Beauty, and value, are in the eye of the beholder – it’s our role as negotiators to help the other party see our case at its highest value possible; anchoring their perceptions to an ideal value.
Value is inherently subjective, and the vast majority of negotiations are deeper than just price alone.
The best way to effectively shape the other party’s perception of value is to Set High Aspirations. However, setting high aspirations isn’t as simple as painting a glistening future of the impact of a successful deal. It requires some grounding, and some strategic work to highlight the realities of your value proposition.
One technique used to Set High Aspirations is Anchoring.
Anchoring is a strategy to create a fundamental shift in how the other party perceives a value proposition before it is laid out in full. Effective anchoring occurs when a negotiator influences the other party’s perception of possible consequences by establishing favorable comparative data on the table early in the negotiation that supports a settlement at the high end of the range of reason.
Anchoring means to tether the value of your offering on the higher end of the range of reason. Another element to unpack here is the range of reason, which is essentially a spectrum of theoretically acceptable values for something.
For example, would you be willing to pay $20 for a large ice cream bowl with the works on a hot day inside a theme park? Although $20 is on the higher end, the price is still somewhat in the range of reason for what people are willing to pay for it. However, asking $400 for the same ice cream bowl is way out of the range of reason – unless, of course, that bowl of ice cream somehow adds a few years to your life or something.
Here are three examples of Anchoring:
In all of these situations, the skilled negotiator is already shaping the other party’s perception about the likely result of their negotiation without the negotiation necessarily even kicking off.
People are social creatures, and we can also be very self-conscious about our decisions. We tend to look to each other for validation prior to making a big purchase. This is why many products on Amazon with higher reviews tend to rake in more sales.
When making decisions, most people rely on comparisons to determine what to do. We look at comparisons with similar past situations, current market price levels, or past contract terms, as each of the data points reflects a decision validated by other human beings
Additionally, our decision-making tends to be influenced more by the first relevant information we receive, and then by subsequent information.
By Anchoring, you’ll be able to increase the subjective value of not only what you are offering, but of yourself as a negotiator.