How the iPad 2 Will Change Customer Engagement

Everything retailers need to know about the latest and greatest mobile device from Apple

As consumers clamor to adopt emerging mobile technology, covering a constantly evolving line of smartphones and tablets, retailers are rushing to integrate mobile commerce into their sales and merchandising strategies. With the availability of apps for phones and iPads, mobile websites, QR codes, and text messages, to name only a few options, retailers must make some difficult choices regarding the best mobile technologies to pursue for their marketing efforts. Many retailers have focused their efforts on the year-old iPad, which they quickly realized could offer new opportunities for sales and customer engagement.

The tablet enables an augmented shopping experience both because of its larger form factor, which naturally engages users to a higher degree relative to the smaller smartphone display, and its capability for enhanced product visualizations, rich interactivity and seamless integration of multimedia. After last year's launch of the original iPad, marketers talked about the impact it would have on the retail consumer experience. Now the iPad 2, introduced in March, may allow retailers to further extend the virtual shopping experience in some very interesting new ways.

2 Video Cameras
From the customer's standpoint, perhaps the most significant new feature of the iPad 2 is its two video cameras — one front-facing and one rear-facing. The first-generation iPad had no camera at all. The dual configuration of the iPad 2 is designed to support video chat, but for retailers the addition of a camera to the tablet could make a big difference in customer engagement.

As with the original iPad, retailers can continue to explore the concept of "clientelling" — i.e., enabling store associates on a retail floor to access a customer's account, wish lists, purchase history and preferences via systems integration through the iPad to provide a high-touch customer service experience in-store. But with iPad 2, a sales associate can take it one step further. For example, by taking a photo of a customer, then drawing on data that indicates the customer's fashion preferences, a store associate can create a variety of outfits for that customer to view right on the iPad screen.

The question remains, however, why would a customer already in the store go through these virtual manipulations when she can just try on the clothes for fit and fashion herself? A better approach might be to devise the means to offer the same functionality at home. A shopper could use the iPad 2 to take a photo of herself, then dress herself online via the brand's website — a true virtual dressing room.

Conceivably, the dual camera iPad 2 could also be used by consumers for collective decision making. A shopper at a car dealership, for example, may be intrigued by a vehicle's telematics or automated tailgate closure. iPad 2 could provide that shopper with the opportunity to connect via video chat (assuming the dealership had Wi-Fi) with a trusted advisor to demonstrate the car's features live. Simultaneously, the sales associate could answer questions from both parties in real time, engaging with both on the lot and online.

Last year I mentioned, and data still supports the fact, that consumers tend to download apps to their smartphones but rarely use them. The potential for apps to be successful is much higher on the iPad 2. Again, the larger form factor and multitouch capabilities of the iPad 2 increase the likelihood that a consumer will choose to open an app as opposed to a browser to access a shopping site while couch surfing. It's just more fun!

Along the same lines, another promising application of iPad 2 is its ability to help bring the QR code into ubiquity. While gaining popularity on the mobile side, QR codes will be more accessible to people sitting at home paging through a magazine or watching a show if their iPad 2 is sitting next to them on the couch. Imagine seeing a commercial for a patio set, scanning the QR code with your iPad 2 from the couch and being directed to a fully merchandised page of the patio set, a grill and gardening accessories, all with a promotion for entering via the QR code.

The Negatives
One of the biggest barriers to innovative use of the iPad 2 may not be so much technical as it is logistical. First, retailers must move their iPad 2 units out from the locked cases where they've mounted them, merely displaying their website, and place them in the hands of sales associates. Second, the iPad is no longer the only tablet on the shelf. With Xoom, Galaxy Tab and BlackBerry's PlayBook, consumers have a choice. Retailers must decide on which of these platforms they'll build their apps and optimize their site for. To help make that decision, analyze the devices your customers are using most to visit your website or otherwise communicate with you.

