How to create an auction atmosphere

PUBLISHED : Sunday, 05 September, 1993, 12:00am
UPDATED : Sunday, 05 September, 1993, 12:00am

IF YOU have been involved as a bidder in an auction, you will be familiar with the hot-house atmosphere sending prices skyrocketing, bringing glee to the sellers and leaving bidders shaking their heads.

It is virtually impossible to identify all the emotions and cross-currents at play which lead normally sane people to overpay in an auction atmosphere. But the key element, I think, is the differing mindset of customers who buy privately and those who buy in public.

When a prospect buys privately - at retail, so to speak - he is looking for a bargain.

When a prospect buys in public - at auction - he is looking to win.

(I know of one art dealer who is such a savvy bidder at auctions that museums and collectors often hire him to act as their buyer. He does it not so much for the fee but because it lets him bid to win with other people's money. Conversely, he will turn away business if he thinks the buyer is not committed to outbidding everyone. He would rather lose the fee than look like a loser.) Keeping that in mind, it follows that it is to a salesman's advantage, whenever possible, to create an auction atmosphere.

There are two kinds of auction situations - when the potential buyers know they are in an auction and when they do not.

When all parties know they are competing with each other, it is fairly easy to create a feeding frenzy that hikes your price. In our business, where we are marketing one-of-a-kind personalities and events, we benefit from this.

When three or four teams compete to sign up a free-agent baseball player, when several racquet manufacturers want to be associated with a superstar tennis player, or when several television networks compete for the broadcast rights to a sporting event, you can be sure the seller will get the going market price, and possibly a lot more.

The true test of salesmanship is in the second situation - when the customer thinks he is negotiating all alone. That is when a salesman must expose the customer to the fact other parties are interested - without offending the customer or driving him away.

At its most basic level, this demands an understanding of your customer and his competition - and a willingness to exploit that.

Let's say you were an up-and-coming golfer who wanted to be represented by our organisation. The best way to catch our attention (if we were not already interested) is to drop a hint that one of our competitors is seriously considering signing you - because our people will frequently go to great lengths to thwart the competition.

This plays on one of the axioms of the buyer-seller relationship: an object is more desirable, and therefore more valuable, the moment someone else wants it too.

I have been in many situations when a customer has wavered about making a financial commitment to one of our projects. Usually, they delay a decision or try to get us to lower our price. And yet the moment another player enters the picture - whether by accident or by our design - their interest soars to a new level of seriousness.

The best salespeople know this and consequently are always finding ways to expand the roster of bidders for their product or service.

There is nothing ruthless about this. It is part of the give and take of business. In fact, if presented properly, it is one of the most ethical things you can do.

A few years ago we were selling a book project to a major publisher. Because of past successes our company had with this publisher, we felt obliged to offer it to him. But we also had a duty to get the best price for our author client.

So we simply laid all our cards on the table. We told him another publishing house was interested, but that we felt we owed him the first shot.

This let the publisher know he was in an auction situation, but in a way that let him feel warmly about us for not only letting him into the game but giving him the inside track.

At the same time, by introducing one of his competitors, we were letting him know he would not have a walkover. He would have to step up and take his best shot - because one of his rivals was waiting in line.

Question: Our company is in downsizing mode and I am the designated ''downsizer''. In other words, I'm the one who has to tell 270 employees over the next four months they are out of a job. The first two weeks has not been easy, even though I have tried to be all business about it. I call the people into my office and I have all the severance terms ready on my desk. But still each session turns into a gut-wrenching personal confrontation. There must be a better way to handle this delicate assignment, but I do not know what it is. Help.

Answer: Perhaps it is a cliche, but have you considered the view from the other side of the desk? Have you tried to put yourself in your employees' position.

A friend of mine had a similar assignment a few years ago. Before he terminated his first employee, he practised with his secretary. He asked her: ''If you had my job and had to fire someone in my office, how would you do it?'' She had some insights on the mechanics of firing people.

First, do not ''call'' them into your office out of the blue. That is like an invitation to a beheading. If at all possible, make an appointment with them a few days in advance. I know this sounds cruel. But downsizings rarely remain secret in an organisation. Chances are the employee already knows why you want to see him. A scheduled appointment gives him time to get used to the idea.

Second, do not try to act casual or occupied with other business when the employee walks in. This may be ''business as usual'' to you, but it certainly is not to him. Meet the employee at the door and show him into your office.

Third, do not sit behind your desk. That is confrontational. Take a seat on the employee's side of the desk. That is empathetic. You are literally seeing the situation from his point of view.

This last bit of body language is useful in almost any potentially nasty one-on-one situation. Ever since his talk with his secretary, my friend starts out all personal discussions with an employee by moving his chair to the other side of the desk.