THE INSTITUTE FOR EXECUTIVE DEVELOPMENT
NEGOTIATING STRATEGIES AND TACTICS Twenty-one ideas, methods, and techniques you can use to negotiate prices, contracts, agreements, and disputes more effectively and successfully.
by Brian Tracy ©MCMLXXXVIII Nightingale-Conant Corporation www.nightingale.com 1-800-525-9000 751pg
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THE EFFECTIVE MANAGER SEMINAR SERIES This fast-paced series of 14 management seminars on DVD, with CD and workbook accompaniment, has been designed to convey the greatest amount of usable information in the shortest possible amount of time. The material m aterial in each program is based on management seminars that have been developed for and presented to leading corporations for several years. Each program is a condensation of 21 valuable ideas, methods, and techniques drawn from years of practical experience. More than 100 hours of reading, research, and planning have gone into each mini-seminar, mini-seminar, giving you just the essential material that you need to be more effective — immediately. Since people learn in three ways — visually, auditorially, and kinesthetically — these mini-seminars are offered in DVD, CD, and workbook format for mat to assure maximum learning and retention. The learning process is flexible. You can take these seminars alone in your office or at home, on DVD and then on CD, to review and reinforce the key ideas. You You can follow along with the workbook and use it as a planning tool for internalization and implementation. implementation. As a busy executive, your most valuable resource is your time. With these DVD-based miniseminars, you can learn in one hour what might take you two or three days in a seminar or workshop — and save the cost of time off, travel, and other expenses. Because these programs have been developed as presentations for live audiences, they are fastmoving, entertaining, informative, and enjoyable to watch. Brian Tracy is a master of the video medium; thousands of people in several countries attend his DVD seminars every month. The idea behind this series was the discovery that 80 percent of the value of the information on any subject is contained in less than 20 percent of the material available. In this series, you get only the top 20 percent of ideas — the techniques you can begin applying today to be more effective and achieve better results. You save time, you save money, and you get high-quality, low-cost professional instruction in the key management areas where you must be knowledgeable if you want to fulfill your potential in your organization. The Effective Manager Seminar Series is a production of the Institute for Executive Development and Nightingale-Conant Corporation.
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HOW TO BENEFIT MOST FROM THIS PROGRAM Negotiating Strategies and Tactics Tactics has been designed to save you time in learning the things you need to know to be more effective. Research in accelerated learning suggests several ways to learn faster and remember more. This program is based on advanced learning techniques that can help make you a “mini-expert” in the principles of effective leadership in a very short period of time. You remember only about 5 percent of what you hear. You remember 20 percent of what you see. You remember 40 percent to 50 percent of what you see and hear. You remember up to 80 percent of what you see, hear, hear, write, and review. review. After six exposures to the material, spread over a period of time, you can achieve almost total recall. You also learn and remember more if you have a clear purpose for learning, a purpose that affects you personally. personally. If you set goals for applying what you learn, you will remember more. m ore. You also learn faster if you discuss what you are learning and how it can be applied to your personal situation. Finally, Finally, you reinforce and expand upon what you’ve learned when you teach others.
Some Ideas for Learning and Retention 1.
Review Review the workboo workbook k before before viewing viewing the the DVD, to gain gain a quick quick overview overview..
2.
As you view view the the DVD, follow follow along along with the workboo workbook, k, and jot jot notes notes in the the appropri appropriate ate sections.
3.
Stop and replay replay parts parts of the CD CD that that are particular particularly ly relevan relevantt to you.
4.
If watching watching with others, others, stop stop the DVD DVD when appropr appropriate, iate, and discuss discuss how the the material material could could be applied.
5.
Review Review your workbook workbook and notes notes some some time after viewing viewing the the program program — think think about your answers to the questions.
6.
Listen Listen to the CD versio version n in your car, car, for review review.
7.
Explain Explain and teach teach to others others the the ideas you you feel are are most importa important. nt. Encour Encourage age others others to learn learn this material also.
8.
Continual Continually ly think think about about how how you you can use these these ideas to be more effect effective. ive. “I hear and I think. I see and I remember. I do and I know.” — Confucius
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CONTENTS Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .5
Twenty-one Ideas You Can Use 1.
