Hey BATNA, BATNA, BATNA, swing!

In a "down" market, I have seen few principles as clearly as I have seen the principle of BATNA. What is it? It is the Best Alternative to a Negotiated Agreement. Said simply, it is your next best choice if this current deal falls through.

I'll never forget being in 9th grade in Greer, South Carolina. I was attending my first year of high school, which I began with much intrepidation. Towards the end of the year, a senior girl I had met invited me to her prom. Me? A 9th grader? I know what you're thinking - she must have been a dog! Did she have fleas? Did she kick her leg when I scratched behind her ear? Actually, she was pretty cute, just shy. My brother, who was a senior that year at the same school, was incredulous! How could his little brother be going to his prom? He begged my parents to not allow me to go, he bribed me, and maybe even threatened. At the end of the day, I still went. K (I'll protect her full name in case she is some huge research physician with a large family today) chose the outfit - a white tux with tails and electric blue cumberbund. Hey, it was the 80s, what do you expect?

So, I'm on cloud nine - the only 9th grade boy going to the Senior prom. There was a couple 9th grade cheerleaders, but no other guys. K picks me up, as I don't have my license yet, and on the way to dinner she thanks me for coming, we exchange pleasantries about how nice the other looks, etc. Then she drops the bomb. She describes her BATNA. While I was her first choice, she begins to wonder aloud if her second choice is coming to the prom. What?!? I know this guy - i served detention with him - what a loser! Yep, I went on an emotional roller coaster as she explained her simple plan had I turned her down. The evening ended well, as did the few month romance that followed. I learned something very valuable, though, from K. EVERYONE has a BATNA. Everyone has an alternative choice. You don't always like it, or sometimes not creative enough to see it - but it's always there. Eventually K found a better BATNA in college!

In negotiation, it's always there, just under the surface. Like I was with K, salespeople are often afraid to ask. They are often afraid to suffer by comparison. Will my product be better? Is their price better? Hopefully this customer likes me better, we've had lots of laughs - then they'll forget my competitor has a better deal. Ouch - their commute to work is actually shorter if they buy that resale! You know what i mean - we've all been there.

Here's my advice: Take your AT-BATNA and SWING!

What do I mean? well, first - your customer isn't the only one with a BATNA. You have one, too! Often we forget about ours and focus on theirs. You always have a BATNA. Here's a few you always have:

1. One alternative you always have is to wait for another buyer. Now, you could lie to your customer and try to make them believe your BATNA is more imminent than it appears. "Yep, I think they're on the way now, just stopping for lunch on the way!" I DON'T recommend this. However, you should always ACT AS IF this is true. Your current customer makes a lowball offer that is totally ridiculous, you should calmly respond: "My apologies, I obviously didn't clearly state the price or demonstrate the value. I should try again. We have never sold in that range for our product" This leads to your next BATNA-

2. Competitive data - Show your recent comparable sales, then adjust for the special nature of this "subject" property. Your customer is negotiating partially because they want a great deal, but also because they don't want to OVERpay. Prove that they're not. Why is this a BATNA? This is a BATNA comparison to the past - it infers what the next buyer MIGHT do based on a history of what others HAVE done.

3. Change the plane. No, i'm not inviting you to go to Hartsfield Jackson just to plane hop. I mean change the LEVEL of the discussion. One of your alternatives is to change the focal point of the discussion, and take it to another level. What are the top 5 core reasons this buyer is considering buying from you? I bet you can name 5 or more that are NOT price. Commute to work, school district, stability of builder, neighborhood amenities, layout of floorplan, and YOU. As you change the plane of the conversation, you can help the buyer question their BATNA on these other items!

So, we've proven that YOU have a BATNA, but you still need to take your At-BATNA. How do you discover theirs? Well, under the 3rd bullet point above, I helped you think about WHY they are buying. I guarantee it's not price. "Well, you're just nuts, then aren't you, Stephen?"
No. I can prove it. When did our industry sell the most houses? the year the prices were the highest. Ouch. Crud. There goes that theory. Just for fun, what year in the last 2 decades did our industry sell the least houses? that would be the last 12 months, when prices were the lowest of that period. Oh, man. there i go again - blowing the theory.

So, if price isn't really why they are buying, what is? Life changes. We'll talk about that in another blog this week. But, since their life is changing, they have certain hot buttons. We'll talk about THOSE in yet another post. However, know this - their BATNA is more tied to their hot buttons than the price. People negotiate with price because it's easiest and because currency is neutral. Deep down, however, they want the best deal on the product they really want. If schools are a hot button, I GUARANTEE their BATNA is in a great school district. If commute is a hot button, I betcha my holey socks that their BATNA has a commute consideration they are looking at. They either like your commute better, or like your price better. Maybe both. But you won't know until you discover it.

Imagine how much more confidently you can negotiate if you understand their hot buttons, and if you know their BATNA. NOW you know your advantage to that BATNA, and whether it's a serious competitor. Do me this favor, focus in on the BATNA, and how yours is superior. We all do better when you take your AT-BATNA and SWING!


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