Two Types of Proposals. Which One is More Persuasive?

Posted by Eily | Oct 8, 2013 2:36:53 AM


Two Types of Proposals. Which One is More Persuasive?

By Steve Martin, CMCT

Imagine that you are preparing a proposal for a client and, having researched all the information, equipment, materials and resources that you will need to deliver the job, the time has come to commit to paper the only piece of information your client is really interested in. Your price.

Will your client be more likely to accept your offer (or at least be more conciliatory with their counter-offer) if it has a precise ending, or would you be more effective doing what many of us do and rounding up your quote?

It turns out that persuasion science can provide a clear answer to this question not only making your future negotiations more successful but maybe your next salary review too.

Researchers Malia Mason and her colleagues Alice Lee, Elizabeth Riley and Daniel Ames, believed that people could improve the result of their negotiations by ensuring that the first offer made is a precise rather than a round ended one. In one study participants were asked to read an account of a negotiation concerning the sale of a used car. In each case the participants assumed the role of a seller and received one of three offers. One offer was a round-ended offer of $2000 but the other two had precise-endings; either $1865 or $2135. After each participant received their opening offer they were then asked to respond with a counteroffer of their own. Those sellers given an initial offer that ended in a precise number were much more conciliatory with their counteroffers typically countering 10% - 15% away from the opening offer. However those offered $2000 on average countered with an offer representing a 23% difference.

These results seems to show how the small act of providing a precise rather than a rounded opening offer can be a potent strategy potentially reducing the gap between the two parties as the negotiation progresses.

Types of ProposalsThe researchers believe that recipients of precise offers are much more likely to think that that the person who makes a precise offer has invested time and effort preparing and therefore has good reasons to support the offer they are making. This was consistent with a test conducted after the negotiations where participants' perceptions were measured. They were much more likely to agree with statements such as “The young man put considerable energy into researching the value of the car.” and “He must have had good reasons for the price he suggested.”

It is also interesting to note that this study found that a precise opening offer was more effective even when it was less than the $2000 round-ended opening offer. This insight leads to an intriguing thought. When the time comes for you to sell that rusting Honda Civic on your driveway you could end up financially better off by opening with a reduced, but more precise offer of say $3827, than a larger less precise one of $4000. Of course should you be in the market for such a car you might be advised to pay special attention to the seller whose opening demand is unusually specific.

This precise number strategy doesn’t just work for one-off transactional negotiations like second-hand cars. The researchers found similar results across a range of other contexts. For example, negotiation experiments conducted with experienced managers who made opening offers in the form of a precise number received counteroffers that were on average 24% closer to their opening offer than those who started with a round number offer. In every case this anchoring to the initial offer carried through to the final settlement.

persuasion science and proposalsSo when it comes to putting pen to paper and writing down that all important number on your proposal be sure to avoid the temptation to round up your price. Similarly when it comes to salary review time, be sure to write down a specific, precise number and make that your opener.

Beyond your negotiations maybe using more precise numbers could help when it comes to managing projects and persuading people to complete tasks by a certain time and date. Rather than asking people to get back to you by the end of the week you might be more effective signaling a precise time e.g. “Please get back to me by 3.45pm on Thursday.”

It goes without saying that the INSIDE INFLUENCE team would love to hear your comments about how you could put this precise number strategy to good use. 

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Mason, M. F., Lee, A. J., Wiley, E. a., & Ames, D. R. (2013). Precise offers are potent anchors: Conciliatory counteroffers and attributions of knowledge in negotiations. Journal of Experimental Social Psychology, 49(4), 759–763. doi:10.1016/j.jesp.2013.02.012

Topics: Inside Influence Report