The Vise is a very effective negotiating Gambit and what it will do for you will amaze you. The Vise Gambit is the simple little expression: “You'll have to do better than that.” Here's how Power Negotiators use it: Let's say that you own a small steel company that sells steel products in bulk. You are calling on a fabricating plant where the buyer has listened to your proposal and your pricing structure. You ignored his insistence that he's happy with his present supplier and did a good job of building desire for your product.
Finally, the other person says to you, “I'm really happy with our present vendor, but I guess it wouldn't do any harm to have a backup supplier to keep them on their toes. I'll take one carload if you can get the price down to $1.22 per pound.” You respond with the Vise Gambit by calmly saying, “I'm sorry you'll have to do better than that.” An experienced negotiator will automatically respond with the Counter Gambit, which is, “Exactly how much better than that do I have to do?” trying to pin you down to a specific. However, it will amaze you how often inexperienced negotiators will concede a big chunk of their negotiating range simply because you did that.
What's the next thing that you should do, once you've said, “You'll have to do better than that”? You guessed it. Shut Up! Don't say another word. The other side may just make a concession to you. Salespeople call this the silent close, and they all learn it during the first week that they are in the business. You make your proposal and then shut up. The other person may just say Yes, so it's foolish to say a word until you find out if he or she will or won't. I once watched two salespeople do the silent close on each other. There were three of us sitting at a circular conference table. The salesperson on my right wanted to buy a piece of real estate from the salesperson on my left. He made his proposal and then shut up, just as they taught him in sales training school.
The more experienced salesperson on my left must have thought, “Son of a gun. I can't believe this. He's going to try the silent close on moi? I'll teach him a thing or two. I won't talk either.” So then, I was sitting between two strong willed people who were both silently daring the other to be the next one to talk. I didn't know how this was ever going to get resolved. There was dead silence in the room, except for the grandfather clock ticking away in the background. I looked at each of them and obviously, they both knew what was going on. Neither one was willing to give in to the other. I didn't know how this was ever going to get resolved. It seemed as though half an hour went by, although it was probably more like five minutes, because silence seems like such a long time. Finally, the more experienced salesperson broke the impasse by scrawling the word “DECIZION?” on a pad of paper and sliding it across to the other. He had deliberately misspelling the word decision.
The younger salesperson looked at it and without thinking said, “You misspelled decision.” And once he started talking, he couldn't stop. (Do you know a salesperson like that? Once they start talking, they can't stop?) He went on to say, “If you're not willing to accept what I offered you, I might be willing to come up another $2,000; but not a penny more.” He re-negotiated his own proposal before he found out if the other person would accept it or not. So to use the Vise technique, Power Negotiators simply response to the other side's proposal or counter-proposal with, “I'm sorry, you'll have to do better than that.” And then shut up.
During the Vietnam War, Secretary of State Henry Kissinger asked an undersecretary of state to prepare a report on the political situation in South East Asia. The undersecretary worked hard on the paper and was proud of what he had done. It was extremely comprehensive and bound in leather with gold engraving. However, Kissinger quickly returned it to him with the notation, “You'll have to do better than this. H.K.” The undersecretary went to work and dug out more information, added more charts, and sent it back to Kissinger. This time he knew that he'd given birth to a true work of bureaucratic art.
Again it came back with the notation, “You'll have to do better than this. H.K.” Now it became a major challenge for him. He put his staff to work on the report around the clock, determined that it would be the best position paper that Kissinger had ever seen. When finally he had put the finishing touches on it, he was reluctant merely to send it to Kissinger, so he made an appointment and took it in himself. As he presented it he said, “Mr. Kissinger, you've sent this back to me twice. My entire staff has dedicated the last two weeks to this report. Please don't send it back again. It's not going to get any better than this. This is the best I can do.” Kissinger calmly placed it on his desk and said, “In that case I will read it.”
A client called me up after a Secrets of Power Negotiating seminar that I had conducted for their managers and told me, “Roger, I thought you might like to know that we just made $14,000 using one of the Gambits that you taught us. We are having new equipment put into our Miami office. Our standard procedure has been to get bids from three qualified vendors and then take the lowest bid. So I was sitting here going over the bids and was just about to okay the one I'd decided to accept. Then I remembered what you taught me about the Vise technique. So I thought, ‘What have I got to lose?' and scrawled across it, ‘You'll have to do better than this,' and mailed it back to them. Their counter-proposal came back $14,000 less than the proposal that I was prepared to accept.”