Everyt Everythin hing g Is Negot Negotiab iable le . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6 .6
2.
The Purpos Purpose e of Nego Negotia tiatin ting g . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7
3.
Six Nego Negotia tiatin ting g Styles Styles . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7
4.
The Uses of Power in Negotiating . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .9
5.
The Impact Impact of of Emotio Emotions ns on Nego Negotia tiatio tion n . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .10
6.
The Elem Element ent of of Time Time in in Decisi Decisions ons . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11 .11
7.
Develo Developin ping g Option Optionss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .12 .12
8.
Know What What You You Want Want . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .12
9.
Preparati Preparation on Is the Key . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .13
10.
Clarifyin Clarifying g Your Your Positi Positions ons . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .14
11.
Reversing Reversing the the Situation Situation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .15 .15
12.
Questionin Questioning g Assumption Assumptionss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .15
13.
The Law Law of Four . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .16
14.
The Successf Successful ul Negotiat Negotiator or . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .17
15.
Suggestive Suggestive Elemen Elements ts in Negotiat Negotiating ing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .18
16.
Persuasion Persuasion by Reciproc Reciprocatio ation n . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .19
17.
Persuasion Persuasion by by Social Proof Proof . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .20
18.
Price-Neg Price-Negotia otiating ting Tacti Tactics cs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .21
19.
Walkaway alkaway Method Method of Negotia Negotiating ting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .22 .22
20.
Harvard Harvard Negotiat Negotiation ion Project: Project: Four Four Keys . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .22
21.
Negotiati Negotiations ons Are Never Never Final Final . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .23 .23
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INTRODUCTION Life may be viewed as one long, extended negotiating session, from the cradle to the grave. Negotiation never stops. It is a major part of the business of living and communicating with others. It is the way that individuals with differing values and interests find constructive ways to live and work together in harmony. harmony. The ability to negotiate successfully is essential to success in all your interactions with other people. Negotiating has been going on since the beginning of civilization. It is based on the fact that each person has an interest in improving his or her relative position in life in six key areas: security, comfort, leisure, love, respect, and fulfillment. Compromising, trading, negotiating is how we balance conflicting and competing wants to assure that each person achieves the best possible outcome for himself or herself. Since value judgements are always subjective, there is never a right and final price or set of terms that can be decided in advance. It always depends on the parties involved and their relative scale of needs at the time of the transaction. Subjective valuations are what create the desire to exchange goods, services, money, money, and other things. “It’s “It’s differences of opinion that make a horse race.” Brian Tracy Tracy has negotiated many millions of dollars worth of contracts involving residential, commercial and industrial real estate, including shopping centers, office buildings, and land development. He has negotiated the importation and distribution of more than $25 million worth of automobiles, plus contracts for printing, consulting, training, advertising, conventions and meetings, and sales of thousands of items. In short, the material in this course is based on extensive experience. It works. If you systematically apply even a small part of what you are about to learn, you can bring about a major improvement in the quality and quantity of your results. If, with the help of this workbook, you take the time to think through one issue that you are currently negotiating, you will be astonished at how much better b etter the negotiation works out for both you and the other party. party. Good luck!
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TWENTY-ONE IDEAS YOU CAN USE 1.
Every veryth thin ing g Is Is Nego Negoti tiab able le There are very few fixed prices or terms on anything, even if they are written down or printed.
A.
Continually look for opportunities to improve the deal or situation in your favor. favor.
B.
Method: “Ask your way to success.” Ask for better terms, to get more, to get it cheaper. cheaper.
C.
The fear of rejection — the fear of being told “No!” — holds people back and causes them to accept less than they need to.
D.
All prices are set arbitrarily; therefore, all are negotiable.
E.
Overcome the fear of rejection — over and over — until it becomes automatic.
F.
Key point: “It’s all just a game.” So get in there and play !
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2. The The Pur Purpo pose se of Nego Negoti tiat atin ing g The purpose of negotiating is “To reach an agreement so all parties have their needs satisfied to the degree that they are internally motivated to fulfill their commitments and enter into subsequent negotiations and transactions with the same part.”
A.
The purpose of negotiating is “To “To reach an agreement…”
B.
All parties “...have their needs satisfied…”
C.
All parties “…are internally motivated to fulfill their commitments…” as a result of the negotiation.
