Sales negotiation trainer & keynote speaker, Tony Perzow, speaks to why people “suck at negotiating”

Introduction of our guest, Tony Perzow.

Stefan: Welcome to the Great Sales Leaders Know podcast. Our guest today is Tony Perzow, a negotiation keynote speaker & trainer, an international sales expert, and author. He has led presentations and workshops for over 10,000 professionals from companies like Walmart, Apple, Google, Microsoft, and Intel. In his seminars and workshops, he incorporates age-old negotiation tactics with cutting-edge conversation A.I. data, along with game-changing challenger sales methodologies to help organizations negotiate with a potent modern day process. You can check more about Tony at his website, www.TonyPerzow.com.

Stefan: Tony, how’s it going today?

Tony: It’s going great. Thanks so much for having me on.

Stefan: Awesome! You’re in Chicago for the sales leadership summit, correct?

Tony: I am. I just finished teaching a two-hour workshop on the concession making strategy and it was a lot of fun. I gave an hour of content including 10 negotiation tactics and strategies that everyone must have. Then, I had everybody negotiate a case study so they could apply these tactics that I taught them and then I did a critique of their negotiations so they can see that these tactics and strategies that I teach actually work and they can see them evidenced in these negotiation simulations. So it was pretty successful and it was a lot of fun.

Stefan: That’s great to hear. It sounds like a great event!

Stefan: Today we’ve got three primary focuses. I’d love to talk about negotiation tactics specific to salary negotiations followed by the unhealthy mindset that many sellers have when in a negotiation, and that is not understanding the power that they possess. Last, but not least, you have a forthcoming book titled You Suck at Negotiating but You Don’t Have to with A Mindful Negotiation Practice. I’d love to hear a little bit about what the key takeaways will be from it.

Stefan: How did you get introduced to sales and how did you get to where you are now?

Tony: Well, it’s an interesting path. I was just having this conversation and it’s like some of these things are in our DNA. I live in L.A. and I was having a conversation with this UFC fighter. He’s retired now and he must be in his mid-40s. He was talking to me about how he grew up without a father. He left him when he was a baby and he never met him until he was in his 20s when his father came back around. He didn’t know anything about him and he wound up becoming this UFC fighter and he found out after 20 years that his father was also a fighter. So these things kind of follow us along. In my case, I’m from a long line of salespeople and I was raised by my father. He was a single dad and he was a serial entrepreneur, meaning every week was a different business idea that he was starting or working on. And I joked that – and this is true – that my bedroom became the room where all his failed business ideas lived. As a kid, I remember jumping on the phone and trying to sell his failed business ideas. Because we didn’t have a lot of money growing up and couldn’t afford babysitters for me, he would drag me along to conferences, trade shows and to retailers. He would show me how to merchandise and how to deal with buyers. Business and sales was kind of ingrained in me as a young boy. It just made sense that when I hit my 20s that I would kind of follow suit. So, I became an entrepreneur and also had a number of sales jobs as well.

Tony: Right before I started teaching negotiation, there were a couple of years where I went back and worked for a company. I went back to the corporate world and I worked for a company called ESI. They’re the world’s largest closeout trading company in the world; a billion-dollar company. So on any given day, I was buying deals and I was selling deals. So, I would be buying fifty thousand TV’s at once. At any given time I had a hundred million dollars that I could spend on closeouts. And then I would have to actually go and sell these closeouts whether it be TV’s or turkey roasters or golf bags. Every given day we had tons of SKUs and I would have to get a good deal on them, buy them and then turn around and sell this deal to a Costco, Walmart, Sam’s Club, or some sort of foreign distributor, and try to sell it before it ever even hit our public warehouse. So I would try to sell the whole lot so we didn’t have to store these goods. They could just go right to the retailer that I was selling it to. I learned a lot about negotiation, a lot about buying, and a lot about sales in that process. I think it’s just as I said at the beginning, it’s a part of my DNA.

Stefan: It’s interesting, too. You mentioned that your father was a serial entrepreneur and obviously you’re an entrepreneur yourself so I’m assuming he played a factor in that decision?

Tony: Yes. I mean, my sister is an entrepreneur. So is my mother and my father. Most of my family is. I grew up in Montreal in a French-Canadian environment. I grew up as a minority. I grew up as an anglophone, English speaking person. It got to a point where there’s not a lot of opportunities for English speaking people in the corporate world of Quebec because you need to be French. Growing up in that environment, as an English speaking person living in Quebec, you kind of have to create your own opportunities. I saw everybody around me creating businesses and that was normal to me. I’ve always aspired to have my own thing and work on my own thing. I don’t think I would have it any other way. Even with the instability and unpredictability of being a business owner, I just I couldn’t have it any other way.

