The Importance of Data-Driven Service Level Agreements

Data-Driven Service Level Agreements

Anyone who has spent any amount of time in the professional world knows that holding teams and individuals accountable is key in company success. While it’d be convenient to believe that all of the departments in all of our companies are self-motivated and interested only in the success of the organization, we know better. We also know that departments within a company interface more now than ever; the age of the silos within companies is rapidly coming to a close. Many times, one team’s success depends largely on the actions of another team. In order for that success to happen, how can one team keep an entirely different team accountable?

A Service Level Agreement (SLA) is typically an agreement between a company and an external service provider. They typically discuss:

  • What will be delivered
  • How it will be delivered
  • When it will be delivered
  • How it will be measured
  • What happens when the agreement is not met

However, SLAs can also be used internally to document and define requirements between teams. They can also be used to hold departments accountable for their deliverables and service, as well as outline the consequences of not upholding the agreement.

Why Should My Organization Use SLAs?

While it might seem that SLAs are put in place to punish teams not performing up to standard, the utility of SLAs go far beyond simple punishment. Rather, depending on how an SLA is set up, the agreement could be used as a way for teams to understand and prioritize inter-department needs.

  • A formal SLA between departments help temper expectations. For instance, a sales executive might expect a marketing team to finish any requested projects within 24 hours. However, the marketing team, based on its workload, might need at least two weeks to turn around new initiatives. Having an SLA in place that outlines exactly how long the marketing team has to deliver will help to set reasonable expectations.
  • Having an SLA between departments oftentimes highlights potential issues that could get in the way of company success. Is there some institutional blocker preventing one team from successfully delivering to another team? Is there any way to restructure or reorganize to alleviate this?
  • When SLAs are rooted in company-wide goals, teams are working towards a common good for the organization. Rather than being strictly a punitive agreement, having strong SLAs fosters positive relationships between different teams and could potentially incentivize teams to produce the highest quality service.

Creating Effective Internal SLAs

In order for an internal SLA to be effective and meaningful, all parties involved should be involved in their creation, documentation, implementation and review.

  • Get the right people: The first step to creating effective SLAs in your organization is assembling all of the necessary people to discuss the document. This typically includes marketing and sales leadership, but could also involve C-level employees. A handoff process between marketing and sales should never be created without buy-in from all vested departments.
  • Start with your goal in mind: Base the objectives of the SLA with company-wide objectives. Start with a goal or strategic objective of the company and work back from there. SLAs tend to be more effective when the teams have a company-wide initiative to rally around.
  • Definitions: In order for an SLA to be effective, expectations and requirements need to be defined and need to be able to be clearly measured. A provision saying “Sales development representatives will respond to MQLs that come from the marketing team within 24 hours” is measurable. Saying “Sales development representatives will do better at being timely with MQL response” is not.
  • Specificity is Crucial: An SLA should have very little room for differing interpretation. Clearly state the objectives, the requirements, the deliverables, the services and the measuring metrics. This will not only keep an SLA relevant and actionable, but it will make reviewing the SLA doable.
  • Implement a Monitoring System: An SLA is useless if no one is actually monitoring whether provisions are being met. Elect a person from each team to monitor the relevant metrics. Have SLA check-in meetings with the teams or team leaders to see progress, failures and opportunities from the current SLA.
  • Review, Review, Review: SLAs should never be final. That is, expectations and requirements could change every time a piece of technology changes within the organization or as the budget shifts. Periodically review the terms of the SLA to see how they can remain relevant and updated as team composition and company composition inevitably shift.
  • Utilize Technology: Depending on your CRM, there are tools that can help you automate reports to ensure SLAs are upheld. This is typically done with the “aging” metric to determine if SLAs are creating bottlenecks or are being upheld.

SLA Infractions

In traditional SLAs between vendors and organizations, SLAs will outline what happens when service expectations are not met. In traditional agreements, this is typically punitive in nature. However, this might not be the best approach with internal SLAs.

  • Sticks and Carrots: Unfortunately, if an SLA has no way to be enforced, it immediately becomes a useless document. However, many companies make the mistake of only punishing teams for not meeting the terms of the agreement. Rather, a company could also consider incentives (also known as “carrots”) for being fully compliant with the terms of an SLA. This reward will absolutely vary depending on the teams and companies involved, but these oftentimes look like bonuses, extra vacation days, department parties and so on.
  • The Importance of Employee Morale: Being too heavy with punishments (also known as “sticks”) in SLA infractions can have a negative impact on employee morale within departments. Rather, give your team positive incentives to follow the terms of the SLA, and employees will be motivated to perform at the highest level. This will not only create more productive and efficient teams, but also improve company culture overall.

Are Your SLAs Backed by Data?

When determining or improving internal SLAs, do you use data to find the proven, required actions that will lead to success? We recently conducted a survey regarding the handoff between marketing and sales – where SLAs are a key factor.

Handoff Survey Results for SLAsOf the respondents who said they have SLAs, 62.5 percent reported they used data analysis of the current processes. The remaining 37.5 percent reported their SLAs were created using best guess based on past experience or gut feeling.

Download The Marketing-Sales Handoff: Survey Results for Overall Funnel Effectiveness to read other key conclusions, as well as how to create data-driven SLAs and ensure leads convert to opportunities and eventually closed-won deals.

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