D.
All parties are willing to “…enter into subsequent negotiations…” with one another. another.
3. Six Neg Negot otia iati ting ng Sty Style less Following are six negotiating styles between our two parties, A and B, and the results of those styles:
A.
Win-lose. A gets what he or she wants. B does not.
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B.
Lose-win. B gets what he or she wants. A does not.
C.
Lose-lose. Neither party gets anything he or she wants from the negotiation.
D.
Compromise . Some wants of each party are fulfilled. Others are not.
E.
No deal. Both parties agree to disagree.
F.
Win-win. The parties work together to discover a third alternative that satisfies the needs of both.
Key point: This program focuses on win-win negotiating.
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Power in Negotiating 4. The Uses of Power No one will negotiate with you seriously unless he feels that you have the power to help him get something he wants, or the power to hurt him in some way.
A.
Create the perception of power p ower — be feigning indifference, suggesting scarcity, scarcity, acting with authority, authority, displaying courage (risk taking).
B.
Power of commitment. You have an advantage if the other party perceives that you are totally committed to getting the best deal — that you will do whatever is necessary. necessary. How determined are you to achieve your goals?
C.
Power of expertise. The person who is the most knowledgeable about the subject often has a distinct advantage.
D.
Power of knowledge of the other’s needs. Knowing the needs of the other party gives you a tremendous amount of power. power. How much do you know about what the other person needs?
E.
person’s position or Power of identification. Be able to genuinely empathize with the other person’s situation. The expression of empathy gives you a lot of power because people are more apt to enter into agreements with people they like than with people they don’t.
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F.
Power of reward and punishment. The ability to confer a reward, and the ability to punish the other party financially by withdrawing a reward, will cause him to want to negotiate with you. What can you do to or for the other person?
G.
Power of investment. The more time and money that have been spent on the deal to date, the greater the commitment to completion.
5. The The Impa Impact ct of of Emoti Emotion onss on Neg Negot otia iatio tions ns Emotions — especially the emotions of desire, greed, fear, or anger — can help you or hurt you.
A.
Desire is usually the critical element in negotiating.
B.
How badly do you want it? How badly does the other party want it?
C.
Would Would your life end if you didn’t get it?
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D.
“So what?” is a good question.
E.
Rule: The person who gets the most emotionally involved in the negotiation has the least power.
F.
Psychologically prepare. Practice detachment before and during a negotiation.
6. The The Ele Eleme ment nt of Time ime in in Dec Decis ision ionss Time is a key factor in negotiating.
A.
Urgency. The more urgent his need, the less effective the negotiator.
B.
Rushing. Don’t allow yourself to be rushed or hurried.
C.
Deadlines. Whenever possible, set deadlines for decision making.
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D.
Delay. Whenever possible, put off serious decisions for 24 hours.
7. Devel evelop opin ing g Opti Option onss In a negotiation, you are only as free as your developed options.
A.
The more alternatives you have, the stronger your negotiating position.
B.
The fewer your options, the less room you have to negotiate.
C.
Do your homework. Develop as many alternatives as possible, on paper, thought through, before the negotiation.
8. Know What What You Want Think through your ideal desired outcome in advance.
A.
Clarity is essential. What outcome do you desire?
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B.
What are you prepared to give to get it?
C.
Write a description of your goals from the negotiation.
D.
Discuss your desired outcome with others, if possible.
E.
Determine clearly the least you will accept.
F.
The person who knows exactly what he or she wants has a distinct advantage over the person who is vague or unsure.
9. Prepa repara rati tion on Is the the Key Key Eighty percent of success in negotiating is based on solid preparation.
A.
Subject matter . What needs to be discussed?
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B.
Objectives. What are your objectives? The other party’s objectives?
C.
Issues. Where do you differ in wants and/or needs?
D.
p arty in negotiation? Positions. What are the starting positions of each party
10. Clarifying Clarifying Your Your Positions Positions Think through your position in advance.
A.
What are your essentials, your limits, your maximums, your minimums?
B.
What are the other party’s essentials and limits?
C.
What are you willing to concede?
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D.
What tie-in concessions can you require to achieve agreement or to get concession?
11. Reversing Reversing the Situat Situation ion To give yourself a broader view of the negotiation, reverse the situation.