Stefan: Let’s face it, you’ve witnessed hundreds, probably thousands of negotiations throughout your career. What are some inherent flaws in negotiating? Why do people suck at negotiating?

Tony: Well, number one, it’s geographical. Anybody living in the United States or Canada are at a disadvantage because we kind of have it easy, right? I spent some time living in Cairo and I remember the first night I went out to the market to buy some vegetables, potatoes, and rice; some staples to have in my little apartment in Cairo. I remember I went into these little markets and I bought just a few items; a bag of rice, potatoes and some vegetables and fruit. It took me an hour and forty-seven minutes to buy three items because everything I had to negotiate over. The thing is, if you grow up in other cultures and other countries, negotiating is a way of life. It’s part of life. You literally come out of the womb and your parents are teaching you how to haggle because your livelihood is dependent on your ability to negotiate. Here in the United States and Canada, we have it easy. We have fixed pricing. You go into a grocery store and you see a bag of almonds for $3.99. No one ever says, “you know what, today I’m going to offer Loblaws $2.27”. The only negotiation is whether you’re willing to pay $3.99 or not. It’s a muscle that doesn’t get exercised with us. It’s a muscle that doesn’t get worked. In fact, it’s a muscle that we avoid. Here in the States, we have CarMax commercials that say, “Come buy your car from us! You don’t have to negotiate.” We’re scared of it. We’ve become deathly scared of negotiation and that’s a big issue. We’re not practiced, we’re scared of it.

Another reason is that we generally in the United States and Canada don’t like combativeness. We don’t like conflict so we avoid it. We don’t want to step on people’s toes. We want people to like us. There’s an epidemic in this country called negotiating through email. It’s much easier to negotiate with someone when they don’t have to see us. We’re working against ourselves all the time. We don’t like face-to-face communicating because it makes us feel uncomfortable. There’s a lot of things that are hindering us and one of the first things I teach people is that these are the things that are killing you; not having skill, being scared to do it, and not liking conflict. I start teaching people to start looking at negotiation as a game because it really is a game. A lot of it is smoke and mirrors. You go into negotiation and you’re only showing cards you want people to see, you’re not showing cards that you don’t want people to see. If you can start seeing it as a game, and I teach negotiation like a game, you’ll take it less personally. All those things are reasons why we have trouble doing it.

Tony: The biggest reason people suck at negotiating, which is what my book is going to be about, is that we need to be prepared. It’s like that old expression, “you’ll do better in life if you’re prepared”. How are you supposed to do better in a negotiation when you don’t know how to prepare for negotiation? How are you supposed to do your homework when you don’t know what the assignment is? So, preparation is the big thing. The problem is most people are going out there just hoping for the best. We go out there shooting from the hip and hoping that it’s working and I’m going to get a good deal for myself. The fact is you need to schedule out two or three hours on your calendar and call that time, “preparing for a negotiation”. Most people don’t schedule any time to prepare for a negotiation. If you know how to prepare, then you’ll be a lot more successful. That goes for salary negotiations as well. You’ve got to be prepared. You’ve got to go in with clarity as opposed to vagueness.

Stefan: That’s a good point. I mean, in the on-boarding phase when you’re a new sales rep, you spend a lot of time getting to know the product, the service, the culture, the script and how to make the call, but from a negotiation perspective what you’re saying is a lot of people lack formal negotiation training. Am I correct in saying that?

Tony: Yes, they lack formal negotiation training. I was just about to pull a stat out of my hat. This is one of the largest negotiation studies ever done, it was a two-year study that had 5,000 participants, with some of the world’s largest companies participating in this study. What they found was that 80 percent of companies have absolutely no formal negotiation process whatsoever. 80 percent of the largest companies are putting their margins and their profits in the hands of salespeople and procurement who really don’t know what they’re doing. Additionally, I believe it was 70 percent of companies who participated in the study have no negotiation planning tools. There are no job aids. There is no kind of sales enablement that comes in the area of negotiation. Then they also showed that the companies that did have a negotiation process during that two year period saw an increase to their net income of 60 percent. The companies that had no negotiation process saw a decrease in their net income of 40 percent. That’s a huge difference. Companies that have prepared salespeople working for them when it comes to negotiation, who are skilled and know what they’re doing, perform better. I often say that the reason why a lot of companies are not reaching their targets or their revenue goals is not really because of their product or their innovation or the lack of sales, it’s due to a lack of negotiating skills. Of course I’m going to say this because I’m biased, but you invest in negotiation training, it pays off.  

