Negotiations are an essential part of human interaction, and we all want to get the most out of them. Some people might presume that being warm and friendly will work in our favor.
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However, recent research study by Harvard Business School suggests that this may not constantly hold true. Instead, adopting a firm and hard interaction style might lead to better results in zero-sum negotiations.
When it does not pay to be great
The initial field research study utilized Craigslist.com, a platform where price negotiations are not just common however anticipated. A research assistant sent out messages from a fictitious Gmail account, utilizing a gender-neutral name, to smartphone sellers on the platform.
The assistant sent 3 different warm messages and three various hard messages, arbitrarily differing the communication design in the initial message but always asking for a 20% discount from the sellers initial rate. When a seller responded, the negotiation was over regardless of their negative or favorable reaction. This was partly to streamline the conditions of the experiment however likewise not to squander the sellers time with disingenuous questions.
In 4 different experiments involving over 1,500 individuals, the scientists tested the effects of warm and friendly versus difficult and firm interaction designs while keeping economic elements continuous. The individuals were advised to make identical preliminary offers while tracking concession patterns so that the scientists could measure the effect of interaction design properly.
An example of a warm preliminary message requesting for a discount rate reads:
Hi there– Im pleased to see your post about the phone. This iPhone matches what I wished to purchase– you should have excellent taste:-RRB-. Exists any chance you could offer it to me for 80% of the market price? Offered the costs on similar phones currently for sale, I would actually value it, and it would help me out a lot! I live in the area, and I can pertain to satisfy you anywhere that is convenient for you. Please let me know by tomorrow if the rate is ok for you– and thank you so much for your time and consideration. Hope you have a terrific day.– Sincerely, Riley
On the other hand, a difficult offer inquiry reads:
The typical phone price in the research study sample was $435, so this suggests that the difficult and firm requests created $35 more cost savings per phone than the warm and friendly requests.
Researchers discovered that both warm and friendly messages and tough and firm messages were equally most likely to generate a counteroffer. While firm messages generated more active rejections (24%) than warm messages (14%), warm messages were more most likely to be neglected (54%) than company messages (45%). This puts the being good strategy at a drawback in this online context because its typically better to get an active rejection than getting ghosted due to the fact that a rejection still provides an opportunity to continue negotiations.
I saw your post about the phone! This iPhone matches what I wished to buy. Im prepared to pay 80% of the market price. Offered the prices on comparable phones presently for sale, Im firm on that rate. I reside in the area, and I can meet you any place. Let me understand by tomorrow if the price is ok for you otherwise Ill carry on.– Riley
Most notably though, when sellers did offer a discount rate, it was larger when the message was difficult and company. Sellers were more going to accept the 80% discount rate deal when it came from a difficult purchaser (about 13%) than from a friendly purchaser (less than 9%).
Do we have a deal?
In another experiment, this time live in the lab with 140 individuals, the researchers might observe the negotiation procedure from start to end up, not simply the very first deal and the counter-offer. Participants were randomly assigned to play the role of either the purchaser or seller of a bowl for ten minutes. The purchaser always made the very first deal using either a friendly or hard communication style.
One individual who had to communicate in a friendly made this offer:
Its the last piece I require to complete what a dear relative of mine used when we would spend time together and it would imply a lot for me to have it, however I do not have so much to use. If you d be prepared, I can offer $250 for it.
The tough offer looked like this:
The findings appeared in the journal Management Science.
These rounds of experiments suggest that being hard and company can save you more money in your negotiations than being friendly and warm to the seller– however with some cautions. The settlements were all distributive, indicating they involved bargaining over the rate of a particular item. Thats in contrast to multi-issue or integrative settlements where products and services can be proposed or withdrawn throughout the settlement procedure. In the former, the pie so to speak is fixed whereas in the latter, more complex kind of settlement the pie can be broadened.
When they evaluated the content of the settlement conversations, the researchers speculated that the warm and friendly style of settlement might be perceived as low in dominance, which might entice sellers to think they can draw out more from them.
When consulted with an aggressive take-it-or-leave-it deal, sellers often participate in equally aggressive counter-offers, permitting steep discount rates. Meanwhile, friendly buyers were more most likely to make concessions with the sellers.
In addition, sellers didnt mind handling difficult buyers, score both kinds of buyers similarly during follow-up questionnaires.
Hi! I desire to buy this sugar bowl from you, and I can offer you $250 for it. Do we have a deal?
In another experiment, this time live in the laboratory with 140 participants, the scientists might observe the negotiation procedure from start to finish, not simply the first offer and the counter-offer. These rounds of experiments recommend that being hard and firm can save you more cash in your negotiations than being warm and friendly to the seller– but with some cautions. The negotiations were all distributive, suggesting they included bargaining over the rate of a specific item. Thats in contrast to multi-issue or integrative settlements where services and products can be proposed or withdrawn throughout the settlement process. These expenses are incurred purposefully and strategically, whereas a person who is excessively friendly in negotiations might wrongly assume that others will return the favor (and get frustrated when it inevitably does not occur).
The authors of the study note that people should not translate these findings like they need to be jerks to earn more from their negotiations. The tough purchasers were still considerate. They note that there is a time and place when being extremely nice in a settlement is the much better call– even if that suggests losing money, time, or some other resource that you value in the short term.
If you are working out with your partner about who needs to do which task, it could be in your best interests to lose some ground by making more concessions. Regardless of the cost, you might be winning by protecting the relationship. However, these expenses are sustained intentionally and strategically, whereas an individual who is excessively friendly in settlements might incorrectly presume that others will return the favor (and get irritated when it undoubtedly does not happen).
According to the findings, the friendly and warm arbitrators ended up paying about 15% more for the exact same product than the difficult and company individuals. Why though?