Double Up, Sir

Published: Sep 28 , 2012
Author: Robin Copland

There is more and more emphasis on the bottom line.  Negotiators are getting ever more ruthless in their search for a "better deal" and sometimes the old "win-win" mantra is lost in the stampede.

 

One of the tactics we see most often used by - and sometimes against - clients is the late introduction of a procurement specialist to a negotiation.  In many cases, this person is introduced rather shamefacedly by the regular negotiator; the excuse is given that they are just there to cast a paternal eye over proceedings and check that the deal is watertight.

 

I should perhaps explain at this point that this is not necessarily why they are there!  More often than not, they are there to extract the last percentile point of discount from the deal.  They are there, in other words, to expose the seller on probably the last issue that they want to be exposed on at that point - namely the price.

 

I recently heard a lovely story on this very topic.  A hotel manager had been in negotiation with a client about a conference and the deal had been done.  Two or three weeks before the conference was due to start, somebody from the client's procurement department phoned the hotel and suggested that there were a couple of points in the contract that needed tidied up and one of them (it turned out that it was the only one!) was the price.  He demanded a further five per cent discount so that the conference could be brought in "on budget".

 

The hotelier went back to the buyer with an "either - or" proposal. 

 

"I wasn't aware of the budget issue," he said, "when we discussed your conference.  If it is an issue for you, I can address it by having twenty of your more junior personnel double up in shared bedrooms.  Alternatively," he continued, "we can accommodate your delegates in single rooms, but that would have to be at the price I agreed with your colleague.  Which would you prefer?"

 

Needless to report that the original deal went through.

 

You can see how clever the hotelkeeper was.  Rather than haggle with the buyer and "split the difference", he gave alternatives, one of which exactly matched the buyer's stated need; the alternative, of course, was just the original deal, as previously agreed.  It was all about appearing to give the other side what they wanted - but very much on his terms.

Robin Copland - Partner, Scotwork UK LLP


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Muck Shift

Just when is a deal not a deal…? I heard this story from a friend of mine the other week; there are some lessons to be learned! So, my pal is a developer and is building some houses on what is essentially a square site. Two sides of the square can be accessed from the road in a neighboring housing estate and the other two are beside a field owned by another developer. There is a huge pile of muck to shift before the actual building project; this phase is known in the trade – and not unreasonably - as a "muck-shift"! As there will be 80 -100 lorries coming in and out each day for 6 weeks, it was considered more convenient to access the site over the field, so an approach was made to the developer to discuss the terms under which he would allow access. This is a standard arrangement and the deal typically is that the field would be returned to the owner in its original condition. Developer makes a bit of money, where otherwise he wouldn’t; homeowners in the adjoining estate are less inconvenienced; builder does not need to spend money cleaning the streets and getting them back to a usable state at the end of the project. Win-win.

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