It Turns Out That Three Is A Magic Number In Negotiations

If you follow the "rules of three" you can get the deal that you want
If you follow the “rules of three” you can get the deal that you want
Image Credit: Hubert Figuière

Every negotiator would like to have some magic in their lives. We’d all like to be able to wave our hands and have a negotiation go our way. We’d like to have spells that we could recite that would make the other side bend to our will. The bad news is that such magic does not seem to exist. However, there is something a bit strange about the number three. Everything good comes in threes, they say. For negotiators, sequences of three can be rewarding as well.

You Should Negotiate in Three Dimensions

I think that most of us understand the importance of preparing thoroughly for negotiation. However, often we often focus too narrowly on negotiation styles and negotiating techniques : how to frame an opening offer, how to be persuasive, and so on.

By contrast, professional negotiators are more likely to grasp the importance of negotiating in three dimensions rather than one. Professional negotiators should be encouraged to move beyond the first dimension of “at the table” interpersonal skills and tactics to the two other dimensions: setup moves and deal design.

The key to engaging in setup moves means taking steps to ensure that the right people are at the right table, engaging in the right issues in the right sequence. All too often, we assume that we’re talking to the right person in a negotiation. But what if we’ve overlooked someone with greater power to implement our proposals? The best professional negotiators set themselves up for success by taking the time to scan the environment to identify the most promising counterparts, options, setting, and so on.

It’s equally important for us to focus on deal design, a third dimension in a negotiation. This includes identifying potential deal tradeoffs—issues that are relatively easy for one side to give and valuable for the other to receive. It also means thinking about how an agreement will unfold after the deal is signed and comparing it closely with your other alternatives.

Always Follow The “Fall in Love With Three” Rule

Take a moment and think about the last time you made a major purchase, such as a home, car, or piece of jewelry with a negotiable price. When you made this purchase, did you feel like you “just had to have it”? If this is what happened, you may have violated a useful rule of thumb in negotiation, the “fall in love with three” rule.

Homebuyers often fall in love with a particular home after seeing it at an open house and place a bid for it on the spot. By falling for one house, rather than several, they can set themselves up for adversarial bargaining and are likely to fall victim to the other side’s power tactics in negotiation.

By contrast, professional negotiators understand that when they have several appealing alternatives, they will gain the power they need to walk away from a negotiation without going below their bottom line. Although it can sometimes be tricky to line up multiple alternatives, such as several houses that you appreciate equally, taking the time to do so is likely to lead you to a more satisfying outcome.

Always Make Three Offers Simultaneously

Something that you want to avoid is a common practice for rookie negotiators. What they do is to carefully craft one offer to present to the other side. Either the other party turns it down, they accept it on the spot, or they can end up haggling. Although this practice can lead to solid outcomes, it often prevents a negotiator from identifying deals that both parties would prefer more.

It can be good to compare this strategy to one that professional negotiators are more likely to follow: simultaneously presenting three offers that you value equally, but that vary across issues. This is called a “MESOs,” or multiple equivalent simultaneous offers. They are likely to draw out your counterpart’s priorities and interests in a way not captured by direct questioning.

What All Of This Means For You

Every negotiator would like a little bit of magic to enter into their lives in order to make their ability to close deals just that much easier. However, since there seems to be a distinct lack of magic in our lives, we’re going to have to settle for the power of the number three. It turns out that there are a lot of things that can happen during a negotiation that happen in threes.

When we are involved in a principled negotiation, we always need to be trying to negotiate in three dimensions. These three dimensions include our interpersonal skills, determining if the right people are at the table, and designing the right deal. We need to make sure that we don’t fall in love with a single alternative – we need to make sure that we always have three to choose from. In order to get the other side to accept our offer, we always need to present them with three offers at the same time.

If as a negotiator, you understand the power of the number three, then you can incorporate it into your next negotiation. Using things three at a time will allow you to have your negotiation progress on multiple fronts and will allow you to make forward progress faster. Put the power of three to work for you!

– Dr. Jim Anderson Blue Elephant Consulting –
Your Source For Real World Negotiating Skills™

Question For You: If making three offers to the other side is a good idea, then would it make more sense to make four offers to them?

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What We’ll Be Talking About Next Time

As negotiators, one of the key points about negotiating that has been drilled into our heads is that in order to be successful, we always have to be able to use our negotiation styles and negotiating techniques to reach a deal with the other side of the table. There has to be a common middle ground that both of us can agree to. If we are not able to reach this point, then we have failed as negotiators. Although this is classic negotiating training, it turns out that in the real world things are a bit different. There are situations in which reaching a lose-lose agreement might be in the best interests of both sides.