Anchors vs. Floppies

One of the most effective negotiation techniques is to set an ambitious anchor, i.e. “go first” and to follow this with an opening position delivered in a firm manner, i.e. without any floppies. Chapter 9 of the book describes this in greater detail.

The benefits of anchoring are well documented. If you have prepared well and set the anchor appropriately high or low (depending on whether you are a seller or buyer), chances are good that you will end up with a significantly better outcome than otherwise would have been the case – the key objective of a good negotiator. Following up on the anchor with a strong opening position further improves the likelihood and magnitude of success.

Professionals however are often reluctant to take advantage of the benefits of anchoring aggressively when negotiating for fees. This is because they fear that if they start too high they will run the risk that their potential client will terminate the negotiation immediately and that the work is lost and that the client relationship is damaged or worse – the client is lost.

This weakness is compounded when an opening position is delivered in a weak manner, i.e. full of floppies. A typical example of a floppy opening is when a price proposal is delivered tentatively and followed immediately by an indication that the proposal is negotiable, e.g.:“we would like to charge a fee in the region of  x but would be happy to discuss a discount”.

One way to overcome this perceived dilemma is to set a “high but floppy” anchor and to follow with a firm opening position. This will work because the purpose of the anchor in this case is to both “test the waters” as well as to set expectations at the favourable end of the settlement zone. Although the anchor is high, formulating it in a way that suggests that there is flexibility should reduce or even eliminate the risk that the fee negotiation will be terminated prematurely.

At this critical moment, i.e. when dropping the anchor, it is vital for the negotiator to observe their counterpart’s reaction to the anchor. If the counterpart does not react strongly to the anchor then this is usually a sign that the indication is not far from an acceptable level. Consequently the opening position need not be much lower than the anchor.

On the other hand, if the anchor is met with a strong flinch then the anchor may either have been set too high or your counterpart is a professional negotiator who has been well trained (how to tell the difference is discussed throughout the book).

Typically however once an anchor has been dropped the other side will be focusing their immediate efforts on arguing why the indicated level is too high, i.e. the negotiation is starting at the level set by the anchor. In this way the anchor will have exerted the desired influence on the negotiation.

Going first with a an ambitious anchor will also generate a second advantage. If the “high” (in case you are selling) anchor is followed by a lower opening position this will be perceived by most people as a concession. Given that people have a subconscious bias towards reciprocity (see Chapter 10) this will help to put pressure on the other side to make counter concessions – the purpose of any good negotiation technique – to get more than would otherwise have been achievable.

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