The Funnel

Some negotiations involve only a few issues—and often just one, such as price. Others may involve a whole host of things. If you’re negotiating a commercial lease, for example, price per square foot is only one factor, and may not even be as important as included amenities, improvements, lease terms—you get the picture. In building its strategy before the negotiation, the team should have attempted to scout the entire field, identifying the many issues that would have to be negotiated. In deciding on its tactics, the team also should decide how “wide” to leave the field.

There’s a tendency for negotiations to narrow down into a funnel, leaving the harder points toward the end. Earlier, I mentioned how agreement at an early stage helps build rapport for the tougher spots toward the end. That’s the top part of the funnel. When the snags start coming—when you’re a thousand dollars apart on the car, or maybe a half dollar on the lease footage—that’s the funnel.

Negotiating the points in the funnel is, by definition, the toughest part of the deal. You give me this, I’ll give you that, helps some people reach an agreement. So some teams will either:

1. Hold back a few “gimmes” during the earlier process as bargaining chips in the funnel, or

2. Revisit some of the earlier points, bringing them up again.

I understand why people do this, but I have problems with both a and b.

Let’s deal with b first. If you start revisiting things, you’re inviting the other side to do so as well. That may not be fatal—and shouldn’t be—but it tends to undermine what you’ve done to that point, and at the very least it’s going to increase the negotiating period. (Of course, if you’ve made a mistake earlier, you do want to correct it.)

My disagreement with a is a little more subtle. Since my negotiations depend on rapport, I prefer to “bank” trust in the early stages. Psychologically, this gives me more leverage as we reach the narrow point of the process. But I admit, I’m very comfortable with being stubborn and saying no. Just as important, I point out what a great, easygoing guy I’ve been in the early stages, already agreeing to everything the other side wants. The funnel “gimmes” become chits on my side, even if they weren’t very important issues for me to begin with. The key to my strategy, of course, is my willingness to stick to my position and take the out if I have to. Personally, I don’t think that’s any easier if I have a small point to trade in exchange, but some people do. The key is to realize that you’re messing with tactics here—NOT your goals.