Quikcard Case Study
March, 2001
Main Issue and Question for Discussion
In 1989, Lyle Best became the Executive Director of the Edmonton-based Alberta Dental
Services Corporation (ADSC), a not-for-profit provide of dental insurance services.
During this time Best introduced the innovative Quikcard system for dental insurance, as
well as finding a market niche providing dental coverage packages for small and
medium-sized businesses. Business has been strong enough that Quikcard Solutions Inc.,
a for-profit company, has recently split off from its not-for-profit parent, and is currently
on the verge of expanding across Canada to become a national provider of dental and
vision coverage.
Throughout his tenure at ADSC and Quikcard Solutions Inc., Lyle Best has made support
for community-based initiatives a priority and an integral part of his business marketing
strategy. Each year since 1989, Best estimates at least half of his marketing budget has
gone towards supporting local community initiatives, which has resulted in cash
contributions toward local charities and not-for-profit organizations totally between $22.5 million over the past decade. This is in addition to considerable non-financial
resources provided through Quikcard. Both Best and Al Hamilton (Vice President,
Marketing) agree that their active participation in community initiatives has been a factor
in the success of the company.
In 2000, as the company prepares to expand across Canada, Best is pondering his
marketing strategy and wondering if it is possible to continue employing a marketing
approach that emphasizes community-building and if so, how to do this at a national
level.
Company Details
The Alberta Dental Services Company (ADSC) was founded in 1964 as a not-for-profit
organization to provide dental insurance in Alberta – a relatively new benefit at that time.
By 1989 the marketplace had changed significantly, as virtually all of the major insurance
companies existed in Alberta in full force, so ADSC began to look for new directions.
Lyle Best was hired to head up the ADSC in April of 1989, after working for a large
multi-national insurance company in Edmonton for 10 years. When the multi-national
sold its Canadian operations, Best decided to stay in Edmonton, in spite of an offer of
employment in Ontario.
When I had a to make a decision…I had an opportunity to go back East
and work for an insurance company there, in the executive offices. But
I just loved Edmonton too much. And even though I was going to be
stepping out of my comfort zone and leaving the industry to a degree because really at that point I didn’t know what I was going to do - I just
knew I didn’t want to leave Edmonton.
Instead, Best took a position with ADSC and began moving along a different career
trajectory. As a businessman with an entrepreneurial spirit, he began by identifying a
market niche with significant demand, and saw ADSC’s unique ability to fill this gap.
The initial target market was primarily the under 25-person company, the small business,
the service world of doctors, lawyers, chartered accountants.
No one in Alberta at that time was offering this kind of product to companies of that size.
This was due in part to it being the early days of computer use, as in the late 1980s, when
the cost of writing mainframe computer programs geared toward small businesses was
prohibitive.
Best likens traditional insurance systems to Las Vegas bookies, who:
…..in practical terms are betting you are going to spend less on claims
than they are going to take in on premiums, and you are betting you are
going to spend more on claims than you are paying in premiums.
Recognizing the difficulty of competing with large insurance companies on their own
terms, Best decided to take on the insurance industry. Rather than setting premiums
based on the ‘odds’ of using a service, he took a different approach.
So we said, let’s not have any of those things in our dental plans. Let’s
just have a certain amount of money that is allocated to the employees.
The practitioner and the patient decide on the best course of treatment
and away you go. So that made it easier.
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ADSC revenues come from charging companies an administration fee for claims
management. Employees covered under this plan receive a personalized ‘Quikcard’
which enables dentists to settle the claim directly with the ADSC. In this way, employees
are freed from the burden of paying dental bills at time of service and then waiting to be
reimbursed by their insurer. The ADSC approach had the added benefit of simplifying
coverage for patients, who consult only their dentist regarding the best course of
treatment, and not with the service provider, as is often the case with insurance
companies.
This gave Quikcard the advantage of not having the restrictions typical to most
insurance-based dental plans, and as such, there was no motivation for a patient
to fraudulently submit a claim with different procedures codes in order to
receive coverage. The amount of dental coverage provided depends on what the
company is willing to offer its employees.
