False anchors II: Don’t get sunk by your teenager

My latest post discussed the topic of false anchors: large numbers issued by retailers for the sheer purpose of anchoring the consumer, then creating an immediate contrast with the “sales” price. “Our amazing TV usually sells for $3000 but—today only—get it for an unbelievable $1800!” The purpose of the post was to alert unsuspecting buyers to the possibility of a psychological trap.

Well, an astute reader offered another example well worth relating, in the spirit of making life negotiable. She actually mentioned the idea of false anchors to a bunch of high schoolers, who recognized the tactic like the back of their hand. Indeed, they immediately offered an analog from their own lives. Whenever they have some bad news to relate to their parents—a D on their math exam, perhaps—they admitted they often say something like this: “Mom, don’t worry: I’m not pregnant, and I haven’t been arrested. I do have to tell you something, though: I just got a D on my math exam.”

What a perfect extension of false anchors! Teenagers, like retailers, are essentially anchoring the listener—in this case, their unsuspecting parents—on some really bad news. And shortly thereafter, they’re bringing up the real news, which is bad but not REALLY bad. In the context of the really bad news, the bad news doesn’t seem so bad at all.

Using this example to make life negotiable depends on whether you’re the teenager or the parents. If you’re the teenager, it undoubtedly works—once. It’s a good way to deliver some bad news and make it seem slightly less bad. Otherwise, why would your peers use it so often? But that’s not to say it’s ethical, preying as you are on your parents’ psychological biases. Nor that it will work more often than once. Your parents, having at least half a brain, will probably cut you some slack the first time but call you out the second time, not necessarily for the bad grade but for the well-worn use of a sketchy tactic.

Now if you’re the parents, making life negotiable means recognizing this tactic the first time. I can only hope that this post helps you to do so. And when you do, your response should resemble the consumer’s response to the amazing TV deal. Just as the consumer must ignore the first price and compare the second against competitors, you the parent must force yourself to ignore the anchor—in this case, the impregnation or incarceration—and focus on the real point—the D. Then evaluate that D against whatever standard you usually use to evaluate grades, not the prospect of grandkids or bail bonds. And, while calling Best Buy to tell them you spotted their false anchor won’t get you very far, telling your kid you spotted their tactic will probably go a ways toward nipping it in the bud in the future.

Have you ever dropped a false anchor as a teenager or detected one as a parent?

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False anchors: Don’t get sunk this holiday season

This holiday season, retailers seem particularly eager to make their lives more negotiable by selling you on their wares. So now is probably an appropriate time to alert you to one of the oldest negotiation tactics in the book and—in so doing—help to make your own life more negotiable.

Several of my early posts discussed the power of the first offer: in brief, they described negotiation research revealing that the party who makes the initial offer in a negotiation often performs better, particularly when that offer reflects a realistic but aggressive goal. So if you’re selling a used car and consider 12K both possible and hopeful, then making the first offer and making it 12 or even 13 is probably a worthwhile idea. And the underlying reason is anchoring: whoever issues a number anchors both parties’ attention on that number rather than letting it stray elsewhere.

This tactic is known all-too-well to retailers, who would like nothing more than to interest you in their products and then anchor you on their desired price shortly thereafter. But most retailers are far too sophisticated to think they can just quote you an exceptionally high price. They know that your many possible alternatives are just a few clicks away. Instead, they realize they have to be much more subtle in their anchoring. Any guess on their preferred tactic for doing so?

Well, it would take about 20 posts to list all of their tactics, but a particularly common and pernicious one is this: they mention a very high number and label it something like the “retail price” or even the “competitor’s price.” Whether it is, is not the issue. The issue is the fact that you’re now anchored on a very high number. And you’re still anchored on that number when, moments later, they state a much lower price and label in their amazing sales price. “This 65” HD 2160p curved TV normally retails for $3000. But today only, you can nab it for an amazing sales price of $1800!”

Now, all of us, seeing the sales price, are tempted to think “Wow! Fantastic! What a deal!” In fact, the sales price is all-too-often nothing more than the price the retailer really wants you to pay. But by anchoring you on the exceptionally high number and immediately drawing a contrast to their much lower (albeit still aspirational) number, they make you and I and everyone else think we’re getting a fantastic deal.

Now, I don’t mean to imply that all retailers are pernicious or unscrupulous, nor that all of us always fall for this tactic. But I do think that most of us, reflecting on this tactic, would admit to ourselves that we’ve fallen for it more often than we realized at the time or would like to tell the rest of the world now.

So what can you do to combat this tactic? Your best hope is to spend a bit more time perusing at least a few more websites in search of comparative data. Is this really such an amazing deal or is it just the going rate? In addition to competitors’ websites, I’d also include the manufacturer’s website, Amazon, and a few independent websites like Consumer Reports as applicable. If that sounds like a bunch of holiday time spent surfing, well, it is. But at least for a consequential and costly purchase, I’d argue that avoiding the allure of the anchor is well worth the time.

Have you ever fallen for this tactic and then realized after the fact?

Giving gifts as an analogy for mastering negotiations

The holiday season seems like an appropriate time to tackle the topic of gift-giving. A little reflection suggests that there are two types of gift-givers:

  1. “Recipient-focused” gift-givers think about what their recipients really like and try to give them that, even if they themselves find it boring. For example: the guy who gives his girlfriend a spa trip even though there is no place on planet earth that he would rather avoid more.
  2. “Self-focused” gift-givers think about what they themselves really like and make that their present, under the assumption that the recipient will like it too. For example: the guy who gives his girlfriend some NASCAR tickets on the assumption she couldn’t possibly find the race anything less than exhilarating.

Which approach is better?

Well, the first is probably more thoughtful, in that it actively takes the recipient’s preferences into account. But it’s also a lot harder, in that the gift-giver has to truly understand those preferences and might just get them wrong. In contrast, the second approach is easy, requiring only that the gift-giver understand themself. Still, it’s always possible that this someone else will be less than enthralled with the wave of the checkered flag. On balance, I’d say the first is the safer route to holiday happiness.

And to negotiation prowess. Beyond their holiday relevance, I raise these examples because they offer a useful analogy for negotiations.

Negotiators, like gift-givers, can seek to understand their counterparts’ preferences, making no assumption that those preferences resemble their own. “The most important thing for me is a low price on this sofa,” a negotiator might think, “But let me try to understand the salesperson’s priorities on their own terms.” Or they can start from their own preferences, assuming that their counterparts definitely see the world the same way. “Low price is the key for me, so high price must be the key for the salesperson.”

As in the case of gift-giving, the first approach is harder: the conversation with the salesperson is going to be a lot longer and more complicated than a simple exchange of prices. But it’s also much more likely to produce an ideal outcome. Why? Because differences and diversity abound in this world, so our negotiation counterparts often value things that we consider relatively unimportant if not trivial—and vice-versa. Yes, the salesperson would probably prefer a high price, but isn’t at least conceivable that she might be more concerned about your willingness to buy an entire living room set (with each piece discounted)? Or your willingness to accept the store’s financing plan? I’d say it’s at least conceivable.

So here’s the point: If we apply the second gift-giving approach to negotiations, assuming our counterparts think about the world the exact same way that we do, we stand to miss out on the major reason for negotiating in the first place: capitalizing on different value systems to make ourselves and our counterparts reasonably happy at the same time.

In sum, when you spot one gift-giving approach or the other this holiday season, please don’t think about negotiations. Please savor the moment. But if your brain needs something to do after said savoring, consider asking yourself which mode of gift-giving describes your own negotiation style—and whether that’s the style you want to carry into 2017.