Although many negotiations in business are transactional and are more about dollars and value, relationships can sometimes affect the outcome. Credibility, trust, loyalty, and past behaviors can often make or break a deal. In a ‘one time’ transaction, like purchasing a house or selling to someone you will never deal with again, relationship is usually not much of a factor. However, in situations where future transactions are possible or the people involved can serve as references or affect future business, relationships can be significant.
For twenty five years I purchased new vehicles from the same salesperson at a dealership in my area. Over that time I purchased five vehicles. I was very satisfied with these vehicles, as they had great longevity and low maintenance costs. I put tremendous mileage on them before passing them down to my children. The fact that these vehicles would run for up to 200,000 miles with very little maintenance was a major reason I kept buying them. Then one day I noticed that one of my older vehicles was burning oil. The problem was severe. The vehicle was burning a quart every 700 miles driven. This was disappointing as I had never had to add oil to these vehicles previously. The vehicle had 185,000 miles on it. When I called the dealership to express concern I was told oil consumption was a common problem on high mileage vehicles. Right about that time, I got a recall notice from the manufacturer stating that they would repair the oil consumption problem for any vehicle with less than 125,000 miles. Having 185,000 miles made me ineligible for that free repair. I called the manufacturer to inquire if I could get any assistance with this repair as a loyal customer. They apologized and said that was not possible and that I should contact my dealer to seek their help. My call to the dealer got the same response – since my vehicle was over the mileage limit they refused to help. The repair would cost over $4000 which was almost the value of the vehicle. At first, I resigned myself to having to either live with the problem or have the repair done. Then I decided to see if I could use my relationship with the dealership to get some help.
I called the service department, stated my case and asked what they might do to help me, hoping they might cover part of the cost of the repair. I said the reason I had been loyal for twenty five years was the quality of the products and low maintenance costs. This new problem and a refusal to help would mean one of two things: either the quality of their products was going downhill or they were refusing to stand behind their products. I said in the past anytime I needed a new vehicle my decision was automatic – to visit their dealership. And I said this problem might change that. The person I spoke with was very understanding and said she would document my comments. My next call was to the salesperson I had purchased five vehicles from. I told him that it was unlikely I would be purchasing another vehicle there because of the problem. He was disappointed to learn that and said he would speak to the Service Manager.
A few weeks later, hearing nothing from the dealership, I brought one of my newer vehicles in for routine maintenance. While I was in the waiting area I was approached by the Service Manager. He said he knew of my problem and had contacted other regional managers to see how they were dealing with similar situations. He said no other dealerships were offering repairs to vehicles beyond 125,000. However, because I had been such a good customer they wanted to retain me. They were willing to waive the recall restriction and perform the $4000 repair for free even at 185,000 miles. They were essentially rewarding me for my loyalty in the hope that I would remain a customer. Within the next 2 years I purchased two more vehicles from that dealership. This is an example of how relationships based on loyalty can matter and can be mutually beneficial.
Trustworthiness can also play a major role. I remember a time when a software salesman, Tom, visited a technology team I was leading to promote his company’s newest product, let’s call it product B. His presentation was brilliant and the product appeared to be excellent. However, there was a problem. In a previous experience with Tom he had misrepresented – ‘over promised’ if you want to be kind – some features in his sales pitch for product A. We had purchased product A because of his promises and were deeply disappointed because the product did not function as he had described. So, despite his brilliant presentation of product B, we simply did not trust him. No matter what he said he could not erase that previous experience. We would not buy any product he presented to us even when he offered steep discounts. His lack of credibility had poisoned the relationship. That software company eventually replaced Tom on our account with another salesperson.
I had a much different experience with a software salesperson from a different company, named Kate. Kate’s company offered software products from a wide number of software vendors. In addition to being very knowledgeable about her products she was extremely honest. She never over promised and often steered us to less expensive solutions, counter to the revenue interests of her company, because she was more concerned with meeting our interests than maximizing revenue. In a few cases she became almost an extension of my team as she researched different solutions and options for us. With other software salespeople we often guarded our budget information fearing they might take advantage of it during negotiations. With Kate we became very comfortable sharing budget numbers because she had demonstrated the integrity to only use it to help get to a Win-Win solution. At first we only bought a few products through her, but over time we moved more and more of our software portfolio to her company. We even became a reference account and helped them cultivate more business. The trust Kate built with my team created a mutually beneficial relationship that lasted for years.
Summary
Although many negotiations are determined by the price and quality of what is being transacted, a strong relationship between the parties can play an important role. No matter which side of a negotiation you are on, developing a collaborative approach can produce positive effects. It can create mutual benefits that add value and better outcomes. Relationships might not matter much in ‘one time only transactions’, but they can be a major consideration when multiple transactions or an ongoing association might be desirable. Whenever possible, stay aware of the people aspects in negotiation. Trust, credibility, and loyalty can generate better long term results.
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