Some companies give all of their employees $500 or $1,000. Some of
them give family maximums. And guys who own their own companies
or businesses would have less restrictions because they are using this to
pay for their dentistry with corporate dollars rather than after-tax
personal dollars.
In the early days Best notes it took some salesmanship to build up a client base. First he
had to increase the number of companies that had their dental programs administered by
Quikcard, which then helped drive card acceptance in dental offices. This was critical, as
dentists originally had to pay a fee to be a provider of Quikcard services. As more
companies used the service, more dentists joined as well, which made the system easier
to sell to companies.
Best had obviously found a market niche with demand. In the first five years under Best,
company dollars under administration went from $0 to $100 million. Best knew that
some of the activities the company was involved in, such as franchising and software
development, did not fit well into the not-for-profit model of the ADSC, so this year a
for-profit division was created, named Quikcard Solutions Inc. Along with this the
Quikcard Charitable Trust was also established.
Alberta Dental Services Trust
In September of 2000, Quikcard Solutions Inc. split off from the ADSC as a for-profit
company, while the ADSC remains a not-for-profit venture. This change necessitated
changes in Quikcard’s charitable activities as well.
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When we go into the world of for-profit, not-for-profits can’t own
shares of a for-profit. So, what we did was… we established a
charitable trust and that charitable trust is allowed by law to hold
shares of a for-profit company. We set out the goals and objectives of
the Charitable Trust to be giving out monies in the dental world, health
related things, education, public awareness, bursaries, scholarships,
these types of things.
So it is called the Alberta Dental Services Trust and it owns shares of a
company called Quikcard Holdings Ltd. So Quikcard Holdings Ltd.
holds the shares. Within Quikcard Holdings Ltd the trust owns a
percentage of the shares, and five key employees own the balance of the
shares. The holding company holds the shares of the operating
company which is called Quikcard Solutions Ltd.
The reason we set the Charitable Trust is that, again, we know we have
grown our business by being good corporate citizens, but there is a
great vehicle to give money back into the community basically
unfettered; you don’t have a whole lot of restrictions. Even when you
give money from a not-for-profit it is filled with all kinds of restrictions
on how and when you can do things. So when you establish a
Charitable Trust you can do whatever you want with it and it’s a lot
easier. So the dividends and the profit made in Quikcard Solutions Inc.
are going to go to the shareholders of Quikcard Holdings. The key
employees who have shares will keep their dividends presumably, but
the lion’s share goes to the Charitable Trust. The trust does hold the
majority of shares, actually.
Effect of Civic Culture
In part, Best’s community-oriented approach to marketing grows out of his experiences in
Edmonton. Although he now proclaims Edmonton as “the best city in the world” his first
experience with the city was hardly an auspicious one. His Toronto boss announced
Best’s transfer by promising a ‘gorgeous view of the mountains from your office.’ After
arriving to find a relatively flat landscape, Best says:
So I get into the hotel and phone back to Toronto and I say, “Gees,
there are no mountains here. I can’t see the mountains from my
office”. And he says, “Oh didn’t I send you to Calgary?” “No, you
sent me to Edmonton.” “Oh, there are no mountains there”, he says.
So that was my coming in to Edmonton in 1979.
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In spite of this rather inauspicious beginning, Best fell in love with Edmonton and its
strong civic culture. Best describes the sense of community spirit that originally drew
him in. A colleague told him ‘The first thing you have to do when you get to Edmonton
is to be a volunteer because that is what it takes to live in this city.’ So Best pulled out
his camera equipment from his days as private investigator and became official volunteer
photographer for the Klondike Days raft races within six months of moving to the city.
This first experience in Edmonton community-based events was followed by many more
over the years, something Best credits to Edmonton’s civic culture.
I would love to say I was brilliant enough to come up with this social
responsibility plan, but I just sort of fell into it. I got involved with
different industry associations and every one of them seemed to have a
charitable offshoot. It was a way for me - coming into town brand new
- to meet a lot of people. You get involved and volunteer. It’s almost
like a fog or a mist or a cloud or something that envelopes you when
you come to Edmonton - I saw everybody get involved here.