Retailers and consumers alike are certain to find other innovative ways to adopt the iPad 2. Of greatest importance is that retailers appreciate the power of this new form of mobile technology and demonstrate their ingenuity as their customers continue to become more inventive and demanding.

By Kim Williams-Czopek

How to Get Uncommonly Loyal Customers

Getting customers to come back is one thing; making them loyal is another. 

A report by Forrester Research titled Customer Experience Boosts Revenue shows a strong correlation between customer experience and three keys to loyal behavior: intent to buy again, reluctance to switch and likelihood to recommend. The fundamental idea here is that as a customer's relationship with a company deepens and extends, profits increase — and not just by a little. Frederick Reichheld , in his oft quoted article from the Harvard Business Review on loyalty marketing, claims "companies can boost profits by almost 100 percent by retaining just 5 percent more of their customers." One can debate the numbers, but good marketers don't need Forrester or Harvard to convince them of this basic premise: customer loyalty is good and customer churn is bad.

But too often marketers hear the word loyalty and think cards, points, rewards and software-based loyalty platforms. Airline miles, frequent hotel guest programs and credit card incentive programs are indeed the most visible customer loyalty marketing programs around. But true loyalty is deeper than any marketing program.

Loyalty Begins at Hello
Targeting the right kind of prospects for your business is critical to achieving a loyal customer base. Too many companies rely on bottom-feeding tactics to acquire customers at a steep discount, during a big promotion, via sweepstakes or based on a low price. Highly price-sensitive shoppers who are always looking for a bargain aren't likely to be your most loyal customers (unless you're Wal-Mart). Comparison shopping engineSHOP.COM recently released survey results that revealed an overwhelming 76 percent of consumers are price-sensitive and shopping for deals, while 24 percent said they're brand-loyal first. Retaining customers more effectively starts with acquiring the right customers first, then treating them well from the beginning of their relationship with you.

To acquire better customers, start by segmenting and profiling your best current customers. What characteristics define them, and which are actionable and targetable? What are your top acquisition sources for best customers, from direct mail lists to referring websites to top search terms? Use profiles of "best" customers to target look-a-likes. Few companies have customer valuation methodologies — e.g., profitability analysis, lifetime value measures, risk profiles, etc. — to segment and treat customers based on their value to the enterprise. Do the analytics and concentrate your resources on high-potential and high-value customers. Job No. 1 is acquiring the right customers.

Working with the customer file for a client in the for-profit education category, our agency did some audience profiling using carrier route, census and other appended data that revealed "best" customer definitions and sources. This data was easily ranked in a .zip file (ostensibly dropping the bottom performing segments), in turn enabling a geo-targeting test. While it doesn't happen every day, we were able to halve circulation and double response.

That's a good start. But in most businesses customer loyalty isn't even a possibility until after the second purchase. That's the second job — the beginning of a true relationship and the potential for loyalty. Most companies struggle to increase their number of repeat customers. They focus on acquisition to the detriment of customer development and loyalty building. Did you know that customer loyalty poster boyZappos.com enjoys over 75 percent of purchases from returning customers?

Service Delivered
Zappos has very loyal customers and extraordinary word-of-mouth (WOM), yet no official loyalty program. Remember that recency is the most powerful variable in the basic recency-frequency-monetary (RFM) formula for segmenting customers and customer retargeting. Zappos delivers on the power of recency even before its first customer retargeting effort.

Millions of Zappos' customers know that there's no added cost for ordering several sizes of several styles of shoes and returning the ones that don't fit. That's standard for all customers. What earns Zappos stellar reviews and WOM (not to mention one of the highest Net Promoter scores in the industry) is the way it consistently delights customers with free shipping upgrades so their shoes arrive sooner than expected. Zappos is delivering on recency by delivering the order faster. Of course the shoe has to fit (i.e., the product or service has to be good), but great service extends to every touchpoint, including one of the most overlooked: not just free shipping, but free and fast shipping.

