Alien Abduction InsuranceAlien Abduction Insurance.

Crazy idea?

Or crazy good idea?

Most entrepreneurs have ideas that fall into both categories – crazy and crazy good.

How do you know which category to put an idea into? People have called some of my most profitable ideas crazy. While others have praised concepts that fell flat.

Once you’ve decided to pursue an idea, turning it into a product or service, how long do you hold out for success? Six months? Six years? Until the bitter end?

Here’s a case study sure to entertain and educate (I think the trendy new term for that is edutainment). Read on for…

Three Business Lessons from Alien Abduction Insurance

Believe it or not alien abduction insurance is a real thing – tens of thousands of policies have been sold. The two primary companies who have issued policies are Lloyd’s of London (via Goodfellow Rebecca Ingrams Pearson) and The UFO Abduction Insurance Co. located in Florida.

They’ve taken vastly different approaches, and had vastly different outcomes.


Business Ideas Lesson #1 – Is there a Market?

Are there people who are afraid of being kidnapped by aliens?


Translation for Your Business:
Is there anyone else who sees the need you plan to fill? Everyone knows the cliche about being able to sell ice to Eskimos. Wouldn’t you rather be the person selling ice on a hot tropical beach to tourists with cash to burn?

Are there enough people who are afraid of being kidnapped by aliens to make a viable market?

Yes. (Just Google “fear of alien abduction”.)

Translation for Your Business:
The easiest litmus test for market size is when your product or service is a significant improvement upon what’s currently offered by others. That generally tells you a market exists (but does NOT guarantee they will buy anything from you).

Yet entrepreneurs often put out cutting edge products, services and ideas. While market research might provide some insight, often the most cost effective way to test the potential is to do a limited offering. This leads to…


Business Ideas Lesson #2 – Will People Buy It?

Let’s face it, in today’s society most people have more wants than cash in the bank. There’s no shortage of trendy new products, services, and experiences that consumers are bombarded about non-stop.

Personally there’s about 20 gadgets I’d love to own right now that just don’t fit in the budget.

Lloyd’s of London is famous for offering insurance on just about everything, so why not alien abduction insurance? The cost to introduce this new type of insurance was probably minimal, allowing them to test the market. Lloyd’s claims to have written over 40,000 policies during the time it was offered.

Translation for Your Business:
Look for a low investment way to offer or test your idea. Set a minimum number of sales, or minimum amount of revenue to consider it a success.

Be sure to set your benchmarks before you launch – otherwise you may be tempted to keep going even when it doesn’t pay

The UFO Abduction Insurance Co. took a completely different tact. Their product, while legitimately an insurance product, is more of a spoof or schtick. If you are abducted you will receive $1 a year for your lifetime, up to a maximum of $1 million dollars. To qualify for the insurance you must pass the “Texas IQ Test”

a) do you have a sense of humor?
b) do you take this coverage seriously?
c) were your or parents related before they were married?

( if you answer yes more than once – you do not qualify)

To generate initial publicity and buzz the first policy was issued (gratis) to Shirley MacClaine. More than 20,000 policies have been issued since the company formed in 1987.

Translation for Your Business:
If you are offering something unusual, and want to keep initial investment / launch costs down, find a way to generate relevant free publicity. Shirley MacClaine has publicly voiced her belief in aliens for years, and claims to have seen UFOs from the porch of her New Mexico home. A freebie to the right celebrity, public figure, or expert can pay for itself 100 times over.

While I would have believed that the people who buy from The UFO Abduction Insurance Co are more likely to be skeptics, they have paid out on two claims. Be prepared to follow through on all your guarantees, or don’t offer them.

If you don’t generate any sales with your initial market test it’s time to pull the plug.


Business Ideas Lesson #3 – Fold ‘Em or go All In

Products and services have a lifespan. Some are quite short (Pet Rock anyone?), others are very long (Arm & Hammer Baking Soda has been around for 160 years!). Even if your product or service passed the initial market test, that doesn’t mean it will last forever.

In 1997 39 members of the cult Heaven’s Gate committed mass suicide. They were insured by Lloyd’s of London against alien abduction. Fearing that they may have contributed in some way to the mass suicide, Lloyd’s decided to stop offering alien abduction insurance.

When a product no longer aligns with your core values, it needs to be discontinued.

Meanwhile The UFO Abduction Insurance Co is still going strong, currently celebrating their 25th anniversary. They seem to have doubled down on their tongue in cheek approach, while fulfilling their obligations by paying out on two claims. More freebie celebrity policies have been sent out, and they’ve even added a $10 million dollar option. Of course you have to live 10 million years to get it…

Embrace your core. Whether it’s wacky or wise, celebrate who you are.


Final Thoughts

What’s a crazy good idea that you’ve made profitable? What finally made you give up a unprofitable offering? Would you have ever guessed nearly 70,000 alien abduction policies have been purchased?

This post is part of the November Word Carnival. The topic is Letting go: How and What to Trim to Keep Your Business Lean and Focused. This month’s carnival will make the juggler want to go stand out in the cold; multitaskers – you’re on report!