I do think it’s a different kind of peer pressure here. The peer pressure
in Ontario, in Toronto, is you have to be like the traditional corporate
guy. People aspire to be like that, because that appears to be the
measure of success. Whereas in Edmonton I think we do a really good
job of recognizing volunteers. We have the philanthropy awards every
year and all these other things that I don’t see happening in other
centres. So it is a nurturing environment and it almost seems that if you
are not doing those kinds of things, you don’t fit in.
When asked about the types of initiatives he has been involved in, Best is somewhat
reluctant to talk about what he has done, but over time it comes out that the list of causes
and initiatives he has supported through Quikcard is lengthy. The majority of Quikcard
commitments to community or charitable events are for a five-year period, although not
all.
I think we have done a lot for Junior Achievement of Northern Alberta
and Northwest Territories. Teaching kids about business is to me one
of the most important things you can do… The Alberta Cancer Board,
we did a five year pledge to them. The Canadian Cancer Society, we
gave a five year pledge to them.
Quikcard has also supported the Arthritis and Cystic Fibrosis Societies, the work of the
Aga Khan Foundation and the Robin Hood Learning Centre. Best is currently vicechairman for the Royal Alexandra Hospital Foundation and serving as Sponsorship
Chairman for the 2001 World Triathalon Championships.
When the Montreal Forum was demolished, Best bought twelve stadium seats. He’s kept
three for his office, and given the rest away to various charities to be raffled off. He
donates a sports Jersey every year to the CNIB for their fundraising. The latest new
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venture is support for the Edmonton-based minor hockey week, which is now called
Quikcard Minor Hockey Week, and is the largest minor hockey tournament in North
America.
Best notes that while community involvement has been second nature to him for several
years,
…I guess it is a philosophical thing, too, if I make it a better city I am
going to get better employees, I am going to make the city richer, spend
more money. And again, it is not something I consciously set out to do.
But after playing the tapes back you see it makes sense.
Social Entrepreneurship
Best is a leader in the newly emerging field of Canadian social entrepreneurship, and a
pioneer in forging new paths for corporations to give back to the communities that
ultimately support them. Social entrepreneurs share many characteristics with economic
entrepreneurs (Dees, 1998) but tend to focus on a dual bottom line emphasizing both
social and economic return on investments, in order to ‘do well by doing good.’ Like
their economic counterparts, social entrepreneurs tend to be problem-centred, results
oriented, visionary individuals. And similarly, they are willing to take calculated,
strategic risks, and tend not to think ‘outside the box’ and not be limited by an initial lack
of resources to work toward their goal.
Best is open about his reluctance to create or enforce rigid dichotomies between
marketing and community support. Social entrepreneurship stands in contrast to the
standard ‘donor-recipient’ model of supporting charitable or community-based activities,
and challenges the idea of ‘selfless’ giving. Instead, social entrepreneurs are active in
trying to create win/win situations, and recognizes that ‘enlightened corporate selfinterest’ may be a solid motivation for activities in the community. This comes out in his
discussion of Quikcard’s sponsorship of minor hockey.
When you say we are sponsoring Quikcard Minor Hockey Week, what
is the goal of minor hockey? Obviously, it is to foster sportsmanship in
these kids. And last year they started the play safe thing with little stop
signs on the back of kids helmets and stuff. Is that advertising or is that
putting back into the community? It is a blend, because our name is all
over everything and you certainly are going to get some advertising out
of it. But for the most part it is putting back in the community.
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But Best also cautions against adopting this type of approach for purely profit-driven
reasons, and is clear in his scepticism of those who support community initiatives only
for the potential business benefits.
I don’t think it’s healthy to start off saying “I am going to do all this”
and using that to grow. Having said that, existing companies should
probably adopt a strategy knowing that there are the benefits that can
come from it. But if you set by saying “I am going to take advantage of
all these charities and make myself something” I think you would be a
pretty miserable person.
Being involved with charitable and community-initiatives can also be very time
consuming, and Best notes that this can be a disincentive.
Yeah there is a value, a dollar value to that. The hard-nosed guy could
say ‘he spends 30 hours a month doing this. If I had 30 hours a month
and put it all into my business I could do this.’ And there’s an
argument there.
But the joy Best gets out of his involvement with community activities is obvious as well.
