Negotiation Strategy – Don’t Leave Money On the Table
Happy Monday everyone! We decided to start this week off with a post that is true to any good negotiator’s heart, the problem with leaving money ON THE TABLE!
Before we dive into the post, take a half of a minute to watch the below video. This is something that is a perfect visual display of collectors’ reactions when they find themselves leaving money on the table. Don’t let this happen to you and your team!
A good negotiator knows that the first person to drop a position, usually loses the battle. Yes, negotiations are battles, but not all battles have to end by one party destroying the other. This is the beauty of negotiations. The idea is that two individuals start in their respective positions in the negotiation. One at Point A and their adversary at Point C. Somewhere, in between them both, there is a mutual meeting point within both of their positions that would leave them both feeling good about the outcome. Let’s call this Point B. The idea here is that Point B works for everyone, and although some negotiators will get their adversary from Point C all the way to Point A, they would both be happy with Point B.
So the key here, as a debt collector, is to remember that you won’t always win if all you do is try to get your counter part to meet you at Point A. Even though Point A is the goal, stubbornly sticking to it will leave you empty handed. Leaving NO money on the table means finding the sweet spot. This spot could be Point A, Point B, or even Point C, but a good negotiator will assess the situation, and then proceed. Trust us, we’re not saying any of this is easy. There are so many variables that go into play here. You may not have any flexibility at all, and Point A and Point B might as well be right next to each other. Maybe the debtor heard a rumor that ABC Bank is settling at 60% this month and refuses to budge, so Point B is all the way down by Point C. The idea here isn’t that Point B is always beautifully presented in the middle of two positions, but a good negotiator will identify Point B before jumping into a negotiation.
Other than collectors’ notoriously annoying attendance issues (LOL), leaving money on the table is one of the most challenging issues a collection manager has to deal with. So many times, new collectors, or collectors struggling with a slow month, and even the lifer with 20 years experience will hop on a call and the first thing they say at the negotiation table is; “We’re willing to offer you 60% settlement if you can pay this month.” … ROOKIE MISTAKE! You may have left 40% of the money on the table, and if the debtor knows anything about negotiating, they’re countering at 30%! Assess before you make a mess!
Negotiation is an art form. There are people out there who make BIG BUCKS as negotiators. That’s because it’s tough to do! There are amazing negotiators in the collection industry, but there are others who need help, and if they’re on your team, help them! Improving one collector’s negotiation strategy can increase their recoveries by 5 – 10% month over month. You can do the math, but if your team overall improves in their negotiations, you can see significant increases in your company’s performance across the board. The reason this video is such a good learning tool for new collectors, or even collectors who need a quick pep talk on negotiation strategy, is because it provokes the most innocent form of feeling like we missed out. Exemplified by the little girl who says “Wait! You didn’t say I could have a real pony!?” with the man who simply responds… “Well, you didn’t ask.” That heart crushing, gosh-darn-it I could have had the real pony feeling is one we all know too well.
Next time you’re in a negotiation, remember the little girl who didn’t get the real pony, know your position, find Point B, and don’t forget to ASK!!!!