Negotiation Training – ‘I Like Your Proposal, But This Is All I’ve Got’Posted on October 16th, 2013
This is a brilliant buyer’s skill, the undisputed crown jewel. In fact, if this post was written solely for buyers, we’d urge you to take the tactic on board as one of the finest available anywhere. To explain why it’s such a good buyer’s skill, consider the two parts of the tactic:
‘I like your proposal’ is effectively saying, ‘I like you, I like your company, I like your product, I like your service, I like your pricing.’
‘But this is all I’ve got’ – there is an implied budget restriction.
So how do we react? Let’s take the all-important phrase, ‘I like your proposal’. We all want to be liked. Here we think we’re nine-tenths of the way there. Our reaction is, ‘I’ve got a live one here, now what do I have to do to close the business?’ Unfortunately, for too many of us this usually becomes, ‘What do I have to give away to win the business?’
Unskilled vs skilled seller
Buyers know that an unskilled seller will respond to this tactic by offering a discount. A good seller, on the other hand, will respond by discussing alternatives. Then the buyer learns more about what they are buying, so either way the buyer wins.
The way to handle this tactic is to have alternatives available. The buyer must be made to realise that if they want to change the price, you will change the package. For the quoted price there is one package; for another price, there is another package.
To pull this off successfully, the secret is to have the alternatives thought through in advance. You then know exactly which package to offer.
Above all, the strength of this countermeasure lies in its inherent ability to flush out whether the phrase ‘this is all I’ve got’ is a real budget restriction or simply a negotiating ploy.
Reverse roles in the negotiation
To illustrate how this works, reverse the roles and imagine you are part of a buying team with the job of purchasing much needed new office equipment.
You draw up a detailed specification and contact six suppliers. After receiving proposals from each and carefully evaluating which best meets your requirements, you decide to award the business to Ace Systems. In their proposal they have quoted a price of £31,500. Your managing director agrees the funding and gives you the green light to proceed, but says, ‘Do everything you can to get the price down.’
You call Alison, the business development manager from Ace Systems, back in and say to her, ‘We like your proposal, it’s just what we want, but we’ve only got £27,000 available. How can you help?’
She responds by offering an alternative package that does not meet all your criteria. How interested are you going to be in this alternative? Not very, I think you’ll agree.
Now imagine a different scenario. This time your managing director has given you an actual budget of £27,000, and that’s as high as you can go. You use the same approach: ‘We’ve only got £27,000. How can you help?’ Alison again responds with an alternative package. How interested are you this time? Very interested.
Your negotiation advantage
Can you see how to use this to your advantage? As a seller you effectively have a way of finding out whether the buyer’s tactic is real or a ploy.
When the customer says ‘We like your proposal but we only have £27,000 available’, you respond by offering an alternative package and gauging their interest in it. If they don’t have much interest, it’s almost certainly a ploy. Your response has uncovered that they do have slack in their budget.
However, if they are interested, it’s more likely to be a genuine budget restriction. Once you know which, it’s much easier to adjust your response.
Negotiation is a game; a serious game, but a game nonetheless. Learn the rules and go for it. And make sure you take notes during your discussions. The dullest pencil works better than the sharpest memory.