I’m old school. I like Roger Moore as James Bond. But you never know when your tastes can change, so I went to see the new James Bond movie (with new guy Daniel Craig) with a friend of mine. And I thought it was kind of marginal. I came out and realized I still have a bias toward Roger Moore. Sure the gadgets were cool, but I definitely think the movie was not even close to Moonraker.
So we’re walking out and my friend says, “I loved it. That is the best Bond movie ever.”
Instead of saying, “Were we in the same theater? Are you crazy or something? That movie sucked.” I say “Really? Yeah, I guess so. Yeah, it was ok. It was good.”
I mean it’s not like we’re talking about pulling out the checkbook and tapping the kid’s college fund to invest in the next movie based on this one. But then as we’re walking along talking about this great movie, it hits me, “Whoever says something first controls the REST of the conversation. My friend’s talking about the stuff he liked and why it was so good and I’m just nodding and “un-huhing” like I had a Daniel Craig man-crush too. Suddenly the little light starts to flicker in my head. This is what happens with all negotiations
If someone at work says, “Where do we want to go for lunch?” chances are if you confidently say you like Mexican food first, you’re going to be choosing between burritos and enchiladas, not sushi and stir-fry in the next hour, right?
The first person to voice an opinion sets the anchor. As long as that anchor is within a “reasonable range” of the average opinion, all conversations are going to circle around or near the anchor like fish around fresh bait. Something of interest has fallen in front of us and we’re going to go with it until something bigger and better replaces it.
However, if the initial opinion is extreme, and outside the range of reason, the anchor doesn’t set. If they said, “That movie was the best movie ever created. No movie will ever be this good. They should stop making movies from this point forward, because it can’t be topped...” that is outside the range of reason, and I will come back with, “Are you crazy? It sucked!” If you confidently suggest dining on bald eagle today for lunch, you surely won’t set an anchor for where you are going to eat. Maybe you’ll get a slap to the face, but you won’t be influencing the choice on where to eat.
Being No. 1
Why is this important to realize? Because this is how most people negotiate things, and it’s the wrong way. They encourage the other person to say the number first... to set the anchor.
Leverage this fact. Other people want you to set the anchor. They do this because they’re not sure what your limits are, what your budget is, or because they’re afraid you’ll walk away if you hear their real number. Or, they don’t want to give away their negotiation point. But it doesn’t matter. Ironically, speaking the number first gives you the advantage because it lets you determine the conversation point.
This doesn’t just work for business negotiations. Anchors occur for ALL discussions, including business, personal and even friendships.
Say you’re buying a car. You’re thinking, “$500 beater.” The seller is maybe thinking, “$3,000 blue book.” So set the number first and fast. A $500 offer may get a comeback of “You’re crazy. Blue book is $3,000. Get lost”, meaning you are outside the range of reason. Or it may get a “That is less than I expected, but I guess the condition isn’t perfect. Would you comfortable with $1,250.” Now you are winning! Either way, you spoke first and either didn’t get the deal (which is outside your range of reason, anyway) or you got a smokin’ deal. Either way, you have controlled the range and the conversation.
So, to recap: To win a negotiation, say the number first and simply be in a “range of reason,” that is favorable to you. It doesn’t matter what’s favorable to the other guy. You’re just trying to set an anchor that gets you in the ballpark. You can discuss where you’re going to sit afterwards.
Read more posts about the art of negotiating.
Mike Michalowicz is the CEO of Provendus Group, a consulting group that help companies whose growth has plateaued to grow again. Michalowicz is the author of The Pumpkin Plan and The Toilet Paper Entrepreneur, as well as a top entrepreneur blog.
Photo: Columbia Pictures