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PHIL HARDWICK — making the most of your business negotiations

PHIL HARDWICK

When negotiating, do you hold out for the best deal, or are you satisfied once you get most of what you want? When you are purchasing a product or service for your company, do you buy when something meets your company’s needs, or something that is the best? It probably depends on whether you are a maximizer or a satisficer?

I first came across those terms in a book entitled The Paradox of Choice by Barry Schwartz.  He states that when it comes to making decisions, especially shopping decisions, a maximizer seeks to find the best product, service or whatever.  The maximizer will wade through numerous choices until he or she finds the very best.  A satisficer, on the other hand, will go ahead and make the purchase as soon as the satisficer’s standards and needs are met.  The basic premise of the book is that the consumer of today has too many choices, causing maximizers to suffer stress because they are continually searching for the best even after making the purchase because they still wonder if they made the right decision.  In many areas of our lives, the choices are almost limitless as evidenced by a trip to the cereal section of a super grocery store or by scanning the channels on a cable or satellite television.
The implications of this concept go well beyond shopping.  Individuals, businesses and organizations have many choices to make.  When those choices are great in number, the maximizer has a difficult time.
Let us first consider with the political world.  How many times have you heard that the reason a politician lost a reelection bid is because he or she just could not or would not make a decision?  Elected officials who are maximizers are probably going to be living stressful lives because they are constantly searching for the best decision, instead of the satisfactory decision.
And what about the board of directors or executive committee that is faced with multiple choices?  If it is a maximizer board, look for the decision to be put off or assigned to a committee.  If it is a satisficer board, the decision will probably be made, and then the next order of business will be considered.  Of course, most groups are heavily influenced by the leader of the group in this regard.  A leader who is a satisficer will call for a vote once adequate choices are presented to the group.
One of the basic tenants of business success is that the business understand its customers.  Successful businesses know when and whether their customers are maximizers or satisficers.  I suspect that businesses that sell a lot of variations of the same product are selling mostly to maximizers.  Computers manufacturers immediately come to mind.  The maximizer customer is in heaven (or hell) when trying to make a decision about which computer to buy – or whether to even buy a computer.   The business knows that in order to be successful it must offer its maximizer customer many choices.  One of the reasons given for Dell’s initial success was that it gave its customers an almost limitless combination of choices by letting the customer build his or her own computer.
Sometimes, however, companies obsess so much over what they think the customer wants instead of asking the customer what he or she wants.  In that respect, it can be said that the business is a maximizer.  Do you constantly agonize over what your customers want?  Are you selling to the maximizer or the satisficer?  It depends on what business you’re in, of course.  Also, some parts of a business or organization may be in the maximizer category while other parts may be of the satisficer variety.  Investment companies, for example, might have one division for customers and clients who want to make their own choices about which investment to make and another division for customers and clients who do not even want to make a decision.
I’ll conclude with a personal example that reveals the part of me that might have been a bit maximizing in the beginning.  Once I was attempting to learn about the customer service experience at a company where I worked.  In this case, customers had the choice to personally pay their bills in person at an local office, pay their bills using online banking or having their bills automatically drafted from their checking accounts.  To me, this was an easy decision.  Why would anyone want to personally go to a counter to pay a bill when those other alternatives were available?  It did not take me long to find out.  I went to a local office and observed people coming in and paying bills.  Quite a few paid in cash.  That made quite a bit of sense.  After all, not everybody has a checking account and a computer.  But what about the others?   I wanted to know, so I would approach customer after customer after the transaction and ask them why they chose to come to the office.  One older lady just smiled at me and said, “because the clerk always asks me about by grandchildren.”  It was, as they say, an “aha” moment.  I learned that for some customers the transaction is more than economic; it is an emotional transaction.  The satisficer in me caused me to stop there.  I had learned what I needed to know.  The maximizer in me would have studied the issue forever to learn about every single customer and would obsess over the situation.
Understanding whether you, your organization and your customers are maximizers or satisficers can improve your life and your business.
» PHIL HARDWICK is a regular Mississippi Business Journal columnist. His e-mail address is phil@philhardwick.com.

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