How to Confuse Your Customer and Lose a Sale

rolls-royce

by Michael Wheeler | shared from Linkedin

My friend Paul Ehrmann has had a fascinating and fulfilling life as an actor/screenwriter. He’s not famous, but he’s worked with some of the biggest names in Hollywood.

Roles come in fits and starts, of course. When things were slow, he paid his rent by taking other jobs, including at one time, being a car salesman.

Paul being Paul, the cars that he sold were Rolls-Royces on Wilshire Boulevard in Beverly Hills. That experience taught him an important negotiation lesson:

When you pull out the color chart, you’ve lost the sale.

You’re not doing parties you negotiate with a favor by offering them a lot of choices. Research shows that people freeze up when they have too many options. Columbia psychologist Sheena Iyengar did a famous experiment at a California gourmet shop. She had the proprietor set up a sample table where shoppers could test different kinds of jam. When there were 24 varieties to choose from, more customers stopped at the table—but fewer people actually bought anything than when only 6 were available.

It’s partly a problem of information overload. But as Iyengar explains, it’s also a matter of anticipated regret. The more paths people could take, the more reasons they have to second-guess whichever one they choose. If a restaurant offers only steak or salmon, for example, you pick one with little further thought. But if there are dozens of items, each with its pros and cons, choice becomes much harder. As Swarthmore psychologist Barry Schwarz says in his wonderful book The Paradox of Choice, it becomes a case of more being less.

For negotiators, this presents a real quandary. In theory, expanding the number of issues under discussion allows us to invent options and expand the pie. But in practice, DePaul University’s Charles Naquin has found that although having more issues to trade on does generate more value, people are more dissatisfied with their results. Apparently they brood about whether they overlooked even more creative solutions.

One approach is to keep our offers simple, so that we don’t distract our counterparts with too many bells and whistles. That may be okay if the items we exclude are of marginal value and don’t really increase other people’s willingness to say yes.

But in other cases, a creative solution that addresses a range of interests and priorities may be the only way of avoiding impasse. In those situations, it may be possible to simplify the decision making process by focusing on one cluster of issues at a time. For example, negotiating a service contract, zeroing in on the possible scope of the work before looking too deeply into costs and financing might make sense. Once the parties develop better understanding of the fine-grained issues, they could then step back and globally reconcile various ways to scale the project with different levels of cost.

The same principles apply we have to weigh a complex proposal that somebody else has put forth. If we feel overloaded by the possibilities, we can make a wiser decision by breaking its elements down into digestible chunks.

Of course, there are times in negotiation when you can do well just by behaving as if certain issues are already decided. That’s what my actor friend Paul learned when he was selling Rolls. Rather than confuse a customer with too many options, he’d describe an available car as a special order.

“Ming blue over silver, one of a kind,” he’d say. “You can drive this car forever—and you will, since they run forever—and you’ll never see another one like it. Now we currently offer some terrific leases, but some of my customers buy outright. Here, let’s sit down. Which will work best for you?”

*****

Harvard Business School Professor Michael Wheeler is the author of The Art of Negotiation: How to Improvise Agreement in a Chaotic World (Simon & Schuster).

He has been a key figure at the renowned Program on Negotiation (PON) at Harvard Law School since its founding 30 years ago. During the 2013-14 academic year, he continues to teach in executive programs at HBS and PON, and is also a visiting professor at Harvard’s Kennedy School of Government.

Photo by Axion23 for SoCal Car Photography, via Flickr Creative Commons.

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