How to Win When You Fail

If you're an entrepreneur, you will fail. I don't mean your business is going to fail and you'll go bankrupt. I mean that sometime, somewhere, to some degree, you will fall short. You will forget to follow through on a commitment to an employee, partner or customer. You'll be late to a meeting. You'll make a bad choice. You'll exercise poor judgment. You will make a mistake.

How you react when you fail will say a lot about who you are as a person, and will be a critical factor in determining how successful you are in business in ways that go beyond financial. But many of us make a mistake and then compound it with further mistakes, not because we have bad intentions, but because we simply do not know what to do. Assuming your heart is in the right place, here are four steps to increase your odds of winning when you fail.

Take full responsibility for the failure. Don't dodge. Recently a subsidiary of my online marketing firm that targets small self-storage companies signed up a new client for a $200 per month website and marketing package. We set up the website, but forgot to get the marketing services in the queue. Last week the customer contacted us and in effect said, "Hey, I'm happy with the website, but I think I was supposed to be getting online marketing services too, and I haven't seen any reports. What's going on?"

I could have dodged. I could have told the client we were waiting for something from him, or I could have blamed the problem on an employee. But I simply told him, "There's no excuse, we dropped the ball." The problem with dodging responsibility, apart from it simply being unethical or downright dishonest in most situations, is that what you are telling your customer is "I do not have the power to provide the level of service you expect." Is that the message you want to send your customers?

Unfairly compensate your customer. In 2006 I heard NPR's Scott Simon tell the story of how his father, upon complaining to his favorite shaving cream company that they weren't delivering the 90 shaves per can they promised, received a crate full of cans of shaving cream. "I think my father may have been buried with the last few cans," Simon says. If you unfairly compensate your customer to their benefit, your company's actions may one day become the stuff of legend.

Explain why the failure will not happen again. Your customers are looking for an excuse to stick with you. They've made an investment. Switching to another company is time consuming, bothersome, expensive and potentially risky, since the customer has no guarantee that things won't be worse with a new vendor. The customer wants to continue working with your company, but needs to know that the problem won't happen again. It's not enough to merely ensure the problem won't happen again, you also need to make sure the customer understands this.

Never do it again. Let me down once, shame on you. Let me down twice, shame on me. Everyone fails now and then. Most customers are reasonable people who understand this. When a vendor fails two or more times in the same way, the customer begins to realize this is not a one-time occurrence, but a rather inconvenient pattern. At some point, the time, cost, and risk of finding a new vendor eclipses the time, cost, and risk of staying with you, and then the customer is gone.

After 14 years of running a service firm I've come to understand that most customers have fairly simple expectations. They want what they paid for in the form promised, within the time frame committed to.

In the case of my firm's client, we followed these steps and the client was not only thrilled with the way we treated him, but then asked us to take on more of his business. We failed, but by taking the right steps to clean up the failure, we won in the end.

Have you ever failed to deliver on a customer's expectations? How did you handle the situation?

Joshua Steimle is the CEO of MWI, an online marketing firm. Steimle currently lives in Hong Kong where he's opening his firm's Asia office and is involved with the local startup community. Connect with him on Google+, Twitter, Facebook, and LinkedIn.