Anchors Aweigh! How Anchors are Employed When Negotiating
By Michael J Griffin
6 minute read
Using “Anchors,” when negotiating, refers to the psychological bias how negotiators rely heavily on the first piece of information presented to them (the anchor) when making decisions or judgments. This first anchor in any negotiation has a powerful influence on subsequent negotiation discussions and can significantly impact the final deal.
Using Anchors When Negotiating
When using anchoring in negotiation, the skilled negotiator strategically presents an initial offer, suggestion, or reference point that is very favourable to their position. Casting a favourable anchor serves as a reference for the negotiation and influences the counteroffers and/or concessions made by both parties.
Here's how to “cast an anchor” when you negotiation:
Setting a high anchor: By presenting an initial offer that is higher or more favourable than what is expected, negotiators can influence the perception of the negotiation range. This high anchor sets a benchmark from which subsequent offers and counteroffers are based. Even if the final outcome is lower than the initial anchor, it may still be higher than what the other party had initially intended.
Setting a low anchor: Conversely, negotiators can set a low initial anchor to influence the perception of the negotiation range in their favour. By starting with a lower offer than expected, they may make subsequent offers seem more reasonable and encourage the other party to adjust their expectations accordingly.
Justifying the anchor: To make the anchor more persuasive, negotiators often provide reasons or justifications for their initial “anchored” offer. By offering objective criteria, market data, or other relevant information, they aim to strengthen the perceived validity of their anchor and increase the likelihood of acceptance.
Shifting the anchor: Skilled negotiators may attempt to shift the anchor in their favour during the negotiation process. They can do this by gradually moving the discussion towards more favourable terms or by introducing new information or options that favour their position. This shifting of the anchor can help reshape the negotiation dynamics and lead to a more favourable outcome.
It's important to note that anchoring gives a psychological bias and may not always lead to more successful negotiation outcomes. Skilled negotiators need to be aware of the strategy's potential limitations and use it in conjunction with other negotiation techniques to achieve mutually beneficial agreements.
The Strategy for Counteracting Anchors
When facing a first anchor in a negotiation, it's essential to have a strategy to counteract its influence. Remember the first anchor is a cognitive bias where the first offer or piece of information presented in a negotiation sets a reference point for all subsequent discussions in the negotiation.
Here are some strategies you can employ to counter an anchor:
First, understand the anchor: Analyse the anchor value and its implications on the negotiation. Assess whether the anchor is reasonable or unrealistic. This analysis will help you determine your counterstrategy.
Gather information: Conduct thorough research and gather relevant data about the negotiation topic. This information will empower you to challenge an unreasonable anchor with facts and evidence, making it easier to propose alternative perspectives.
Cast your own anchor first: Be proactive and set your own anchor before the negotiation begins. Make sure your anchor is based on a realistic assessment of the situation. By doing so, you influence the negotiation toward your desired outcome.
Express empathy then reframe: Acknowledge and understand the other party's anchor, expressing empathy for their position. Then, reframe the negotiation by introducing additional information or alternative options that demonstrate the limitations or flaws of the initial anchor.
Ask open-ended questions: Engage the other party in a dialogue by asking open-ended questions that encourage them to think critically about their anchor. For example, you can ask, "What factors led you to choose that specific number as your anchor?" This approach may prompt them to re-evaluate their position.
Provide multiple options: Offer a range of alternatives or options to the anchor, demonstrating flexibility and a willingness to find mutually beneficial solutions. Presenting various choices can help steer the negotiation away from being solely focused on the initial anchor value.
Use objective criteria: Introduce objective criteria, such as market data, industry standards, or precedents, to support your counterarguments. This helps shift the negotiation toward a more objective and fair assessment, rather than relying solely on the anchor.
Take breaks if necessary: If the anchor seems to be significantly influencing the negotiation, suggest taking a break. This allows both parties to reassess their positions and think independently, potentially reducing the influence of the anchor when the negotiation resumes. It may also give you time to do research to refute or minimize the anchor impact.
Countering an anchor requires a combination of good research and preparation, critical thinking, effective communication, and a well-prepared negotiation strategy. By employing these techniques, you can mitigate the impact of an anchor and work towards achieving a favourable outcome for both parties.
Select Anchor Strategies
Setting an anchor in a negotiation can be a strategic move if done at the right time. Here are a few scenarios where it can be beneficial to set an anchor:
When you have information advantage: If you possess valuable information that the other party is not aware of or is unlikely to have, setting an anchor can work in your favour. By introducing your anchor early in the negotiation, you can influence the reference point for subsequent discussions.
When you want to frame the negotiation: Setting an anchor allows you to establish a frame of reference that aligns with your desired outcome. It helps shape the direction and terms of the negotiation by influencing the other party's perception of what is reasonable or acceptable.
When there is ambiguity or uncertainty: If there is ambiguity or uncertainty about the value or terms being negotiated, setting an anchor can provide clarity and structure to the negotiation. It helps establish a starting point for both parties to work from and can facilitate more focused discussions.
When you want to guide the negotiation towards your target: Setting a well-calculated anchor that aligns with your target or aspiration can help steer the negotiation towards a favourable outcome. It signals your position and expectations, setting the stage for further negotiations that focus on your anchor and target.
When the other party has set an anchor: If the other party has already set an anchor, it may be necessary to counter or adjust it. By setting your own anchor, you can reframe the negotiation and introduce new information, alternatives, perspectives or options to gain a better deal.
When setting an anchor, it's important to strike a balance and be realistic.. If the anchor is too extreme or unrealistic, it may be easily dismissed or rejected by the other party. On the other hand, if it is too conservative or close to your actual target, you may miss out on potential concessions or favourable terms.
Remember, casting an “anchor” is a negotiation technique that requires careful consideration and strategy. It's crucial to assess the specific circumstances of the negotiation and the dynamics between the parties to prepare your negotiation and anchor strategy to your advantage. If you want to sharpen your negotiation skills, find our ELAvate Negotiation Skills (ENS) workshop flyer attached, then contact me for a no-obligation discussion. Download the ENS flyer here.
May this instructional blog make you a better negotiator.
Michael J Griffin
CEO & Founder of ELAvate
Sales Productivity & Negotiation Trainer