Imagine for a second that you are the only company offering a specific service that had the ability to drive off the charts results for your client.
They know it and you know it; this is leverage.
Leverage is not to be confused with influence or power. Leverage is something that shifts during sales, it can be due to deadlines, costs, competition or lack thereof, innovation, needs, the list goes on.
Imagine for a second that you work for a dominant Software company in North America, you have a hold on the market and have built up your contact list to be full of high-level CEOs, go-getters and decision makers.
Then a start-up looking to expand into the market hits you up out of nowhere, they want to find out if you are interested in joining them.
Bored of the red tape and corporate way of doing business you are intrigued and deep-down relish the idea of being the underdog. You miss the hustle, the flexibility and nibble approach being with a start-up can provide.
Who has the leverage in this situation?
In reality, both parties have some form of leverage, what matters is the perceived leverage that each party sees in each other’s position. The start-up recognises that poaching a high-performance sales superstar to join the team is both a quick win in terms of gaining contacts and market share but also deals an unexpected blow to the competition. If they are candid about their strategic approach in the market and make it clear that the candidate is their only choice, then you will have the leverage. If, however, they pick up on the fact that you’re dying for a new opportunity, you’re totally over the stuffy corporate life, the rigid processes and micro-managing boss then some of the leverage moves back into the start-up’s corner.
Leverage or perceived leverage is a fluid concept. It shifts from side to side during the sales process and can be affected by any number of variables from market changes, to reorgs. What matters is noticing who thinks they’ve got the leverage and understanding how to shift the leverage in your favour. Personal story: Always negotiate.
It was June 2015 and I was living in the beach-side peninsula of Manly in Sydney, Australia, it was 5.30am in the morning and still dark outside. I was with my wife and we were setting off to Sydney airport to pick up my friend who was arriving from London to come stay with us for a few weeks.
We climbed into my brand spanking new jet-black Mitsubishi Triton 4x4 Truck and started the engine. This truck was my pride and joy, I had only purchased it a few weeks ago and so was particularly precious about it.
In all honesty, I was looking forward to rocking up at the airport in it to collect my mate, it was half the reason I volunteered to collect him ;) just to see the look on his face when we got into this monster.
As we set off down the road on this dark and damp morning, I saw a car parked in the middle of the road directly in front of me. I had to swerve to avoid it. In doing so, I went through what I thought was a large puddle of water.
I couldn’t tell as it was pretty dark, you know its darkest right before the dawn and I was still half waking up. I was just shocked that some moron was stopped in my lane and what the heck were they doing up at this time anyway.
I didn’t pay too much attention to the water splattered all across my windshield and bonnet. I just turned on the window wipers and sprayed some water.
45 minutes later we pulled up and parked at Sydney Airport excited to go find my friend from his 22-hour flight and get the adventure started. It was bright daylight now as the sun was rising.
As I got out, to my horror I realised it wasn’t water that had splashed all across my immaculate black truck, but white paint, thick and gloopy and it was splattered everywhere like someone had taken a bucket and thrown it across the whole thing. The truck was an absolute disaster. It was covered in white dots and big streaks of paint where the tires had flicked it up everywhere. I was completely taken back. I stood there for a moment, stunned, taking it all in. I couldn’t quite believe it.
My friend who I was over the moon about coming to Australia for the first time and I hadn’t seen in a year was about to land after a 22-hour flight and there I was stood looking at my brand-new truck looking like I had just driven through an art gallery.
This was a nightmare, the absolute dilemma.
Do I go to arrivals to meet my mate, dressed in the funny Kangaroo and Koala onesies we had purchased for obligatory embarrassing airport meet and greet or deal with the ticking time bomb that was my truck and its lousy new paint job?
What a dilemma!
I chose the truck! My wife and another friend volunteered to go off and changing into the Aussie animal costumes to go greet my friend (what legends, I think they could see how gutted I was about this crazy situation).
I knew I had to act fast, the paint hadn’t completely dried yet, so I jumped in the car and delegated my wife to go collect my friend and explain why I wasn’t there. As a I tore off from the carpark, I wracked my brains about what to do.
