First, was last year a truly a failure? Did their push fail? Or did it fail to succeed? Did it succeed more than it failed? On their side, they did reach a milestone, turning themselves into a force to be reckoned with. They achieved more than anyone thought that they could. Against them, they failed to achieve any sort of permanent change. They planted their flag onto a hill and could not keep the hill.
So what happened?
These are the facts as I best understand them, with the prudent disclaimer that I am no scholar, my memory is faulty, and I may have been chewing peyote as this all occurred.
To understand the Puppies approach, you must first understand the Conservative playbook. In this book, you identify differences between groups, amplify resentments, and rouse the base by playing on their fears. In this case, they identified that a minority of SFF fans picked the award winners, that these people weren't us, they were social justice warriors (SJW) with an agenda, and that we (the reasonable fans) were being pushed out.
So what really went wrong?
The biggest problem that the Puppies faced was a change in circumstances. The Puppies failed to alter their tactics after their successful slating of the Hugo awards. I know liberals who study this stuff, and when a movement reaches a transition, that's where the movement usually goes wrong. The movement usually fails to adapt to their new circumstance. Its this failure that dooms most movements. And this doesn't happen just once to a movement. This happens multiple times, meaning that any movement must be able to handle multiple transitions. While the Puppies were well prepared to fight their uphill fight, they were not prepared for their total nomination victory. Their gambit to fix the nominees paid off, changing the very nature of their fight. When they continued acting as the underdog, when they continued dividing the electorate, the created their failure.
The nature of their electorate was a problem. As voting for the Hugo only takes getting off your ass and actually doing it, which when life gets in the way quickly becomes secondary, there were many ex-Hugo voters or wanna-be voters in the wings. As they saw it, they were part of the "SJW" voter group, but just not voting. When the Puppies leveled assertions of SJWs and disenfranchisement, the vast number of inactive voters took this as an attack against themselves. Rather than splitting the electorate through resentment, the Puppies solidified the electorate against them through resentment.
The Puppies predicted that the silent majority would ally to their own court. They were wrong by an order of magnitude. When the votes came in, the electorate's message was clear: they were angry at the Puppies.
The next major misplay of the Puppies was trivializing their opponents. This history of social justice in this country is long and filled with many useful lessons. The Puppies learned none of these techniques, but their opposition, the Social Justice Warriors, were well schooled in these techniques. Given a social justice fight, they knew what to do and how to do it, so the SJWs did exactly what you'd expect them to do: they built a coalition.
I'm not sure who taught Conservatives that SJWs only succeed because they browbeat everyone else. (Correct me if I'm mis-characterizing.) That's the sort of information that sets you up to lose. SJWs win by building coalitions from the ground up, and they'll take decades to do it. Most of this is done quietly, not because of secrecy, but because that sort of projects just takes time. This coalition building isn't just a fanciful notion, but the cornerstone of their power. The number one weapon of the SJW is the narrative, building a story that holds the coalition together. A good narrative wins the battle. (Gay marriage is a fine example of this.) So who joined the SJW coalition when the fight got started? The best SF&F writers in the world joined, that's who. They wrote the SJW narrative. That's the sort of opposition that you must absolutely respond to, and the Puppies did not adapt.
The SJW coalition consisted of SJWs, non-voting fandom that viewed themselves as insiders (and thus were under attack for being SJWs), every writer and fan that didn't want a politicized Hugo process, every voter who felt disenfranchised because the Puppies successfully slated their candidate, and anybody who was just up for a good beat-down style fight. They didn't even have to face a transition, as all they had to do was to organize and fight. Unfortunately for the Puppies, the SJWs continued organizing after achieving victory, because that's what they do, so this year cannot be a simple repeat of last year.
In military terms, the Rabid Puppies assembled the militia that could, while the SJWs assembled a veteran field army complete with a propaganda machine. The little militia may win in films, but that's not how it goes in real life.
If the Puppies want to face the SJWs on their own turf, they need to build coalitions. They need to learn how to evangelize a narrative, one that not only builds their slates, but brings in others to their coalition. They need to have a plan that includes the transitions in the fight so that they can respond appropriately. All this would involve actual work, and not just grandstanding and rousing the base. The returns on this work lies years, if not decades in the future. If not this, the Puppies' other alternative is to shift from a symmetrical operation to an asymmetrical operation. [Edit: This is a reference to a type of warfare. No, I'm not advocating terrorism or anything like that.] A good solution would combine the two, as the Puppies must learn how to handle each transition on their way to influencing the Hugos.
The big lesson here is that if you declare a knock-down, drag-out fight, fandom will gleefully respond.
Take a lookie at this: http://www.vox.com/2016/3/1/11127424/trump-authoritarianism
I'll sum it up this way: Sad Puppies fit the model for authoritarianism. This article explains even better why the Puppies failed. They were authoritarian while fandom isn't.