You may be thinking, “Roger, you didn't tell me whether that was a $50,000 proposal, in which case it would have been a huge concession, or a multi-million dollar proposal, in which case it wouldn't have been that big a deal.” Don't fall into the trap of negotiating percentages when you should be negotiating dollars. The point was that he made $14,000 in the two minutes that it took him to scrawl that counter-proposal across the bid. This meant that while he was doing it, he was generating $420,000 per hour of bottom line profits. That's pretty good money, isn't it?
This is another trap into which attorneys fall. When I work with attorneys, it's clear that if they're negotiating a $50,000 lawsuit, they might send a letter back and forth over $5,000. If it's a million-dollar lawsuit, they'll kick $50,000 around as though it doesn't mean a thing, because they're mentally negotiating percentages, not dollars. If you make a $2,000 concession to a buyer, it doesn't matter if it got you a $10,000 sale or a million-dollar sale. It's still $2,000 that you gave away. So it doesn't make any sense for you to come back to your sales manager and say, “I had to make a $2,000 concession, but it's a $100,000 sale.” What you should have been thinking was, “$2,000 is sitting in the middle of the negotiating table. How long should I be willing to spend negotiating further to see how much of it I could get?”
Have a feel for what your time's worth. Don't spend half an hour negotiating a $10 item (unless you're doing it just for the practice). Even if you got the other side to concede all of the $10, you'd be making money only at the rate of $20 an hour for the half-hour you invested in the negotiation. To put this in perspective for you, if you make $100,000 a year, you're making about $50 an hour. So, you should be thinking to yourself, “Is what I'm doing right now, generating more than $50 per hour?”
If so, it's part of the solution. If you're aimlessly chatting with someone at the water cooler, or talking about last night's television movie, or anything else that is not generating $50 an hour, it's part of the problem. Here's the point. When you're negotiating with someone-when you have a deal in front of you that you could live with-but you're wondering if you could hang in a little bit longer and do a little bit better, you're not making $50 an hour. No, sir. No, ma'am. You're making $50 a minute and probably $50 a second.
And if that's not enough, remember that a negotiated dollar is a bottom line dollar. It's not a gross-income dollar. So, the $2,000 that you may have conceded in seconds because you thought it was the only way you could have made the sale, is worth many times that in gross sales dollars. I've trained executives at discount retailers and health maintenance organizations (HMOs) where the profit margin is only 2 percent. They do a billion dollars worth of business a year, but they bring in only 2 percent in bottom line profits. So at their company, a $2,000 concession at the negotiating table has the same impact on the bottom line as getting a $100,000 sale.
You're probably in an industry that does better than that. I have trained people at some companies where the bottom line is an incredible 25 percent of the gross sales; but that's the exception. In this country, the average profit margin is about 5 percent of gross sales. So probably, that $2,000 concession you made is the equivalent of making a $40,000 sale. So, let me ask you something. How long would you be willing to work to get a $40,000 sale? An hour? Two hours? All day? I've had many sales managers tell me, “For a $40,000 sale, I expect my sales people to work as long as it takes.”
However fast-paced your business, you're probably willing to spend several hours to make a $40,000 sale. So, why are you so willing to make a $2,000 concession at the negotiating table? It has the same impact on the bottom line as a $40,000 sale if you're in a business that generates the typical 5 percent bottom line profit. A negotiated dollar is a bottom line dollar. You'll never make money faster than you will when you're negotiating! So Power Negotiators always respond to a proposal with, “You'll have to do better than that.” And when the other person uses it on them, they automatically respond with the Counter Gambit, “Exactly how much better than that do I have to do?”
Key Points to Remember:
1) Respond to a proposal or counter-proposal with the Vise technique: “You'll have to do better than that.”
2) If it's used on you, respond with the Counter Gambit, “Exactly how much better than that do I have to do?” This will pin the other person down to a specific.
3) Concentrate on the dollar amount that's being negotiated. Don't be distracted by the gross amount of the sale and start thinking percentages.
4) A negotiated dollar is a bottom line dollar. Be aware of what your time is worth on an hourly basis.
5) You'll never make money faster than you will when you're Power Negotiating.