Zappos' success is due to its emphasis on repeat customers and customer service. Zappos calls its salespeople customer loyalty reps because they're dedicated to serving customers first, and are encouraged to make emotional connections with customers on the phone.

It's interesting to note that while other companies are trying to reduce time on the phone, move telemarketing services offshore, shift customer communications to automated email, etc., Zappos displays its 1-800 number at the top of each of its web pages. Zappos wants to have conversations with its customers!

As Tony Hsieh, CEO of Zappos, said at a Net Promoter conference, "as low-tech as it sounds, the telephone is one of the best branding devices out there. You have the consumer's undivided attention for 5 [minutes] to 10 minutes. If you wow them during that interaction, that's something they're going to remember for a very long time and tell their friends about."

It's this emphasis on communicating with and wowing its customer, more than anything else, that defines Zappos.

Uncommon Customer Service
In addition to attracting and starting with the right customers, loyalty is realized as a function of treating them right with service levels that will have them wanting to tell their friends about you. How you say it matters a lot.

Customer loyalty of this order goes beyond the transaction, beyond commerce. Uncommon customer loyalty is earned. It adds a layer of meaning in the customer relationship. It takes more than having the right customer service policies in place. Emotion is involved.

Customers often cite real people, specific gestures of appreciation or go-beyond-the-call-of-duty service experiences as reasons for their loyalty — not automated emails. In a survey frequently quoted in the annals of loyalty marketing 101 on why customers leave, it was found that 68 percent defect because of a company's attitude of indifference towards them. How are you treated as a customer of companies you buy from repeatedly? The great experiences always stand out.

Most marketing communications influence how a person feels about a company or brand. But marketing that triggers emotions in consumers leads to more action. It moves them beyond the first purchase to repeat purchases and long-term loyalty. Interestingly, it was a neurologist who was credited with the aphorism, "reason leads to conclusions, emotion leads to action." That principle applies here.

Of course there are tactics. Advertising gurus have always known that evoking an audience's emotions — love, greed, fear, guilt, pride, jealousy, pleasure — works. But go beyond the clever headline. When service is truly personal, when sentiments of appreciation and thanks are felt, when real people stand out and care, then uncommon customer loyalty can be achieved. "How can this scale?" some may ask.

There are no easy prescriptions for such states of business. Nonetheless, it's worth trying very hard to create and nurture loyal customers. Your business' improving profitability depends on it.

Will Fits.me Fit me?

Fits.me Virtual Fitting Room for Women Launched

Fits.me Virtual Fitting Room is introducing today a set of female FitBot robotic mannequins that promise to ease the challenge of purchasing clothes that fit. The male versions introduced in 2010 have already been instrumental in transforming the experience of online apparel shopping, and with today's announcement, the experience can now support shopping for both sexes. The female FitBot mannequin will launch at British retailer, Hawes & Curtis where the male FitBot mannequin has already been implemented.

Due to the various shapes and sizes of the female body, the female FitBot robot was more complicated to accurately model than the male torso and took longer to perfect. The Fits.me technology allows the robot to adjust to conform to hundreds of thousands of body shapes, allowing the shopper to visualize how the specific garment will look on her. This solves the single biggest problem for online fashion retail – the lack of a fitting room.

“Our female FitBot mannequin can adjust to just about any female body type, giving women the confidence that they are making a successful online purchase without the need to return,” says Heikki Haldre, CEO and co-founder of Fits.me Virtual Fitting Room.

Size is a matter of style  

"Using proprietary FitBot technology, robots can conform to over 85% of the female individuals that shop online today," says Dr. Maarja Kruusmaa, professor of biorobotics at Tallinn Technical University and co-developer of the Fits.me technology. “By entering a few measurements into the Fits.me model, customers can visualize how different sizes of garments compliment their unique shape. Fits.me has already collected information from well over 100,000 male end users, and the data confirms what many intrinsically observe; over half of the customers chose a size that is different than the traditional size chart would recommend.”

