Being warm and friendly to everyone around is how we were taught growing up. But these good qualities may not necessarily make you a better negotiator as you shop around online in the comfort of your own home. So the question is, does being nice pay off at the virtual bargaining table?
Professor Martha JEONG, Assistant Professor of the Department of Management, says that buyers who are warm and friendly while negotiating with sellers often put themselves in a disadvantageous position, contrasting to conventional wisdom.
Being nice can backfire
“Oftentimes when we teach negotiations, we talk about how to become a good negotiator economically. We know about making a good first offer and not too many concessions. But during negotiation we’re not just exchanging values. What about the communication style? Do the words we speak matter?” says Prof. Jeong, whose research interests lie primarily in the areas of judgment and decision-making and negotiation.
But what she found was not quite what she was expecting in a study co-led by her.
Tough buyers talking firm and direct ended up paying 12% less than the warm buyers who gave more gratitude and compliments to their counterparts, and more important, tough buyers are almost 50% more likely to have their offers accepted by the sellers.
“We found that when one uses polite language in the negotiation, he/she is often perceived as less dominant by the other party,” says Prof. Jeong. “When the seller senses that, he would then infer that the buyer would be interested in the product even if the price goes up—and that is exactly how it played out.”
Choose your words carefully
During the Covid lockdown, people are turning to online shopping, not just for grocery and meals but secondhand items as well. How can we negotiate a better price without reading someone’s face?
“Negotiations are very different when done online than face-to-face,” notes Prof. Jeong. “In a face-to-face scenario, there is tone, body language, facial expression. But in an online scenario, information is much more limited: words you are using would matter even more, as all you and the other party see are the words in the written messages.”
“In the study, buyers used phrases like ‘I am so excited’ and ‘please make my day’ usually paid a higher price than the tough buyers, who often negotiate with a simple one-liner such as ‘this is the best I can do’,” says Prof. Jeong.
So keeping a tough and firm stance may help you get the best deal. However, personalities are hard to change. What if the negotiator is always a Mr/Ms nice?
“Interestingly, while many may find that being tough is too stressful to do in person, when you are by yourself typing in front of the computer, it would be much easier for you to assume that firm and tough persona. It may be a good time to switch your approach in that case in order to get an edge.”
Besides a little harmless disguise, an aspiring seller/buyer, of course, should always do market research, and gather as much intelligence as possible before entering the negotiation phase. The most important part about being a good negotiator, Prof. Jeong reminds, is preparing.
“Prepare as much as you can, and before you negotiate, be sure that you know what is your reservation price—the absolute ceiling you are willing to pay before you walk away. If this price is not very salient in your mind, then the chances are the counterpart would have a much bigger influence in the negotiation process, and you would end up being worse off in any deals,” the ultimate tip given away by Prof. Jeong.
But don’t be insulting
“I always try to be a tough negotiator, but that is not like I am being rude or threatening,” says Prof. Jeong with her pleasant yet firm voice complimented by a smile. “By being tough I mean we are being more direct and making bare commands because being warm and friendly do come with a cost. Not that people should not be friendly, but they should do it knowingly and understand the effects.”
Prof. Jeong and her collaborators are now looking to expand their research to include factors such as sex and age and examine whether these affect the outcome both consciously and unconsciously. If you want to master the art of negotiation in the digital age, stay tuned.