Business Negotiation May 7, 2014

Psychological Approaches That Lead to Closure

Negotiators settle when each party believes the other has conceded most of what it will and further efforts are not likely to be very productive. At this point, the desire to close starts to outweigh the desire for more concessions, and the parties move toward closure. To reach this point is in part a psychological process.

Psychological approaches like those suggested below can help lead to settlement:

One: Assure the other person that she is wise to reach an agreement. Give her good reason to support a closing decision now. Good references from pleased customers help. Tell her why she will be pleased and satisfied.

Two: Act as though agreement has been reached on the main issue and price. Start talking about details like where and when delivery should take place, the wording of a clause, or whether payment will be made by check, credit card or cash.

Three: Make repeated requests for agreement and closure. Don’t be afraid to say, “We know everything we need to know to agree, don’t we?” Say it again and again as you go along.

Four: If you get a “no” answer to the above, ask why. The other party will probably tell you. You will then have something specific to overcome or improve on. Do it again if the closure doesn’t follow.

Five: If you are a buyer dealing with a seller, get the seller as close to the money as you can. Show him the purchase order or the cash. Let him hold your cr4edit card or your signed check. Make the sale real and immediately accessible to him.

If you are the seller dealing with a hesitant buyer, it’s wise to connect the buyer with the joys of the product or service. Put him in the car. Get him in front of the computer. Let him get his output out of the printer. Let him push the buttons. Get him to try on the new suit, shirt and tie. Have him handle to product or get a hands-on feel for the service.

Six: There are people who coerce themselves into agreement because they feel guilty about wasting the time of the person they are dealing with. Rug merchants in Turkey know that Americans tend to buy if the merchant spends a lot of time with them.

Seven: Fear of loss can be as strong a motivator as the desire for gain. Many people are more strongly motivated by the desire to avoid loss than the pleasure of making gains.

A seller may urge closure on the buyer because without it they may have to sell their total capacity to someone else. This could be a disaster for a buyer’s organization, which has counted on the seller’s production capacity and technology. A large computer chip company did just that and thereby captured a huge order from a prime computer customer. The computer manufacturer could not risk losing the seller’s production capacity on its newly developed chip, so it decided to take no chances. It tied them up completely.

Likewise, a buyer can tell the salesperson that if the seller does not accept the offer now the money will not be available later. This is often done when budgets expire on specific dates and cannot be extended without government or higher executive approval.

In my next post, we will discuss even more psychological approaches that can help lead to closure.