Fits.me fitting room is essential customer service - that increases sales

"By letting customers use Fits.me's superior visualization offerings, our sales to new customers increased by 57%, and we have doubled the sales to international customers,” says Antony Comyns, head of ecommerce at Hawes & Curtis. “We believe providing this service to online customers is a requirement for any quality fashion retailer. We are thrilled about the launch of the FitBot mannequin for our women’s apparel and being able to offer our female consumers the same valuable service.”

 Check out the video of the Fits.me manaquin! 

7 Things You Should Know About Google

Recently Google announced +1 (yes, Plus One, a name even more unfortunate than iPad), their version of the Facebook “like” button.  Google says +1 is shorthand for “this is pretty cool or “you should check this out” and that it’s designed to help you “share recommendations with the world – right in Google’s search results.”   For expert SEO’s, this is Google’s new version of PageRank.  For spammers, this is a dream come true.  For users, it’s a shiny button to keep them busy/involved/occupied/distracted.  For marketers, it’s yet another To Do to add to your never-ending list.


Here are 7 important things you should know about Google #1:


As it stands today, you need to be logged into your Google account to be able to +1 something.  (If you don’t see +1’s yet, sign up for Google’s experimental search site.)  When a user clicks the +1 button, their recommendation shows up in their Google public profile.   One of the biggest challenges of +1 is that a lot of users don’t even know they have a profile.  (If you have any kind of Google account, you have a profile.  You can see yours here:  https://profiles.google.com.) 

+1 will be enabled on all PPC ads.  Again, the user needs to be logged in their Google account to see and/or click the #1 button.  If someone in your network has clicked the #1 button their recommendation will show up at the bottom of the ad.  If nobody in your network has clicked on the +1 but a lot of people in general have, Google will show you that the page is popular.  (As with all things Google, this is subject to change.)   +1’s will not change PPC rankings.  As an advertiser, you will be able to opt out of the +1 program if you’d prefer not to participate.  Clicks on the +1 button do not count as paid clicks.  Allegedly, there will be reporting on your ads that are getting the most +1 clicks.

+1 will have an impact on your organic search rankings and it could be significant.  (Read: at least until the spammers  have their way with it.)  Google is not being shy about saying that getting folks to #1 your site is going to influence your organics in a positive way.  How much will it impact your particular site?   It will likely depend on your category and how social your users are.  It’s important to remember that even though customers have Twitter and Facebook accounts, it doesn’t necessarily mean that they are active with them.  Plus, not everyone is a sharer.  Nor do all your customers search on their home computers with a logged in Google account.  In fact, if you’re at work, chances are good that you’re not logged into your personal Google account.  

Google says that in the future, you will be able to add #1 buttons on your site.  (They say this will be months, not weeks.)  This will undoubtedly be one of the biggest (and best) uses of the +1 program.  Unfortunately, it also adds another element for you to work into your already crowded website.  

Very few people are talking about this but of all the possible places for folks to +1, your product pages will likely be the most important.  You should keep track of which products/services that people are +1’ing.  Why?  Well, you may be able to do something with that information. Depending on how your customer is using +1, it may indicate a propensity to buy/use your products/services.  So, if the person clicks the +1 button and you’re tracking it on your end and you have their email address, you could send them a triggered email.   (EBOSI’s – Emails Based on Selected Interest are some of the most successful – and most underused – emails available to you.) 

Most people are thinking about the benefits of +1 for their Google rankings but if you’re really on top of things, there are lots of ways you can use +1 to your advantage on your own site as well.  For example, you can use your +1 results for merchandising (enhance the content, including videos, for the items with the most +1s); to solicit reviews on particular items; determine which other products and/or services you should recommend to a site visitor; customize a personalized landing page (just think, all my +1’s in one place); promote in PPC; worker harder to improve the organics; and feature more on Twitter and Facebook.

Speaking of Facebook and Twitter, be sure to look at all the other icons (your Tweet This and Facebook Like buttons, for example) you use on your site and figure out which order you want your icons to be listed in.  Remember, the first one will get the most attention so prioritize them accordingly.

