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Podcast Transcript: Let's talk about the psychological art of negotiation.
At root is the concept of the "win–win" strategy, the idea that any deal can be structured in such a way where both parties walk away thinking they profited.
Crucial for a win–win is access to the other party's motivations, intentions, fears, etcetera. And the talent to know another's perspective is thought of as the ability to empathize—to stand in their shoes and feel what they feel.
But research published in the April issue of Psychological Science tells a cautionary tale. Researchers found that empathizing with your opponent can wreck the deal.
152 business students had to negotiate the purchase of an impossibly high-priced gas station. One group was asked to imagine what the seller was thinking, and the other had to get in touch with what the seller was feeling.
The scientists found that whereas the empathetic group achieved the highest level of seller satisfaction, the more calculating group secured the greatest number of deals.
So take heed: get inside the other's head, but don't get so close that you start feeling their pain, lest you appease them to make them happy, then leave the table having lost not only the deal, but emotional energy, too.
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1 Comments
Add CommentIn real business situations, it is usually a good idea to consider the deal over two time frames, a short term time frame and a long term ("life of the contract") time frame. Measuring deals closed only measures the former. If you are a sales person, whose commission is based on deals closed, then that is all you probably care about. But if you are an owner of an ongoing business, you might be much more interested in the longer time frame. Pressure sales today may yield extra revenue today, but may destroy relationships or reputations that cause a loss of income in the future.
Reply | Report Abuse | Link to thisAny business owner or sales manager who has employed an overly aggressive sales representative, may have experienced the see saw emotions that result when they discover that their top sales rep (who quickly becomes the most compensated sales rep) has bullied people into signing unfavorable contracts, and that now these people no longer intend to comply with those contracts and may be actively discouraging other potential buyers from doing business with they company and these disintegrating deals may actually be costing more than they were originally worth.
So, it while it is interesting that people who were empathetic to the other side were more satisfied with the negotiation, but those who did not closed more deals, it would be even more interesting to see how many of those additional deals later resulted in buyers remorse, noncompliance, or otherwise unravelled, and what the relative costs of the unravelled deals were compared to the extra benefits those extra deals generated.
Maybe empathy keeps negotiators from making bad deals that will unravel later. I think that would make a useful follow up study.