Your kids should lose and lose regularly. Now, that I know this sounds harsh however, the more your kids can get used to losing the more resilient and dedicated they will become provided you support them too. Now, please let me be clear I don’t mean for them to go and get their ass handed to them every single race or event.
What I mean is, encourage them to pick the harder road. Pick the events that they’re not good at, pick the distances that seem too far from them, go to carnivals where you know you’re going to have stiff competition. If your child knows that they are going to very well at something and are winning a specific event a lot, then their effort level in training will decrease.
Losing in the micro
I believe that kids need to learn how to lose in micro 
and win in the macro. What do I mean by that? Kids need to learn how to lose at small events to understand what failure feels like and what a great motivator it can be. Failing in the micro will help drive them and push them to succeed in the macro. There’s nothing better than an occasional kick in the ass to make you perform at above or beyond your standard at the big meets. This means that there will be tears, it will be hard, but they will understand that hard work pays off. Even if they don’t win at that big meat I’m sure that would definitely work harder to try and succeed.
Whether you like it or not the days of everybody gets a prize for just showing up are starting to leave, which I believe is fantastic. Kids need to 
learn, that through sport if you consistently fail good things aren’t going to happen. As an example in the real world if you fail at your job on a regular basis then you get sacked or fired. I know some parents won’t be able to deal with this post. They will write back “Yes but” or they’ll say “You don’t understand” or they’ll say “You’re living in your own world”. But the truth is a failure on a micro level is an awesome tool to breed success at a macro level. I believe if you fail fast and fail often you will learn a valuable lesson in resilience, courage, determination and motivation.
A word of warning
Now, this comes with a few warnings. You as a parent need to support and encourage your child (see 5 Tips to be a great swim parent) to keep going when times get tough. You may even have to make them keep going to training. Don’t be afraid to speak to their coach and ask what areas they need to work on. Then explain to your child if they want to improve they have to work on XYZ.
How can you help
If you do speak to their coach then you should be sure you don’t harp on it with your child. Just be honest and encouraging with them explain that if they want to succeed then you will be there to help them but you can’t do it for them. You might even want to sit them down and have chat about why they should persevere and reassure them that better things are on the horizon if they just don’t quit. As a parent it’s important you don’t disregard their efforts even if they come last. 
There are two amazing sayings that you can say to your child after they swim. The first is, if they win “That was a great effort, I love you” and the second is, if they lose you need to say “That was a great effort, I love you”
As a parent you need to prepare your child for life and sport is a great way to do this. In general our histroy is a great thing to learn from, remember growing up and going to parties. You didnt always get a prize in pass the parcel did you ? And you turned ok right?
Im not a psychologist nor do I have any claim to be an expert in the world of parenting, but I am a father and one day my child will fail. But if I dont teach my child how to be resilient in the face of failure that I have truly failed as a father.
Want to know more? Then I suggest having a look at the following links: