The Apprentice Season 1 Episode 3

Task:

Buy 10 specific items on the street for the lowest price.

Things People Did Right:
The women used their charm. I don't know about you, but a bunch of beautiful women giving me the pouty faces, cheering me on, and begging would have some kind of psychological affect on me.

Things People Did Wrong & What Chould Have Been Done Instead:

• Sam says he won't come in the house until he is greeted at the door. No one comes to greet him. He's demanding some respect, but he's not in a position to demand it. He is in the position to earn it, and he should be spending time on how he's going to earn the respect of his teammates.
• There shouldn't be 3 people in the suite delegating the task. One person should be in charge of research, getting the address, phone numbers, verifying that they have it in stock, and mapping out how to maximize their driving time. Probably the perfect job for the project manager.

What I Would Have Done As Project Manager:

The game plan:

1. As the project manager, I would research on the best price on the web. Check ebay. Check Froogle. Check wholesale prices. When you know how much they get it for, you know how much to offer without insulting them by suggesting something ridiculous. You can tell them, at least you are making some profit, and at the end of the day, some profit is better than no profit. And they can always restock. You also know that even though it seems like you were able to knock off 20% of the price, they could have had a 50% markup, and it would have been better to start negotiating at the store where the markup is a lot less.
2. Separate the group into 2 teams of 3.
3. Connect with the buyer. Is the seller married? Have kids? Wearing the same color shirt? Do you know the brand of his tie? Is he the same nationality as you? Does he have an accent you recognize? Are you from the same town, or at least neighboring towns? Find some common ground first. Move away from the seller/purchaser relationship. And make it seem like you are in a spot where you can mutually benefit. Its not a cash transaction about him selling you something for the lowest price. There is something he's getting it out of it, whether it be profit, exposure, repeat business, or just knowing that he's doing something good that'll make him feel like a good person.
4. Don't waste time negotiating with the salesperson that doesn't even have the ability to knock down the price. The store manager will see the benefits of TV exposure and return business. The salesperson is more focused on the sale of the item, not repeat business.
5. Never negotiate something for nothing. For example if the owner says "I could only do that price if you were paying cash today." Your answer shouldn't be "yes we are going to pay cash." Suggest a slightly lower price because your cash on hand is limited. Knowing that credit card takes on the average of 1-4% of the transaction, you should abe to deduct that amount.

Negotiation Tactics (use to knock down the price during negotiation):

1. Show benefit of cash and on the spot puchase
2. The benefit on being on camera, which means free advertising, and being the hero. But only when you buy.
3. The percentage game (explained below).
4. The benefit of leaving the store and getting out of his hair to add to the final leverage of the close.

The Close:
Here's how I would close. The close would be the last knockdown in price. And for him to agree to this last reduction in price, I would reiterate the bulletpoints on the benefits of closing this transaction.

• If you have negotiated the price from $100 to $86.50, tell him, "Here's the thing (name). We are on a task where we specifically need to make all purchases at 15% off. Its just the rules of this game.
• And if you buy from us, you get the benefit of some free TV exposure. You can make a determination how valuable that is going to be for your business. I believe that that no matter what happens, it'll be at the very least some positive benefit.
• We're ready to buy right now, with cash, leave the store as happy customers and get out of your hair because I know your time is valuable."
• Let him calculate the 15% off price. And say "So that's only a $1.50 less than the price we talked about. For $85, do we have a deal (and offer a hand shake close)?" The psychological need to shake someone when they offer their hand is the last microgram of leverage you're dishing out during the close.

Take-away Lessons:
Sam says "I'm not sure if I even care about the price of the gold anymore." That quote says it all. It was about him doing well as a project manager, gaining the respect of his teammates, and not about winning the task. The focus was wrong, and that's why they lost.