Stefan: What is some advice you can give someone who is or will be entering a salary negotiation?

Tony: The first thing is to sell your value. If you can sell your value really well, a lot of negotiation issues will disappear. The thing to understand is that in the interviewing process, you’re a salesperson, right? So approach the interview process like you would approach a sales opportunity. A lot of people, what they do is they start tap dancing. They start putting on a show, talking and throwing their resume around. They talk about all of their accomplishments and how amazing they are. That’s just kind of bragging. We already know that bragging doesn’t work when it comes to sales. In fact, artificial intelligence is telling us that you don’t want to spend more than two minutes in a conversation bragging about yourself; it’s called a two-minute cliff. Every second after two minutes, your chances of closing that sale drastically decrease. So the majority of people will go into the interview process bragging. Approach the interview as a salesperson and sell yourself as a solution to a problem. When it comes to the actual negotiation, you need to be prepared. I definitely would recommend using this planning guide that I created. It takes about 10-15 minutes and it’s a planning guide that you fill in that will bring you clarity in a negotiation. You’ll learn to know what you want, what the company wants, what your mission is as well as your objective in the negotiation with this company. What’s your BATNA, which is your Best Alternative to a Negotiated Agreement, which is basically your plan B. If this deal falls through with this company, what’s my plan B? What’s the organization’s plan B? And then more importantly, what are some things you can trade? So what are some things that are of low cost to you and might be high value to the organization? So if they say, “Listen, we can’t pay you a hundred thousand dollars a year. We can only pay you 80 thousand dollars a year”. You can say, “Yes, okay, fine. I’ll take 80 thousand dollars if you do this for me”. So, my number one tip is trade. Don’t ever give things away for free. If the organization who you’re trying to get a job with makes you an offer and it doesn’t match what you want, then that’s okay, but instead of just saying yes or no, trade with them. Try to get something in return. I call this the “if you” rule. Never make a concession without attaching those two lovely words “if” and “you” to the concession. Ask for things in return, it’s definitely something you should do.

Tony: Oftentimes, we feel a lot of pressure. I just had this situation right now in the workshop I did. I talked about deadline tactics. I talked about how buyers will put deadlines on salespeople because they know that the closer you get to that deadline, the more pressure the salesperson feels. When salespeople are under pressure, they make bad mistakes and make big concessions. When we’re in a salary negotiation, there’s a lot on the line for us. We feel a lot of pressure. If we don’t have a plan and something to fall back on and say, “this was what my plan was,” we’re bound to make stupid mistakes and accept bad deals for ourselves. The next tool to use for preparation is my power ledger. It’s a ten-minute exercise where you go through all the different power sources. There’s maybe about ten power sources in a negotiation where you or your buyer has leverage. There’s always a seller and a buyer in a negotiation. Even if you’re negotiating with your wife or your husband, there’s someone who’s selling and there’s someone who’s buying. In this exercise, you give yourself a little checkmark for each category. Ask yourself if you have the power in this category or does the company, the hiring manager, or whoever is hiring you. One of the biggest mistakes we make as negotiators is – especially in the sales role – we think that the buyer holds all the cards. We think the buyer has all the marbles and we are going in and we have no leverage and the buyer has it all. That is rarely the case. I’ve had over 10,000 people negotiate and practice these case studies in my seminars and in my classes. One thing I can say for certain is that you always have more power than you think. If you go into negotiation thinking, “I don’t have any power and this company has all the power,”  I guarantee you, you’re not going to make a good deal for yourself. What a power ledger does is it shows you where your leverage is, where the company’s leverage is, and 9 times out of 10, you’re going to walk out of that exercise realizing you have more power than you think. This will make you more confident which will allow you to approach your negotiations with more confidence. You’ll be less likely to cave and give in and make dumb concessions.

Stefan: What are some additional ways that you can overcome this mindset? So if I’m a sales rep, how can I overcome this mindset that I don’t have any power?

Tony:  Negotiation is risky. It’s extremely risky. In fact, everything I teach is risky. If you did a four-day workshop with me, during those four days there’s not one thing that I would teach that would work 100 percent of the time. One of my favorite negotiation quotes is by Sir Francis Bacon and he says, “All negotiation involves work, discovery, and taking risks. The person willing to suffer uncertainty has a better chance to tip the balance of power in their favor than those less bold”. What this means is that most people are risk averse and most people approach negotiation saying, “I’m not going to take any risk”. If you’re able to take some risk in your negotiation – and when I say taking risk, that just means utilizing tactics – you’re going to see the results. I tell people, even if you’re not confident, at least pretend to be confident. I often say, usually the first thought that comes into your mind is the wrong thought because that’s usually a risk averse thought or “i’m scared to negotiate” thought. I teach this stuff and even I still don’t trust my first thoughts. I’ve got to be able to stand back and say, “I’m going to try to get a little bit more. I’m going to take a little chance. I’m going to aim a little higher”. I want to tell people out there that you need to aim high. Aim higher than you think you can. Try to get more than what you think you can and don’t trust those first thoughts in your head. Take a second and ask for more because I guarantee you that the first thought that’s going through your head is not enough. If you’re about to make a concession and give some sort of discount or lower your ask for your salary, take a moment, stop and cut that concession in half. Take more risk and you’ll be amazed at what starts happening if you could just start taking more risk.