The bigger the brand, the better the chance they will benefit from Google +1.   Why?  Simple.  The more traffic you have, the more +1’s you are going to get.   If you are a little guy and want to make +1 work for you, you are going to need to work at.  (Like with orders, if you don’t ask for the click, you’re not going to get it.)

With +1 Google is going head-to-head with Facebook over ad dollars.  In the end, the company with the most data will win.  Right now, Google is highly dependent on gathering their browsing data through cookies.  With +1, Google will be able to find out more information about you, your likes and dislikes, your habits and so on. Depending on how successful the program is, this may or may not be important to you.  Google has committed to reporting on the +1 program (at least in the beginning) so use that to your advantage.  Look at if/how it’s impacting your organics.  Determine if/how it’s changing the way users click on your PPC ads.  Figure out how you can use it to your advantage on your web pages so you’re ready when it comes around.

10 Best Practices for Choosing the Right E-Commerce Platform Provider

In today's cross-channel retail environment, a holistic approach to making any investment decisions — especially when it comes to choosing an e-commerce provider — is the name of the game. The process of choosing the right partner for your business can be a daunting one. Here are 10 best practices to help make that process easier:

1. Check the provider's clients' websites. Pay attention to the visual design of the sites. Do they look good? Is it the same template from one site to the next? Don't focus entirely on the visual design, however. Click around. Try adding items to your cart and start the checkout process. In many cases you'll find shopping is cumbersome, the checkout process is tedious or there are actual errors on the site. If you like what you see, add this provider to your "hot list."

2. Make sure your provider offers support for search engine optimization initiatives. Let's face it, most of today's shoppers use search engines to quickly find the sites that sell the products they need. With this in mind, quiz the providers you're interested in about their SEO strategy. You're likely to hear that your brand will shoot to the top of the organic rankings. But don't just take their word for it. Check Google's PageRank on some of their clients' sites. If the ranking isn't at least a three or four, you'll probably want to look elsewhere. Another helpful exercise is to pick a few customers of the providers you're considering and search for them on Google and Yahoo. Take note of where those customers show up.

3. Be sure the provider offers advertising and affiliate program support. Online advertising and cross-promotion are vital to generating new business, as both drive additional traffic to your site. Many retailers work closely with affiliates to promote their offerings. Banner ads, skyscraper ads and other announcements are placed on a variety of related websites at a fixed rate or in exchange for promotional space on the retailer's site, making it visible to an even broader base of prospects. To optimize the effectiveness of affiliate networks, select an e-commerce provider that will allow you to monitor and track the success of each ad you place.

4. Find a provider that knows how to exploit social media. With more than 600 million active Facebook users and almost 200 million Twitter subscribers, social networking is no longer a fad. If you're not actively using these sites to market your brand and products, you're missing out on enormous opportunities. In addition to the fact that these sites are likely where your customers and prospects are to begin with, social networking sites are increasingly acting as points of entry to e-commerce sites and vice versa. More and more online retailers are building loyalty, rating and referral systems tied to social media. Make sure the provider you're considering can help you interact with social networking sites — e.g., how to use social media to engage in immediate and meaningful interactions with consumers; how to use Twitter and Facebook to offer discounts and promotions; how to integrate one-click access to Facebook and Twitter from your own website.

5. Be sure the provider offers fully integrated inventory management. Sometimes the products consumers want are unavailable, particularly during busy shopping seasons. However, if your e-commerce system links directly to your inventory management system, shoppers will receive out-of-stock messages before placing their orders. Dynamically omit out-of-stock products from search results and product catalogs.

6. Look for a provider that can help you seamlessly integrate your online data with your other databases. Providers you're considering should know how critical it is to access your data across all channels. Find the one that provides the easiest way to integrate and access your data in real time. Any e-commerce provider looking at your data from a strictly online perspective is doing you and your business a disservice.

