Two weeks ago I coached a client before an upcoming negotiation. His company had been engaged in a relationship with a prospect for over a year that was based on assumptions that were never tested. My client is a real estate developer. The prospect was a potential tenant. The potential tenant provided a Letter of Interest as well as personally expressing their interest in leasing from my client. My client assumed all was good and passed the potential tenants on to other divisions and departments within his company to finalize the lease contract. What he did not know at the time was that the potential tenant had tendered a counterfeit yes.
That is to say, he was given a yes that was a no-in-waiting or a maybe at best. How could he have improved his performance and the outcome?
By using the “Rule of Three” to test the deal for “Proof of Life (POL).”
There are three kinds of yeses: counterfeit, confirmation, and commitment. The first time my client got the yes, i.e., “We love the location and the terms. Let’s move ahead”, he should have used a mirror or label. “It seems like you are happy with the layout of the center and what we have outlined in the contract.” Or, “Let’s move ahead?” If the potential tenant followed it with a yes or further explanation of “Let’s move ahead,” that would have been his confirmation yes. Paraphrasing would have generated the third yes which would have been POL for the deal. “So, if I understand you correctly, you love the location. You are happy with the terms and would like to proceed with getting the contract approved and signed?” During his preparation, my client did not understand the value of testing the yes. Had he, he would have determined that he was the “Fool” and not the “Favorite.”
Last month the potential tenant informed my client that there was a very recent internal report from their sales department saying that, after doing some research, they discovered that retailers did not perform well in projects such as his. As a result, the potential client was backing out of the deal. The consequences for my client? Lost time, as they could have been negotiating with other prospects and hundreds of thousands of dollars.
Something did not add up for my client. The discussion he wanted to prepare for was to determine the true motivation behind them changing their minds. He wanted to know why the agreed to do business and then back out at the last minute? He wanted to if they understood that they would hurt themselves at least as much as they were hurting my client? He wanted to know why they were no longer accepting calls from his company?
My client scheduled a meeting with the supervisor of the person who provided the letter of intent. During that discussion, with use of Accusations Audits, Calibrated Questions and “negative’ Labeling, he discovered there was no deal…ever. They used my client’s company as a “rabbit”…a distraction to drive down the price. The “Favorite” in this case was the potential tenant’s current property owner. They used my client’s offer to get a better deal on their current location, signing the new lease about the same time the phone calls stopped.
Using the BlackSwan Method to determine POL for your deal will let you know, sooner rather than later if you are the “Fool” or the “Favorite” so you can close or move on.