Image Credit: Gregg Tavares
I think that we all realize that when we go into a negotiation, we are going to have to make some concessions to the other side. We’d all like the number and the size of those concessions to be as small as possible so that we can emerge from the negotiations feeling as though we got what we wanted without giving up too much. However, there’s an interesting negotiating strategy that says that if we go into a negotiation planning on making specific concessions, then we just might be able to get the deal that we’re looking for. What do these types of concessions look like?
What Is A Token Concession?
When we are making concessions during a negotiation, we tend to assume that a concession must be something that will really cost us, financially or otherwise, for the other side to take notice and give us what we want. However, it turns out that we can often make real headway toward our negotiation goals by giving a token concession to the other side. A concession like this costs us little. By inspiring reciprocation from the other side, a token concession can get us much closer to our goals in the negotiation.
It’s possible that you don’t believe that making token concession during a negotiation will get you closer to the deal that you are seeking. However, it turns out that real-world experiments have been performed that show that this is the case. There was an industrial trade organization that wanted to conduct a member survey via mail. Understanding that getting members to respond would be a challenge, the organization worked with researchers to determine whether it could boost the response rate by potentially offering different financial incentives for filling out their survey.
The organization sent the questionnaire with no financial incentive to one randomly chosen subgroup of members. Of this group, 20.7% returned a completed questionnaire. The association then promised to pay a second group of their members $50 if they completed and returned their questionnaire. This time, 23.3% of members sent the survey back – not very much of an increase from the first group. The association then sent a third group of members a single dollar bill – basically a token concession – along with the questionnaire. No other incentive was provided. This time, 40.7% of members from this third group returned completed questionnaires – clearly a much higher response rate.
Using Token Concessions
The result from the questionnaire study was confusing at best. It violates the predictions of standard economic theories. Not only was the so-called $1 ‘incentive’ considerably lower than the $50 incentive, it wasn’t really an incentive at all. Instead, it was a guaranteed payment regardless of whether the member complied with the request. As negotiators, we need to recognize this as being a strong pull to reciprocate. The question that we need to get an answer to is why did so many more members dutifully fill out and return their questionnaires? It seems that because they received $1 they felt obliged to comply because the dollar was not an incentive but rather a token concession.
Most cultures have a strong norm of reciprocity. This is the impulse to return a favor. In a negotiation, if you offer a concession, even a token concession, the other side probably will feel a powerful drive to reciprocate with a concession of their own. A token concession can be a strong motivator of reciprocal behavior on the other side’s part. To improve the outcome of your next negotiation, consider making any of the following token concessions:
- Encourage the other side to choose the time and location of your first negotiating session, such as their office rather than yours.
- Bring doughnuts and coffee to share with the other side.
- When you get down to business, agree to a small request made by the other side.
The real challenge when it comes to offering a token concession is to guarantee that your token concession will be acknowledged, appreciated, and reciprocated. In order to make this happen you need to remember your code of ethics. In business relationships, a token concession could resemble a bribe if you appear to have expectations of a quid pro quo exchange of favors. Before you offer a token concession, consider whether your terms could be viewed by the other side as unethical, illegal, or otherwise unfair to others. You need to try to give your token concession without an expectation of receiving anything in return. You will have to figure out what the other side wants. When crafting a token concession, you need to think about what the other side wants and figure out if you are in a position where you can give it. Finally, you need to show them the strings. Before the other side has a chance to accept a token concession, you need to explain why you are offering it. If you will be asking for anything in return, make that clear to them. Ideally, you should offer a token concession with the goal of simply generating good will rather than expecting any particular concrete reward.
What All Of This Means For You
The goal of any negotiation is for us to find a way to convince the other side to agree to our requests and to craft a deal that everyone can live with. In order to make it to this point, the other side is going to have to make some concessions to us. In order to boost the chances of this happening, we need to find a way to motivate them to want to say “yes” to us. One way that we can go about doing this is to make token concessions to them.
Negotiators often think that any concession must have great value. However, it turns out that you can make concessions that have little value to you – a token concession. Real-world experiments have shown that making a token concession can produce the results that you are looking for. When you make a concession to the other side, they will feel as though they need to make a concession to you. You need to make sure that your concession will be appreciated. You need to make it with no expectations of anything in return. Make sure that there are no strings.
The goal of any negotiator is to convince the other side to go along with their proposal. In order to make this happen, we need to find ways to get them closer to saying yes to what we are asking for. Using token concessions may be just what we need to encourage them to agree to our offer. If we can get them to say yes often enough, then perhaps we’ll be able to get them to agree to the deal that we want.
– Dr. Jim Anderson
Blue Elephant Consulting –
Your Source For Real World Negotiating Skills™
Question For You: How many token concessions do you think that you can use during a negotiation?
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What We’ll Be Talking About Next Time
Thinking that your emotions are not going to get in your way the next time that you enter into a negotiation is just foolish. We all feel emotions all the time and depending on how your negotiations are going, you may be feeling a lot of emotions. Although there is no problem feeling emotions, we don’t want our emotions to take us over. If they do, it may become hard to negotiate and even harder to reach a deal with the other side. As negotiators, we are going to have to find ways to control our emotions. Just exactly how are we supposed to go about doing this?