A.
Try and see the situation through the other person’s eyes.
B.
Argue the “case” from the other person’s viewpoint.
12. Questionin Questioning g Assumption Assumptionss “Errant assumptions lie at the root of most failures.”
A.
What are your assumptions? Known and hidden?
B.
What if your assumptions were not true?
C.
How could you test your assumptions?
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D.
What are the other’s assumptions?
E.
How can you clarify each other’s assumptions?
F.
Use a fact-finding approach: Question the other party; gather data objectively — interview for information, feed it back to him in your own words.
Ask this key question: “Why do you feel we are here, and what would you ideally like to accomplish in this meeting?”
13. The Law of Four Four According to the law of four, there are usually four main issues to be decided in any negotiation.
A.
According to the Pareto principle (the 80-20 rule), 80 percent of the importance of a negotiation is contained in four issues or less.
B.
For example, when you’re purchasing a car, car, four main issues include price, model and color, color, accessories, and timing of delivery.
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C.
Of four main issues, one is usually primary; the other three, secondary. secondary.
D.
Identify the main issues in advance. Think them through.
14. The Success Successful ful Negotiat Negotiator or How can you tell if you are one?
A.
The successful negotiator views negotiation as a lifelong process — that is, never ending.
B.
He is open-minded, adaptive to a changing situation.
C.
He is flexible — quick to identify mutual goals in the negotiation.
D.
He is cooperative versus combative.
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E.
He is creative versus competitive.
F.
He is nonmanipulative, honest, direct.
15. Suggestive Suggestive Elements Elements in Negotiating Negotiating Following are suggestive factors that influence your thinking, feelings, emotions, opinions:
A.
Location. Negotiate on your turf or neutral turf.
B.
Personality. Be warm, friendly, empathetic.
C.
other. Positioning . Sit side by side — not across the table from each other.
D.
Timing . If the other party is in a hurry to come to a conclusion and you’re relaxed, you have a psychological advantage.
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E.
You’re more likely to make a better deal if your facilities (furniture, lighting, etc.) Comfort. You’re are comfortable and you’re rested. Also, note that all negotiations proceed better during or after a meal.
F.
Attitude. In a negotiation, a positive attitude — cheerfulness, optimism toward positive results — is much more effective than a negative attitude. And the best negotiators are very patient.
16. Persuasion Persuasion by Recipr Reciprocatio ocation n Reciprocity, giving and receiving, is the most powerful way to gain agreement and commitment.
A.
Use the Socratic method. Determine all areas of agreement first — agree, agree, agree.
B.
A key phrase to use when you disagree is “Let’s “Let’s come back to that.”
C.
Agree slowly, reluctantly, but with an air of reasonableness, fairness.
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D.
Tit for tat — ask for, for, expect, concessions on your issues in exchange for agreeing on several small issues of the other party.
E.
Be willing to give in order to get.
F.
Win-win negotiating negotiating is based on mutual cooperation and mutual benefits.
17. Persuasion Persuasion by by Social Social Proof Proof Use social proof to influence the other to accept your arguments.
A.
Use facts, numbers, names, statistics to show that others are making similar agreements.
B.
Similar others in similar situations who have made similar decisions d emonstrate the reasonableness, fairness of your position.
C.
Assertions are not proof. Provide documentation for your claims.
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18. Price-Negot Price-Negotiating iating Tactic Tacticss Practice price-negotiating tactics until they become second nature.
A.
Flinch: “That is too much!”
B.
Question: “Can’t “Can’t you do better than that?”
C.
Assertion: “I can get it cheaper somewhere else.”
D.
Question: “What’s “What’s the very best you can do if I make a decision today?”
E.
Low ball: Offer cash — right now!
F.
Nibble, or add on: After you’ve bought the main article, get something s omething free thrown into the package.
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19. Walkaway alkaway Method of Negotiating Negotiating In most cases, the walkaway method is a powerful way to get the lowest possible price.
A.
If you are buying, ask what is the very least that the person will accept.
B.
If selling, set your price at the very least that you will accept.
C.
Be prepared to get up and walk away if the price is unacceptable.
20. Harvard Harvard Negotiation Negotiation Project: Project: Four Keys The Harvard Negotiation Project has come up with four key elements to successful negotiating.
