Buyer's Viewpoint of The Bogey

I hope you remember the discussions we had during our negotiation seminar about the "Bogey." I created this negotiating term after conducting my initial research into negotiating. I use this label to describe a simple negotiation skill that really works. All you have to do is try it a few times to prove this to yourself.

In the hands of a skilled buyer or a skilled seller, a Bogey can benefit both parties and can truly lead to a both-win negotiation. This month I'd like to illustrate how a buyer, or someone negotiating for resources, might utilize this simple negotiating technique. Next month's tip will explore how a salesperson, or someone selling an idea or concept, might use the Bogey.

Here are some examples of the Bogey:

Let's say you want to landscape and fence your backyard in an unusual way. The job is reasonably complex due to the layout. You get a bid of $25,000 from a local contractor. It is neither the lowest nor highest bid, but you decide it is the most reliable and responsive—you'd like to do business with them.

The trouble is you only want to spend $18,000 to $20,000 for the project. So you try a Bogey. You tell the contractor that you really love their proposal, but I only have $18,000 to spend. The contractor will generally respond to the $18,000 Bogey by either changing their proposal or exploring what alternatives are available. They may show you ways to cut some costs that you never knew existed. They may also eliminate some of the "fat" that was included in their original proposal. You learn things you never knew existed about fencing, lighting brickwork, planting, and waterfalls. All of this puts you in a better position to buy sensibly at a reasonable price.

A Bogey should always be considered when purchasing a relative complex product or service.

• The U.S. Government uses it when they tell a defense contractor to take a closer look at their million-dollar proposal because the government budget is only $700,000.

• A school district uses it when it tells its architect to redesign the high-school building to fit the $22 million limitation imposed by the bond financing.

• A project manager uses it when she tells her technical services department that the implementation schedule only allows twelve man-days for their portion of the project.

• An industrial buyer uses it when showing the salesperson that the amount budgeted by the accounting department is less than what the seller bid.

What happens in each of these examples is similar to what happened with the landscape project. In all cases, the buyer learns more about the product and service, and what alternatives are available. It helps the buyer tap into previously undisclosed knowledge held by the seller.

Why does it work? When a buyer says, "I love your product but have only so much money," the salesperson tends to respond in a positive, friendly fashion. How can you be hostile towards someone who likes you and your product? The salesperson gets involved with the buyer and the budget problem. All that remains between them and a closed sale is a little problem-solving.

This permits the negotiation to move away from a competitive affair to one of cooperation. The salesperson, knowing that budgets do exist in the real work, tends to feel sorry for the buyer. Their frustration is directed against the "system" that senselessly and unfeelingly created this obstacle. This causes the salesperson to take a new look at the buyer's situation and real needs. Before long it is discovered that some items in the original price can be trimmed away, others can be changed, and still others can be adjusted by the buyer to help meet the budget. Each party has helped the other reach its overall goals.

Part of the reason the Bogey is so effective is that it involves the salesperson's ego. People like to help others in need. The Bogey gives the salesperson a chance to show their knowledge of the business and dedication to the buyer's well being. The Bogey may not necessarily lead to a lower price for the buyer, but the buyer will be better off learning a lot more about the product or service than was known before.

Next month we'll talk about how the Bogey is an equally effective negotiating tool for sellers.