That's the general idea. Although, there should be the rare occasion where failing part of it is beneficial to you. Like maybe you let the girl get taken to their hideout and after you rescue her and kill the bad guys she says she heard two of them talking about a hidden passage with more spoils, one that you wouldn't normally notice. Of course not all quests should have that, only rare ones.
^Yes. and like someone stated before, some quests would be better for your character. like from the example:
-Defending the farm= Warrior
-Sneaking into hideout for rescue= Stealth.
The rewards should be of a lower level the more failures you have, but sometimes the lower level item might be better for your character.