A.
People. Separate the personalities from the problem, the issues at hand. Stay unemotional. Keep your eye on the negotiation, off the personalities.
B.
party. Interests. Identify the underlying needs of the other party.
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C.
Options. Generate a variety of possibilities. Use brainstorming methods to develop alternative approaches.
D.
Criteria. Agree to base the result on some objective criteria.
E.
Agree on boundary conditions in advance. What are you trying to avoid, achieve, preserve?
21. Negotiation Negotiationss Are Never Never Final They are an ongoing process.
A.
With new information, ask to reopen the negotiation.
B.
Start with thinking through the benefits that the other will enjoy by renegotiating.
C.
If you are unhappy with the results of the negotiation, go back and ask for changes.
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Good negotiators are made, not born. Negotiating is a lifelong process. You can learn to be be an excellent negotiator by studying the subject, by applying what you have learned in this course, and by practicing these techniques over and over until they become second nature. In closing, remember the four essentials of negotiating, upon which all successful negotiations are based: 1.
Get Get the the fact facts; s; prep prepar are e in in adva advanc nce. e.
2.
Ask for what you want.
3.
Seek wi win-win solutions.
4.
Prac Practi tic ce, pra pract ctiice, ce, prac practi tic ce!
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SUGGESTED LISTENING FOR FURTHER HELPFUL INSIGHTS BY BRIAN TRACY The Psychology of Achievement Capitalize on skills and talents you never knew you possessed, after hearing this outstanding program, showcasing Brian Tracy at his very best. It makes for fascinating listening, and you’ll marvel at the revelations. Through refined, easy-to-use mental-programming techniques, you will enjoy even greater success, prosperity, prosperity, happiness, and peace of mind. Six CDs with Progress Guide — 5031CD
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Choose One... Several... or All of Brian Tracy’s Exciting, Pragmatic, Multimedia Seminars Call toll-free toll-free 1-800-525-9000 1-800-525-9000 to place an order or to receive further information on any of these programs.
Setting Business Strategy
Negotiating Strategies and Tactics
Now you can think strategy, plan strategy, implement strategy, and live strategy, secure in the knowledge that you’ve touched all the the bases, covered covered all eventualities eventualities . 744
Why argue when you can agree? Learn the four secrets discovered in the Harvard Negotiation Project, plus much more. Never again dread bargaining, and learn how you can want more and win. . . . . . . . . . . . . . . . . . . . . . . . . . 751
Leadership: The Critical Difference Brian Tracy captures the very essence of leadership — no small task — and presents it for all to see and understand. You learn the seven steps to becoming a truly effective leader, leader, plus much more. . . . . . . . . . . . . . . . . . . . . . . . . . 745
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Delegating and Supervising It’s not what you y ou know about these vital areas that gets you in trouble — it’s what you don’t know. Never get swamped, backlogged, or overworked again, as you learn and practice all the ins and out of these two crucial skills . . . . . . . . . 7 48
Motivating People Toward Peak Performance
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The Creative Manager Don’t back off and claim you’re not creative and never will be — until you give this program a try. Then exercise restraint in the bragging department. You can be highly creative, and Brian Tracy shows you how.. . . . . . . . . . . 755
Superior Sales Management
Learn the one overriding key factor in getting the most from people. Become a whiz at multiplying your effectiveness, and watch your career soar. Feel free to commit your people to big assignments, knowing they’ll come through. throu gh. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 749
Learn the skills of being a friend, a counselor, a confidant, a stern taskmaster, a cheerleader, and a business-oriented exec. Anyone, from a sales manager to an accountant, benefits from this this people-oriented people-oriented analysis. . . . . . . . . . 756
Managing Meetings That Get Results
Learn to develop the key requirements for success while ridding yourself of habits and deficiencies that could be holding you back. Travel down the “right” path for you, and do it at an accelerated accelerated pace. . . . . . . . . . . . . . . . . . . 757
Conducting great meetings is like giving great parties — everybody leaves satisfied. Get the most from your meetings by giving the most. Learn the key to resultsoriented, effective effective meetings. meetings. . . . . . . . . . . . . . . . . . . . . . . 750
Pathways to Personal Progress
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