The Law of Failure

Illustration:  Bruce Crilly

It’s been noted in many places that Thomas Edison [caricatured above] may have failed as many as 1,000 times at inventing an electric-powered light bulb, and when asked about his string of failures, he turned the tables by saying (and I’m paraphrasing,) “I didn’t fail 1,000 times. I succeeded at inventing a light bulb, and it took 1,000 steps to arrive at it.”

A recent New York Times article asked the question “What if the Secret to Success is Failure?” when discussing education and character among school-age children. Do a search on “failure,” and you’ll find inspiring stories of heroes of history who have failed mightily on the way to great successes: Churchill, Einstein, Darwin, Pasteur, Ford and on and on.

And at the recent DMA International Conference in Boston, Biz Stone, co-founder of Twitter, turned failure on its head relative to social media, stating “if someone posts a negative comment about your product, it demonstrates a level of investment and passion about your brand.”

Okay, that’s a lot of fluffy and warm and puppies. But in business – and particularly in marketing – we’re trained otherwise. For most of us, “failure is not an option” for our next product rollout, or our next advertising plan, or our next event. However, if we embrace The Law of Failure, we might find that failing helps to reveal what success really looks like.

In almost every business, professionals fail their way into success, typically in a process of elimination continuum: try › fail › tweak › repeat until try ultimately leads to success. At which point, you test the snot out of that success to ensure repeatability and reliability. This is true in engineering; in medicine; in sports; in fashion; in entertainment; in technology; in a zillion other categories.

In marketing and advertising, (direct, media, creative,) we call it “testing.” But testing is simply an accepted euphemism for “financing failure to yield better strategies.” Why else would almost every big campaign be run through focus groups first?  Why test your spots on samples of your target demographic? It’s not so much that you can see what WORKS, but rather that you can reveal what DOESN’T.

My theory on why it is so vehemently avoided in the marketing/advertising arena is simply because of the money flow. When doing medical testing, for instance, the medical company has an R&D budget to cobble away in a lab for sometimes years at a time. In engineering or technology, all the sunk costs are stacked upfront – sometimes financed by venture capitalists – and millions or tens or hundreds of millions of dollars might be spent to arrive at a new design/product/solution that then gets recouped upon selling/distributing/launching.

But in advertising, the money flow is different. The typical relationship is an outsourcing model (company x hires agency y to develop the marketing program) that puts the pressure on the marketer to justify that spend and that agency choice. It’s our money, so you better spend it wisely. No marketer I’ve ever met wants to hear in the pitch “yeah, we’re gonna spend a percentage of the budget on failing.”

But that’s essentially what’s happening. Sure we do research, we do cluster analyses, we create predictive models. My colleague David Adelman at OCD Media is a media planner who creates predictive models in order to yield what he calls the most “testable propositions.”

The only problem (in advertising and marketing) is that those propositions are tested out in the marketplace, and failure is seen as a scarlet letter on the breast of the marketer (and in many high-profile cases, the agency, too.)

But I propose that failure is not a sad end to high hopes, but rather an intelligent investment in future successes.

When you fail at strategy X, you now have saved an innumerable amount of money because you KNOW that strategy X won’t work (under the current conditions.) You can instead pursue strategies Y and Z. And if they fail, you save proportional amounts, and so on. KNOWING is powerful.  Failure leads to knowing, whereas success is sometimes an intoxicating mix of planned well, guessed right, timed it right, chose a good director, etc.

This might not fly at your company if you’re a slave to the quarterly conference call with the board and have to explain that you’re failing. But if you’re a small to midsize marketer – you’ll never spend money any more wisely than by failing and KNOWING what to avoid in the future.

This offer expires soon.

I’ve just read Jay Goltz’ blog post on entitled “Is Groupon Ruining Retailing?”  A good read, and lots of good points that got me thinking about couponing as a marketing tool.

A classic sales promotion method, couponing has grown steadily over the past several decades.  According to a recent report issued by NCH Marketing (a Valassis company,) shoppers saved $3.7 billion with coupons in 2010.

Sort of a perfect time for Groupon to be coming out of its shell, eh?

However, there are some important rules of the channel that the Groupons of the world might be missing.  Couponing is not for everyone, is more of an awareness-building tool, less of a customer acquisition tool, and it has a limit.  There are also many factors at play besides redemption rates that have to be taken into consideration.

So why do marketers coupon?  A solid coupon program will create:

  • Incremental sales (for either new products or labels past maturity)
  • Brand Awareness
  • Program ROI
  • And maybe some additional opportunities for sell-in at the store level.

A colleague of mine, David Adelman of OCD Media, also reminded me that couponing has to be looked at in context of what the running sales trend has been for the particular brand, and then re-evaluated months after the program.  Sure, there can always be a spike in sales in the short term, but some coupon programs can hurt, since, on some level, you’re discounting future sales for that spike this week.

The real balancing act with couponing is about redemption:  too little redemption and the program won’t deliver the requisite ROI.  Too much redemption, and the value of the program ALSO goes down…how is this?

Coupon Redemption Scale


Turns out that too many redemptions can erode the brand in several ways:  super-redemption can cut into overall margins, so while moving more volume, the marketer can be incrementally losing share on every purchase.  Look for a redemption range [in the blue dotted lines] that helps move sufficient volume without over-saturating the market. Better to under-estimate, since you can always pump more coupons into the market, or hand-distribute in stores.  Also, if the coupon is on a 1+ offer, (most are) you can erode repeat purchase by an even longer period…further delaying the product sales rebound…a deadly combination with over-redemption.

So coupon carefully.