You have to have fun doing this stuff. If you don’t you are coming at it
with a totally bad attitude. We love playing off each other. The Oiler
Alumni is another really good example of that where we have a core
group of guys in our Alumni, the same guys all the time. And I think the
reason it is the same guys all the time is because we do hang together
and have fun about it. We challenge each other to do things for charity
or for the community.
Social Networks and Social Capital
Interest in the area of ‘social capital’ has been growing since the mid-1990s, in large part
due to the widespread publication of articles by Robert Putnam (e.g., Bowling Alone:
America’s Declining Social Capital (1995); The Strange Disappearance of Civic America
(1996)). However, the conceptual work in this area predates Putnam’s publications by a
decade.
Pierre Bourdieu (1986), in one of the earliest documented discussions of social capital,
defined it as ...the aggregate of the actual or potential resources which are linked to
possession of a durable network of more or less institutionalized relationships of mutual
acquaintance or recognition - or, in other words, to membership in a group - which
provides each of its members with the backing of the collectively-owned capital, a
credential which entitles them to credit in the various senses of the word (p. 248-249,
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cited in Foley and Edwards, 1999).For Bourdieu, access to capital shapes the economic
and social worlds of individuals. The volume of social capital an individual possesses
can be measured by the network they are able to mobilize to produce an action they
desire (Foley and Edwards, 1999).
Bordieu takes the analogy to other forms of capital (physical, human, financial) seriously,
and sees social capital as yet another form of capital an individual can possess. This
analogy recognizes that the acquisition of social capital, like the acquisition of other
forms of capital, requires the deliberate investment of resources (Portes, 1998). This
conceptualization stresses the differential access people have to resources and
opportunities through their membership as part of a group, and the relationships this
membership provides. Later work by Coleman notes that social capital ...is productive,
making possible the achievement of certain ends that in its absence would not be
possible (Coleman, 1986, p. 598).
The links between social entrepreneurship and social capital are complex, but illustrated
to some extent by Lyle Best’s experience with Quikcard. Best’s volunteer experiences in
Edmonton predate his involvement with ADSC and Quikcard by ten years, and was one
of the reasons he felt he could take a chance on leaving the world of multi-national
insurance behind him to move to the ADSC. He notes that the network he’d developed
through his participation in various professional and volunteer activities gave him the
confidence to take a chance and start something new.
I basically said, I could make it work here because I have a big
network. Then as I got going it was just a default reaction to say ‘ok,
well I will sponsor this, or sponsor that’ as a way to get my name out.
But it was also a way for me to continue giving, maintain my circle,
stay involved.
Social entrepreneurs are a mix of competitive spirit coupled with an unusually high
capacity for collaboration, and Best is an excellent example of this. He describes
meetings with other social entrepreneurs as being much like ‘a big poker game,’ with one
person offering to donate $15,000 to a charity, and another asking ‘is that all?’ and
topping it by offering $20,000. Because most of these individuals are entrepreneurs
competing daily in their own industry, competing to be the ‘biggest giver’ gives them a
chance to channel this competitive energy into social causes in a collegial atmosphere.
But Best also notes that within this group, a team can pull together quickly as well, as
they did when a local hockey player suffered a severe and debilitating spinal injury.
With the Aaron Moser deal we netted at $374,000 but we basically sold
out the room right in this boardroom in an hour. One would say, “I
am good for 30 tables” and another would say “I am good for 35
tables.” And one by one, guys would make commitments.
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Marketing Strategies and Support for Community
Initiatives
Al Hamilton, Vice President (Marketing) describes Quikcard’s marketing approach:
You can take a comparison with – well, we can go stick up twenty
billboards and its costs us, maybe $20,000. Or I can take five
billboards and put $15,000 into the community. Am I reaching the
same amount of people? Probably. And probably reaching them in a
more positive way than throwing it at another institution to stick our
name up there. I mean, you need to have your name recognition, and
we appreciate that we need to do that. But if we can the same dollar
and make it a more effective part of the community, and still get the
visibility, then we think we’re farther ahead.