Luckily a quick Google search showed that about 5 miles away was a garage, that’s the funny thing about airports as it turns out next to them is car manufacturers and a variety of car valeting and detailing services. I was in the exact right place for this kind of disaster.
As I located the garage and pulled in front, I was even more surprised to find that they were open for business. Win!
Then it dawned on me: what the hell was this going to cost?
Was it even possible to get white paint off the truck? I mean it was splattered everywhere in every nook and cranny.
I went inside with no time to dwell on my ridiculous position, “I have white paint drying on my new black truck please help”. I knew they had all the leverage in this situation, they could have charged me $5,000, what was I going to do, not pay it and let the paint dry and have a polka dot coloured car.
I am not sure if it was my years working in negotiations, but instinct kicked in (even then) and I went into full negotiation mode. I remember calmly explaining the situation to the guy in charge like it was no big deal. Walking outside to show him I decided I wasn’t going to be taken for a ride and I was going to haggle him down whatever he said. I braced myself as he assessed the damage, what was he going to say, $3,000, $5,500, $10,000?
The clock was ticking I needed this guy to hurry up and give me a price so I could hand him my credit card and get on with getting this insanity over and done with. It’s going to cost $1,200 he said. My mind was elated, after making all sorts of prices this felt okay. Then almost immediately it didn’t, I felt like it was a big price to just to wash some paint off with a high-pressure hose and special chemicals. I mean if you’ve got the equipment surely, it’s not going to cost $1,200.
I held my nerve and didn’t give anything away and counted, “Umm ah, that’s a bit more than I was anticipating, the best I can do is $850” feigning pain and ignorance to the truck cleaning business and hoping to high heaven he would come down in price. This was turning out to be a very expensive start to my mate arriving.
Suddenly, I noticed that the perceived leverage switched back to me, it seemed as if the guy didn’t notice my predicament with the paint drying and thought I might go elsewhere if he didn’t come down. He took the deal; we shook on it and drove the truck into the garage to get the job done.
Leverage can switch in an instant, maybe the garage salesperson thought I knew more than I did about the area and where the next garage offering the same service was located. Maybe he was ripping me off. Maybe he could have begun the negotiation with a high anchor, and I would have been forced to pay more. Maybe he didn’t expect me to negotiate in this situation and that threw him off guard. Maybe he thought I knew more about paint and how it is cleaned.
You can see in this simple example in a situation where I looked to have little leverage at all, by doing what came naturally to me and negotiating purely out of instinct and principle, I changed the dynamic of who had the perceived leverage. In all honestly, I would have paid more, but I didn’t want to. I was motivated to get the best deal I could even under pressure. When I told my wife and friends, they couldn’t believe it, I had managed to negotiate on the price even when my brand new truck was sitting there dripping in fresh white paint.
Here’s a few hypotheticals I didn’t know in this situation. I didn’t know that the garage sales person maybe needed one more sale to hit his targets that month. I didn’t know that the paint could be cleaned after it had dried. I didn’t know that the garage’s biggest competitor was right around the corner. I didn’t know that my insurance would cover a new paint job. I didn’t know that this sales person wasn’t an experienced negotiator and therefore felt anxious when challenged on the price. I didn’t know that he would have taken $500.
The list of unknowns is endless but either way you look at it, the lesson here is to recognise who has the leverage and watch how this changes how deals get done.
Leverage and controlling the application of leverage in sales allows you move deals towards your advantage and make concessions that allow the other side to think they are winning when I reality they are moving in the direction you want. Negotiations are all about giving the illusion of control to the other side when in reality you’re the one posing the questions that direct the outcome.
Try it today, if you find yourself in a jam, apply these rules and negotiate anyway. You might just be surprised at the results.
In the above example, negotiation saved me 30% on a situation that I thought they had me in every conceivable way, drying paint, a race against time, my friend arriving, but that was just my side of the story.
Always remember there’s more to it than meets the eye. Go negotiate your future, it’s always worth taking a moment to ask the question. For more
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