One of the main reasons we tend to lose students is because of their unwillingness to fail on a frequent basis. It never ceases to surprise me how some people actually believe they can walk into a martial arts school and just "pick it up" in a few months or less.
If we take karate, for example, a person with little or no experience can learn the basics of kicking and punching in a relatively short amount of time. A false sense of confidence often develops in students who, impressed with their ability to strike a bag come to realize how difficult it is to hit a moving target the first time they experience kumite (free sparring). Especially a target that fights back. In my experience, this is when people tend to drop out a karate dojo. A teacher may recognize this before it happens and give the student some extra pointers to keep their interest.
However, I have to say it is very difficult to keep someone coming to an aikido dojo because failure is such a frequent occurrence. You may not always know how bad you're kicking and punching; you might even feel pretty good about yourself. On the contrary, you always know how bad your ukemi (rolling) and technique are because it hurts and doesn't work. The learning curve in aikido is huge, even for someone with experience in another art. It's hard to feel good about yourself when you fail all the time. Some folks recognize this as a challenge and stick with it; most do not.
Failure is a vital aspect of martial arts training - and life. We all fail at life from time to time. We fail to meet the expectations of others as well as our own. We fail to live up to standards, to meet deadlines, to make the grade. There are two paths we can take: give up and stop caring or keep failing and drive on until you get it right. Enlightened people realize that it takes a lifetime to get it right.
Failure is only a bad thing if we don't learn from it.