When asked if this was a conscious strategy, or one that had evolved over time, Hamilton
responded
Well, it is part of our strategy, to take our allocation of funds for
charities - that is part of our promotional budget. We think that can be
every bit as effective (as conventional marketing strategies).
Would the business have been as successful if it had not supported community-based
activities?
Probably not. I mean we are selling to the public. The public is more
likely to want to be involved with somebody who is involved in the
community. I think there is a direct link between your involvement and
your success. I would tend to shop, or to send my business, to someone
who is very active in the community as opposed to somebody who is
going to grab the money and run. That affects my decisions.
Best estimates that each year since 1989 at least half (and sometimes more) of marketing
money has gone into supporting community and charitable events. In addition, Best and
Hamilton support a lot of events with non-financial resources as well, for example by
acting as master of ceremonies at various charitable events, or by actively participating in
community activities. Best stresses that this participation is a critical addition to cash
donations.
So many people don’t attach themselves to the sponsorship dollar, they
just cut the check. If you just cut the check and send the money I hope
you felt good for a couple minutes, because that is probably all you are
going to get out of it.
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Both Best and Hamilton mention that they receive far more requests for support than they
can possibly respond to. So decisions have to be made. Best looks at the cause and
whether he or someone he knows has been personally touched by an issue.
If I haven’t been personally touched by it, then they have to sell harder.
The Canadian Cancer Society took 10 seconds because my wife had
cancer, so it is not hard for me. The Community Conferencing (an
alternative justice model) thing….well, with the right set of
circumstances I could have been on the wrong side of the law too, when
I was a kid. In fact, I was more than once. So I relate to them.
Hamilton says they tend not to support individual requests, but instead
…try to look at where it will have the most impact and things that will
affect the broader scope. I mean, everyone’s been affected by cancer,
so we get involved with the Cancer Society…. We try to do things with
various charities where we have a ‘hands-on,’ where we’ve involved.
We want to have a presence in all of these events.
Hamilton also emphasizes the importance of giving support to organizations where there
is a good ‘fit’ between the company and the not-for-profit organization or activity.
From a socially responsible aspect, we think the company has to be
involved in the community and be visible. But just throwing money at
things indiscriminately, doesn’t have the same impact for your business,
and I don’t think it has the same impact in your community.
The 1999 ‘Boys in the Bus’ Edmonton Oilers Reunion Tour is an example of a good ‘fit’
between a company and its community and charity support. Best and Hamilton, a former
Oiler and President Oiler Alumni Association worked together on the event, with Best
acting as Chairman for the event. Besides being, by all accounts, a successful reunion,
Hamilton estimates the event
….raised between $150,000 and $200,000 for charity. That went to 10
different charities in the city. Actually, probably more than that,
because we have an on-going fund that keeps filtering money into the
community.
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Leadership
The issue of leadership runs throughout Quikcards community orientation. Al Hamilton
describes it this way:
I think you have to look past the end of your nose and say ‘we have a
social responsibility to try and do something with these charities.’ We
live in the community so we want people to know that we feel
responsible and that we are part of the community. And I don’t think
anybody does it any better than we do. But it’s like anything else, you
need some leaders. And if you have good leadership, the others will
follow. There’s always people that will step up and take command of a
campaign and go with it.
Best acknowledges that some of his social contributions may be a result of his less-thanaffluent upbringing, and being able to relate to people facing hard situations.
When you become a social entrepreneur you have to be able to relate at
all levels. And sometimes…you have to be able to draw on personal
experience, I think, to be truly effective in those ones.
We did something with the Oiler Alumni where we did the inner city
school breakfast and lunch programs. You’ve got to be able to put
yourself in the position of the parent who couldn’t feed that kid, you
have to put yourself in the position of the kid who just wants to get fed,
and the people who have to prepare the meal and serve it to them. And
you have to walk in their shoes for a while. You have to go down to
that neighbourhood. The easiest thing to do is cut a check; the harder
thing to do is actually go and be there helping out.
Best’s commitment to community service through Quikcard’s marketing activities,
coupled with his business acumen has made him a leader in an emerging area – that of
organizations developing ‘hybrid’ models of enterprise which recognize the importantce
of – and interconnections between – generating both economic and social returns on
investment.
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Bibliography
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