7. Make sure the provider can help with international transactions. The web broadens your reach, allowing you to sell into markets around the globe that would be left untapped through a traditional brick-and-mortar model. That's why it's so important that the e-commerce provider you ultimately choose includes full support for international transactions. With features such as automatic translation of product descriptions into foreign languages, dynamic currency conversions and calculations, and integration with the systems of third-party international freight and shipping carriers, e-commerce providers can enable you to take advantage of every sales opportunity, regardless of where the consumer resides.

8. Get specifics on what will be in your contract. Not knowing the breadth of what's included in a contract can result in a number of ancillary costs you weren't expecting to pay. Ask your chosen solution provider the following questions to ensure you won't be paying out of pocket down the road:

• What's included in the implementation bid and set-up fees?
• What's included in monthly costs, and what's required to change orders?
• Are all of the features and functionalities highlighted in the demo included on my site?
• How do the business tools work? What can I change on the site directly?
• What will my website look like once it's live?

9. Be sure your provider's tools can be easily integrated with your other systems and solutions.Setting up a commerce-enabled website is a big enough task in itself without having to make major changes to existing systems. Ensure that the provider you choose is fully compatible with your existing hardware, web server software and operating system.

10. Work with a partner, not a vendor. Choosing the right e-commerce platform provider to work with is critical to your overall internet success. But let's face it, there are many providers out there offering similar-sounding technologies and services. So how do you know which one to choose? Make sure the provider offers the best solution for the long-term success of your business. Some e-commerce systems may cost less up front, but because of poor shopping cart functionality, lack of reliability or bad design, they end up costing you more in the long run when factoring in lost sales and excessive maintenance costs. The most expensive system may not be a good match either. It may offer functionality you'll never need or be too costly and complex to manage or modify. Find someone who can guide you through the decision, and consider the total cost over three years to five years, not just the initial acquisition cost.

Don't Burst You Pop-Up's Bubble Before it Grows

Traditional ­business practices still work in newer formats

A growing number of cross-channel retailers are turning to pop-up stores to launch products and concepts, generate buzz, build brand awareness, and dip their toes in the water of new locations. But something that might begin with a lightbulb-over-the-head scenario takes a lot more to put into action than the simple act of turning on a light switch, displaying an open sign and unlocking a door.

Just because a business is designed to be of a temporary nature doesn't mean any less work needs to be involved in the ramp-up process than what goes into starting a more traditional storefront. The old adage rings true: The more you put in, the more you get out.

Here are a few important factors that you should consider before opening a pop-up store:

Plan ahead. Set up a solid business plan months before your projected opening date. This shouldn't be a fly-by-the-seat-of-your-pants operation. If you choose to go that route, it'll show. The more prepared you are, the easier it'll be to face the challenges and annoyances that come with pop-up stores. Planning several months ahead affords you an opportunity to save considerable time and money by creating a budget and identifying your business objectives long before you enter into a temporary lease arrangement.

Location, location, location. Finding the right spot at the right time is crucial to your success. Walk around the neighborhood of any location you're considering at different times of the day in order to get a take on the tone and visibility. Keep track of foot and vehicle traffic counts and alert yourself to any potential safety issues. Talk to area store owners to find out if there are complementary businesses that you could tap for co-marketing promotions. Don't settle for the first locale that looks good. Explore all options and be sure to complete your due diligence to see if the area's demographics match your target audience. That alone provides an opportunity for your intended customer base to more easily find you — and could promote foot traffic.

Learn leasing strategy. Make sure your business objective includes an adequate time frame. How long a pop-up store stays open depends on those business objectives and, of course, your budgetary constraints (which should have been created long before entering into any lease discussions). The average life span of a pop-up store is about three months. Making sure that you give yourself enough time — at least three weeks to four weeks, and sometimes longer — to see results is an important factor to consider prior to entering into lease negotiations. Also consider the possibility of extending a lease if all goes well.

