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Negotiation psychology: test yourself

 In Business decisions, Insights, Negotiating, Realizer Blog

When I was 27, I was given my first million dollar negotiation to do.

It was to buy TV ads for a client with a certain TV network. I was proud to be leading the negotiation, and excited to test my negotiation skills against older and more experienced sellers. We gave them the brief – to come back with 2 options for a spend of $1m or $800,000. The previous year we’d spent $1.2m with the same network. Expecting them to come back with a stretch option for $1.2m, I pre-empted this by ruling it out: “Don’t come back with any options above $1m”.

A few days later, they came back to meet with me. Their lead negotiator, let’s call him Jason, opened up the conversation and presented 2 options. One for $1m and one for $1.2m.

They hadn’t listened to me. I felt disrespected.

I lost my cool with them, pointed out very forcefully that this wasn’t what I asked for and sent them packing.

The moral of this story only emerged over quite a long time for me.

In the short term we managed to make a deal for $1m. But by losing my cool, I lost the upper hand. And I lost all the good will.

And it was only with the benefit of a couple more years’ experience that I realized I’d been totally driven by my ego, and desire to prove myself. I realized that I’d mixed up negotiating a result for my client with proving myself in my then-new role.

What’s more, every time I saw Jason in a new negotiation, or a meeting, or even a work function, I was always embarrassed and on the back foot at how I’d behaved.

So, what I learnt is that in industries where you repeatedly negotiate against the same people, goodwill and relationship building are much more important than the aggressive negotiation tactics you see in the movies.

And I learnt that psychologically, you should take the emotion out of negotiation. It’s business, not personal.

This story was the start of a long and interesting journey for me into the psychology of negotiation. My background before I was in media buying was in psychology and decision-making, so I became fascinated by how people make decisions in negotiations and where they sometimes go wrong.

We’ve put together a quiz below to test your understanding of the psychology of negotiation. Write down your answers and then click here to see how you did and dig into the psychology behind the answers.

 

Question 1

You walk into a room, about to start a difficult negotiation. What’s the best thing to do when you see your counterpart(s)?

A. Establish your power by giving a firm handshake and a penetrating stare

B. Start by finding something to agree on like, “this is a nice room, don’t you think?”

C. Wait for them to say something

 

Question 2

Two people have been negotiating and you’ve noticed that one has been doing more of the talking and one has been much more quiet. Who is most likely to achieve their goals?

A. The talker: Talking is important; you can’t persuade people if you don’t talk

B. The listener: Understanding their position, and tailoring your strategy accordingly, is more persuasive.

C. It depends on body language more than words

 

Question 3

You’ve had an initial meeting and now it’s time for one party to name a price. Should you be the one to make the first offer?

A. Yes, make the first offer

B. No, wait for them to make the first offer

C. It depends on your knowledge of the market

 

Question 4

You’ve been looking for a house for a while and you’ve finally found one for sale which you have fallen in love with. But you have to get it within your budget. What’s the best strategy?

A. Tell the real estate agent you’ve fallen in love with it and put an offer on the table

B. Double down your efforts to find another house you also love

C. Put an offer on the table with a strict time limit

 

Question 5

The house has gone to auction. What’s the best thing you can do to maximize your chance of getting the house within your budget?

A. Try and influence other bidders not to go over their budget by coming in late and looking like you have bottomless pockets

B. Assume that other people will pick a round number for their budget so pick a number for your budget which is slightly more than a round number, like $1,527,000

C. Hire a professional bidder

 

Question 6

It’s a big negotiation and you’re in the room with your boss and a colleague. What is the best way of working together as a team?

A. Specialize roles – listener vs speaker vs observer

B. “Man marking” – each person build rapport with one of them

C. Help each other out when your colleague makes a false step

 

Question 7

Your counterparty has just named their offer over the phone. You go silent. What are they likely to do?

A. Ask you to give a counter offer

B. Give you a better offer

C. Go silent too

 

Now you’ve finished the quiz, click here to check out the answers. Or…