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What is an SLA, and Do You Need One?

Category: Business Growth and Sales digital marketing strategy

Written by: Lacey Wilcox

Posted on: December 3, 2019

Clarity is a really positive thing, both in life and in business. Anything you can do to make sure that you and those you’re working with are in complete agreement is just better for everyone. One of the ways to create this clarity is by spelling things out “on paper” (even if that paper is a digital agreement). This provides something both parties can refer to in order to make sure expectations are met.

One example of this kind of agreement or contract is an SLA (a service level agreement). Today we’re going to look at what an SLA is, why you need one, what should always be included when creating one, and some aspects of an SLA for your business that you might not have considered before.

What is a Service Level Agreement?

A service level agreement (SLA) is a must for creating a clear-cut, positive relationship between two parties who are working together. It defines the level of service expected, metrics for measuring that service, and an agreement of what should happen if the terms of that agreement are not met. 

When you create an SLA, there are a few things you want to make sure yours includes:

  1. A summary of the agreement. What exactly is expected within this relationship? Spell it out so neither side has any doubt. 
  2. Goals and expectations of both parties. What does success look like for everyone involved? Be specific as to what each party expects and desires. 
  3. Metrics to measure performance. Once you have defined success, determine how you will measure it. For example, if your goal is revenue, set an amount or percentage as your target. 
  4. Requirements or needs from both parties. Whenever you enter into a working relationship, both sides have to bring something to the table. In order to succeed, you might need certain information from your customer. Make sure your SLA spells out these needs.
  5. Points of contact between parties. Communication is key to any strong relationship, so make it a part of your SLA. Establish points of contact from the very beginning so you always have a means of reaching one another.
  6. Conditions of cancellation. Because your SLA includes expectations and metrics for success, it will be clear to everyone when goals are not being reached. Take the time now to establish a plan for ending this relationship so that things can end as smoothly and amicably as possible. 

An SLA is nothing new under the sun, and it’s something most CEOs know about, understand, and expect. But one thing about an SLA that might not be as well known is that you can have an external SLA with customers, as well as an internal SLA within your own team. 

Creating and Using External SLAs

When we use the term “external SLA,” what we’re referring to is a service level agreement between your business and someone outside of your company (usually a customer). This kind of SLA is what most people have in mind when they think of this term.

Much of what you need and should expect in this kind of SLA is outlined above, but we want to emphasize some aspects that you will want to cover carefully to have the smoothest agreement and work relationship possible:

  • The exact work you will do, and what the client will pay you. We understand the mentality of wanting to over-deliver for your customers, but it’s a really fast way to burn out your team. Instead, commit to offering the most excellent service possible, within the parameters of this SLA. If you’re going to do more work, the client needs to pay you for it.  
  • Any timelines/deadlines that might be involved. If there are going to be any deadlines involved in this relationship, make them crystal clear from the very beginning. That way there is never any doubt as to what either side can expect each month. 
  • A schedule for regular meetings.A-schedule-for-regular-meetings Part of establishing healthy communication is having regular meeting times. Make these meetings (and attendance at them) a part of your SLA.

While creating a positive working relationship with your customers will require time, effort, and consistency, creating a clear SLA is a great start. 

Do We Need an Internal SLA?

So far, everything we’ve shared about an SLA has been pretty straightforward, and some of it is probably things you’ve known already. But you might not know that an SLA is also a great tool for establishing sales and marketing alignment within your business

When you’re using an SLA internally, you don’t need all of the components that you would when creating an agreement between your business and your customer. Instead, your agreement/partnership with these two teams could include:

  • An outline of regular meetings and team communication.
  • Expectations for moving prospects from marketing to sales.
  • A shared goal of revenue generation (which can also be segmented by quarter or month).
  • Tools used for measuring leads generated and deals closed.

Because this SLA is tied to a shared goal of generating revenue, it serves to unite your marketing and sales teams, rather than dividing them. Both teams are held accountable with metrics for leads generated (marketing) and deals closed (sales), but it all operates within the realm of generating revenue together, rather than being at odds with one another. 

An SLA is a powerful, practical tool for developing a strong relationship with customers and coworkers. These agreements make it clear what is expected of everyone, provides both parties with specific responsibilities, and clearly establishes what success looks like.

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