How and Where to Leverage Your Power

by Guy Ralfe on August 26, 2009

One million dollar question is –

Big fish in a small pond or small fish in a big pond?big fish small pond

As I was pondering on the above question, I couldn’t resist reflecting on my conversations with my Father a few years ago.

So, here is some background:

My father always said to me – “It is better to be a big fish in a small pond rather than to be a small fish in a big pond.

This comment was typically in reference to divisions that he would transact with when it comes to banking, accounting, legal etc.

I particularly remember his choice to bank at the local branch when many of the other businessmen he interacted with drove many miles to have an account at the supposed Main branch of the bank in the nearest city.

A relative of mine was one who believed in dealing at the main branch, he spoke of only getting an appointment with the manager if they booked well in advance. He often complained of the effort it took to get loans approved and how the service was consistently on the shoddy side, but they still stuck with banking at the main branch because it made them feel they were a part of something big and important and this was where all the power was.

On the other hand our bank manager was our account manager. On many occasions they visited us and discussed business as long as it took. I recall the manager staying for lunch on many occasions. When we went to the branch we were always known and treated as a valued client. The support staff often knew what we were coming into the branch for, as they recognized us from a previous visit or when we spoke on the phone.

When it came to requesting new business loans people were often surprised how quickly my father could get an approval, what good rates he was able to secure and the extent of the leverage on the account the bank was prepared to offer. We were not getting any preferential treatment or having any rules flaunted for us, but still things were moving fast.

The reason: It was the relative power we held at the small branch that gave us the advantage.

Let us analyze what happened a bit more.

Let us assume that the average transaction value as a metric of worth to the branch.

Typically, the Main branch where the average account is of large corporations, requiring extensive services and producing large revenues for the branch. Assume the main branch had an average transaction of $50,000 and the local branch had an average transaction of $5,000.

If my average transaction is $10,000, at the main branch I will be an “expensive” customer – who costs a lot to service per transaction. At the local branch, I will be one of the higher contributors to the banks operations and so will be deemed a more favorable client. The local branch will likely go out of their way to keep my business as I can better help the branch meet its goals. Note in both instances I have the same average transaction value.

So my circumstances are the same but the situation values them differently.

The results my Father experiences to this day are due to this relative valuation. Both branch managers have access to the same credit and loans departments, but you can see how the local branch manager is compelled to present a stronger case for a like request than the main branch manager would.

So, my point:

This is the way the marketplace works. Always be conscious not only of what offers you can make, but where you make them.

Be the big fish by choosing the right pond!

Guy RalfeThis article was contributed by Guy Ralfe, co-founder of Active Garage and co-author of the upcoming book ProjectManagementTweets. You can follow Guy on Twitter at gralfe.
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