Tony: Secondly, and this is what A.I. is telling us as well, is that confidence is key. Even if you’re not confident in your pricing, even if you’ve fallen for the brainwashing that your competition is a lot cheaper or that your pricing is way too high, you need to be confident. We’re all told, salespeople especially, a hundred times a day that their pricing is too high and that their competition is cheaper. It’s very easy to get brainwashed, but at least have confidence when you approach pricing or salary conversations. A.I.’s telling us that top sales performers use a lot less words to explain their value or their pricing. So, when you’re trying to sell, let’s say your salary, you’re saying, “I want $150,000 a year,” don’t over explain that. People who are less confident use a lot more words to explain their pricing. So, be brief and don’t over explain it. Top sales performers use 102 words on average to explain their pricing when bottom sales performers are using over 150 words to explain their pricing. Also, A.I. is telling us that top sales performers take a 2.1 second pause after they say their price. After you say your salary, take a pause. Bottom sales performers tend to keep on talking. I do this myself. I was just in a sales call with a construction company who wants to potentially hire me to train their salespeople. I quoted my price and as soon as I put my price, I said “Don’t worry, that’s gross. You won’t have to pay a penny more. That’s all that you have to pay. Everything’s included. The LMS is included in that.” In my head, as I’m saying these things out of my mouth I’m thinking, “Just shut up already.” Why am I saying these things? I teach this stuff and I make this mistake. So again, every time you talk about price or salary or every time you’re in negotiation, you have to pretend like you’re the king of the world and say things with confidence. You’ve got to show confidence because people smell weakness a mile away when it comes to negotiating.

Tony: I was doing a cold calling workshop with a steel company and I’m training their salespeople in challenger sale methodology. How do you use challenger sale methodology in a cold calling situation? I would have people create cold calling scripts, about 2-3 minutes and have them perform it in the workshop. What I found was that people have a tendency to inundate, they use way too much information. It’s challenger sales, but finding a teaching point. In a cold call, you want to find one teaching point. One thing that you can get your buyer thinking, “Huh. I’ve never thought of that before.” What I find is that they start throwing all these teaching points around. They start coming up with three or four points, and they inundate the buyer with all these teaching points, overwhelming them and then nothing comes across as clear. Another age-old negotiation tactic is called argument dilution. Every time you’re making an argument, you always want to use just one argument. Let’s say you’re in a salary negotiation and you argue “my salary is worth $250,000.” You need to then explain your position. Why are you worth $250,000? You’ve got to use only one argument, one explanation. What people tend to do is that they start throwing all these different arguments out there. Some of their arguments or explanations will be wonderful, but some of them will be weak. Whenever you start throwing up more than one, what you’re doing is diluting the strength of your strongest arguments and giving the buyer or the organization, an opportunity to find gaps or holes in your weakest argument. Don’t think that there’s strength in numbers when trying to persuade somebody and that you need to throw all these amazing stats and data at them.

Stefan: Tell us a little bit about what readers can expect upon release for your book?

Tony: Well, it’s basically covering planning and preparation, which I think is the most important factor in a negotiation. How do you plan and prepare for a negotiation? What kind of questions do you need to ask? What kind of information should you be trying to gather? What are the best ways to gather information? I’m covering everything that you need to know right up until the bargaining stage, the point at which you are actually exchanging numbers or talking numbers. It’s kind of like a step-by-step approach. I’m putting it in a way where it is not going to take a lot of your time. Spend 30 minutes doing these before a negotiation and you’re going to make more commission. You’re going to make more money.

Stefan: Where will it be available for purchase?

Tony: It’s probably gonna be available fourth quarter of this year, and it’ll be available for purchase on all the Amazons and Kindles, all that stuff.

Stefan: Awesome. I want to thank you very much for chatting with me today. I think we covered a lot of relevant topics and I love the enthusiasm that you possess when talking about your area of expertise. I want to wish you all the best and I’m sure we’ll chat again soon.

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