By Christina Norsig

Sales Managers: Build a Culture of Trust

Make no mistake: Unless you and all the leaders in your organization can gain the trust of your employees, performance will suffer.

It's a matter of human nature: When employees don't trust their leaders, they don't feel safe. And they don't feel safe, they don't take risks - and where no risk is taken, there is less innovation, less "going the extra mile," and therefore, very little unexpected upside. As a leader, you must model trustworthiness for everyone else. Here are some very specific things you can do to provide unusually excellent, trust-building leadership at your organization.

The Real Deal

Look for chances to revel some vulnerability. We trust people we believe are real and also human (imperfect and flawed) - just like us. And that usually means allowing others to get a glimpse of our personal vulnerability. An authentic, not fabricated weakness or fear, raw emotion that allows others to see us as like them, and therefore relate to us at the human level.
Take Carl, a self-made success and CEO of a venture-backed software company, a great example. Carl had a PhD and held a senior management position but came from humble roots. In fact, Carl was the first one in his family to go to college. The stories Carl used when leading his team meetings were told from the heart about these humble beginnings. His team not only trusted him more because he wasn't afraid to show that side of himself, but they loved him for it.

Honesty Matters

No matter how tempted you are, don't BS your employees. Tell the truth, match your actions with your words and match those words with the truth we all see in the world: no spin, no fancy justifications or revisionist history - just tell the truth.
Telling the truth when it is not convenient or popular, or when it will make you look bad, can be tough. Yes, it's essential to your reputation. Your task as a leader is to be as fourth right and transparent as is realistically possible. Strive to disclose the maximum amount of information appropriate to the situation. When you feel yourself starting to bend what you know is the truth or withhold the bare facts, find a new way to stop, reformat your communication and tell the truth.

No Guarantees

Never, ever make the "adulterer's guarantee." This happens when you say to an employee in effect, "I just lied to someone else, but you can trust me because I'd never lie to you."
When an employee sees you committing any act of dishonesty or two-facedness, they'll assume that you'll do the same to them. They'll start thinking back through all of their conversations with you, wondering what was real and what was disingenuous.

Go Digital

Don't punish "good failures." This is one of the stupidest things an organization can do - yet it happens all the time. A "good failure" is a term used in Silicone Valley to describe a new business start-up or mature company initiate that, by most measures, is well planned, well run and well organized - yet for reasons beyond its control it fails.
When these are punished you instill fear of risk taking in your employees, and with that you stifle creativity and innovation. Instead, strive to create a "digital camera" culture. There is no expense associated with an imperfect digital photograph - financial or otherwise. You just hit the delete button. No wasted film, slides or prints. We are aware of this relationship between mistakes and the consequences when we pick up the camera - so we click away. We take many more pictures than we would in a world of costly film. Make the failures free. Because of this, people will take chances, and in that effort they will often get that one amazing picture that they wouldn't have if they were paying a price for all the mistakes.

The Fairness Doctrine

Constantly tap into your "fairness conscience." Precise agreements about what is fair are hard to negotiate, because each of us has out own sense of fairness. But at the level of general principle, there is seldom any confusion about what fair looks like. Just ask yourself: Would most people see this as fair or unfair? You'll know the answer.
If you treat your followers fairly and do so consistently, you will set a pattern of behavior for the entire organization. This sense of fairness is critical to the creation of a safe environment, can be reinforced not only with fair practices but also by privately speaking to or if necessary, censuring - subordinates who behave unfairly to others.

One Bad Apple

Separate the bad apples from the apples who just need a little direction. The cost of untruths to an organization can be huge in terms of time, money, trust  and reputation. As a leader, you have to recognize that you are not going to be able to "fix" a thief, a pathological liar or a professional con artist - all of these must go, immediately.
That said, one huge mistake leaders make is to doubt or distrust someone because of their work performance disappoints us. Performance problems should be managed fairly and with little judgment of the persons underlying character, unless that is the issue at the root of the trouble. Ultimately, improving performance is merely a matter of feedback, course correction and some coaching.