False Expectations Can Lead to Lost Deals
June 26, 2008The negotiation for the boat seemed to be going well. We had developed good rapport. I understood his personal commitment to go the extra mile to get the deal done and his interest in closing the sale in these tough economic times.
And he understood our interest in getting the boat in the water ASAP and our financial interest in paying less.
As a result, after he confirmed our research that the boat’s manufacturer wouldn’t let its dealers negotiate price – like Saturn for cars – I was especially appreciative of his seeming flexibility on non-price-related financial items.
For instance, when I said I was having a tough time deciding given the price difference between his boat and a used boat I was considering (my leverage), he said the manufacturer was offering a significant gift card on some models, he thought including this, and he would check.
I also asked about a boat cover, and he said he could do something for us on it, a $600 retail purchase. Finally, he said he would look into whether they could deliver the boat to us, saving us several hours on the road plus gas money.
At this point, given his flexibility, I was ready to close the deal. While it was still more expensive than the used boat, the overall value was better.
I hung up the phone excited about our potential new purchase. Fifteen minutes later, after our next call, I was upset and ready to walk.
Why? He called me back to tell me: 1) the gift card did not apply to this boat, 2) he would charge extra for delivering it, and 3) while they would give us 50% off on the cover - they would charge us more than this discount to travel and install it on the boat (the cover could not be installed before delivery as it had to be ordered).
What had happened? I was upset because I felt like he had negotiated in bad faith by holding out these discounts – thus getting some psychological commitment from me to the deal – then yanking them away.
Technically, he had not made any misrepresentations. But critically, he had led me to psychologically expect the discounts.
Our next step? Step back and evaluate what had occurred, reassess our goals and leverage, and consider how to strategically respond, if at all.
Bottom line – we still wanted the boat and it was still a better value than the used boat. But we didn’t feel good about it.
Importantly, my wife ran this by her father – a longtime customer of this store – and he suggested we talk to the salesman’s boss.
I did – and after some wavering, the store manager “reinstated” the gift card. I later said we would find a local person to install the cover, saving ourselves an additional several hundred dollars.
Feeling much better about the deal at that point, I put in the order.
What lessons can we learn from this negotiation?
1. False expectations are often worse than no expectations.
The salesman almost lost this deal by creating a detailed set of false expectations of significant discounts and then not fulfilling them.
Instead, he should have generally told me he might be able to get me some discounts – then checked the details – and then offered the actual discounts.
By holding out the carrot, and then yanking it back, he ended up worse off than if he had not held out the carrot in the first place.
2. Beware of ego’s potentially negative role near the end of negotiations.
One reason I didn’t feel good about the deal after the salesman backed off the “discounts” was due to my ego.
I know this because I would have initially been happy with a deal with minimal discounting. After all, this still would have satisfied our goal and was better than our alternative.
How can you tell if your ego is involved? Identify your goals and best alternative before you start making offers or concessions. Then reassess each before you walk if you think your ego might be rearing its ugly head.
3. Going over their head can be a great impasse-breaking strategy.
If you’re not getting anywhere with your counterpart, consider moving up the chain and giving it another shot with their boss.
But don’t do it behind their back. Instead, nicely request to talk to their supervisor. Those up the chain often have more incentive to concede than their front-line colleagues.
After concluding this negotiation, our family went out for a celebratory dinner. When we got home, it was story time for our three year old. I told him we had time for three stories. He replied by saying “five.”
We read five. But that’s a column for another day.
Marty Latz is the founder of Latz Negotiation Institute, a national negotiation training and consulting company, and ExpertNegotiator Planning & Management Software, a web-based software company that helps managers and their front-line negotiators more effectively negotiate (www.ExpertNegotiator.com). He is the author of "Gain the Edge! Negotiating to Get What You Want."
And he understood our interest in getting the boat in the water ASAP and our financial interest in paying less.
As a result, after he confirmed our research that the boat’s manufacturer wouldn’t let its dealers negotiate price – like Saturn for cars – I was especially appreciative of his seeming flexibility on non-price-related financial items.
For instance, when I said I was having a tough time deciding given the price difference between his boat and a used boat I was considering (my leverage), he said the manufacturer was offering a significant gift card on some models, he thought including this, and he would check.
I also asked about a boat cover, and he said he could do something for us on it, a $600 retail purchase. Finally, he said he would look into whether they could deliver the boat to us, saving us several hours on the road plus gas money.
At this point, given his flexibility, I was ready to close the deal. While it was still more expensive than the used boat, the overall value was better.
I hung up the phone excited about our potential new purchase. Fifteen minutes later, after our next call, I was upset and ready to walk.
Why? He called me back to tell me: 1) the gift card did not apply to this boat, 2) he would charge extra for delivering it, and 3) while they would give us 50% off on the cover - they would charge us more than this discount to travel and install it on the boat (the cover could not be installed before delivery as it had to be ordered).
What had happened? I was upset because I felt like he had negotiated in bad faith by holding out these discounts – thus getting some psychological commitment from me to the deal – then yanking them away.
Technically, he had not made any misrepresentations. But critically, he had led me to psychologically expect the discounts.
Our next step? Step back and evaluate what had occurred, reassess our goals and leverage, and consider how to strategically respond, if at all.
Bottom line – we still wanted the boat and it was still a better value than the used boat. But we didn’t feel good about it.
Importantly, my wife ran this by her father – a longtime customer of this store – and he suggested we talk to the salesman’s boss.
I did – and after some wavering, the store manager “reinstated” the gift card. I later said we would find a local person to install the cover, saving ourselves an additional several hundred dollars.
Feeling much better about the deal at that point, I put in the order.
What lessons can we learn from this negotiation?
1. False expectations are often worse than no expectations.
The salesman almost lost this deal by creating a detailed set of false expectations of significant discounts and then not fulfilling them.
Instead, he should have generally told me he might be able to get me some discounts – then checked the details – and then offered the actual discounts.
By holding out the carrot, and then yanking it back, he ended up worse off than if he had not held out the carrot in the first place.
2. Beware of ego’s potentially negative role near the end of negotiations.
One reason I didn’t feel good about the deal after the salesman backed off the “discounts” was due to my ego.
I know this because I would have initially been happy with a deal with minimal discounting. After all, this still would have satisfied our goal and was better than our alternative.
How can you tell if your ego is involved? Identify your goals and best alternative before you start making offers or concessions. Then reassess each before you walk if you think your ego might be rearing its ugly head.
3. Going over their head can be a great impasse-breaking strategy.
If you’re not getting anywhere with your counterpart, consider moving up the chain and giving it another shot with their boss.
But don’t do it behind their back. Instead, nicely request to talk to their supervisor. Those up the chain often have more incentive to concede than their front-line colleagues.
After concluding this negotiation, our family went out for a celebratory dinner. When we got home, it was story time for our three year old. I told him we had time for three stories. He replied by saying “five.”
We read five. But that’s a column for another day.
Marty Latz is the founder of Latz Negotiation Institute, a national negotiation training and consulting company, and ExpertNegotiator Planning & Management Software, a web-based software company that helps managers and their front-line negotiators more effectively negotiate (www.ExpertNegotiator.com). He is the author of "Gain the Edge! Negotiating to Get What You Want."
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