people make is thinking that as soon as there is money to be discussed, or as soon as there’s a difference of opinion about how to resolve a problem, it’s a fight rather than a collaboration.
In the long term, most successful business people know that collaboration is the only way to have a profitable venture.
The second big mistake I think is that they jump into the positional part of negotiation before they talk about the principle part.
Positions have to do with numbers. How much is this going to cost, and when am I going to get my car back?
Principles do not have to do with numbers, but things like what’s your customer service guarantee? Who’s going to do the work? Who’s going to approve the work? All those things that eventually result in a price and a time.
What is the difference between a negotiation strategy and a negotiation tactic?
Again, the strategy is essentially collaboration. Negotiation is working side by side to achieve a mutually beneficial solution.
With this in mind, negotiation changes from a contest to a collaboration.
Keeping an eye on both sides of the transaction, working together to resolve the problem—not making it a personality contest—that’s the overall strategic approach.
Tactics are used to implement the strategy of collaboration. They get people across the bridge from the two separate positions. Say you want them to pay $500. They want to pay $400. You must bridge that gap if you can. There are tactics that are designed to create concession.
Can you describe a couple of those tactics you mentioned?
The wince is probably the most commonly used technique. It’s basically a reaction.
It’s when somebody says, “It will cost you $875 to fix your car.” And the customer says something like, “Wow, that’s a lot of money!”
They give a statement, which suggests that the position that has just been expressed to them is too extreme.
The intention of that is to get someone to say, “Um, we could give you a discount based on the fact that you’re a member of the auto club. So, maybe we’ll bring it down another $50.” That’s what a wince is intended to do—get concessions.
Another technique that works slightly differently is silence, where a customer just basically doesn’t say anything.
Somebody says, “It’s going to be $875.” And the customer just stands there, looks at them and doesn’t say anything. And then the service provider says, “But we could probably give you a discount because of the auto club.”
Both the wince and silence produce the same kinds of concessions. One is essentially saying your position is too extreme, and you’re going to have to help me by making a concession. The other is not saying anything, but with the same intention of getting an extreme position to be compromised.
How should a shop owner respond to these techniques?
A response to the wince might be something called the feel, felt, found. For example, “I understand how you feel. Many people who haven’t had a car repaired recently have felt the
same way. But when you understand the work that goes into it, most people have found that the price is not so bad.” That’s feel, felt, found.
If somebody uses silence, you could respond using enlightened indifference, which appeals to your chance to work together.
Let’s say that the shop says it’s $875, and the customer doesn’t say anything. The shop could say, “This might be something you want to think about, and if you want us to do the work, we would love to do it. This is the best price I could get you, but I understand this might be something you have to give some thought to.”
If the negotiation stalls, what are some tips for getting it back on track?
One thing that you can do is something called limited authority. You can say, “This is the price that I came up with. Actually our boss is out today, and I’m pretty sure he would go along with this. I’ve seen him actually increase the price a little bit, so if you’re interested, we probably ought to nail this down now.”
Any final negotiation advice?
It’s important to recognize that the big enemy of successful negotiation is anxiety and emotional reaction.
If you remind yourself constantly: I’m in this business because I want to be in this business. I understand that there’s going to be some give and take involved in putting together any deal with an insurer or a customer, and that’s OK. That’s part of the business. I want to do business with people who are decent and want to do business with us.
If you do that, you cut way back on the emotional reaction when somebody makes a demand or suggests that perhaps your position in negotiation is not as acceptable as you thought it was.
Any time you feel like you’re getting emotional, it’s a good idea to step back, calm down and take a breath, because very rarely do we make good decisions when we’re emotional.
And sometimes, we make really dumb decisions when we’re emotional.