Whether you're working with a new customer or another department at your company, one of the most critical steps for alignment is creating a service level agreement (SLA). However, you may be wondering, "what is an SLA and how do I write one?"
Traditionally, an SLA serves to define exactly what a customer will receive from a service provider. Here, we'll explain the different types of SLAs, what they include, how to create one, and examples to draw inspiration from.
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An internal SLA only concerns parties from within the company. While a business might have an SLA open with each of its clients, it can also have a separate SLA between its sales and marketing departments.
Let's say Company X's sales department has to close $5,000 worth of sales per month in total, and each sale is worth $100. If the sales team's average win rate for the leads they engage with is 50%, Company X's marketing director, Amir, can work with the sales team on an SLA, stipulating that Marketing will deliver 100 qualified leads to sales director, Kendra, by a certain date every month. This might include four weekly status reports per month, sent back to Amir by Kendra, to ensure the leads Kendra's team is receiving are helping them keep pace with their monthly sales goal.
Multilevel SLAs can support a business's customers or the business's various internal departments. The point of this type of SLA is to outline what is expected of each party if there's more than just one service provider and one end user. Here's an example of a multi-level SLA in an internal situation:
Company X's sales and marketing teams partner up on an internal SLA that delivers leads from Marketing to Sales every month. But what if they wanted to incorporate a customer retention strategy into this contract, making it an SLA between Sales, Marketing, and Customer Service?
After sales closes 50 new deals for the month, it's Customer Service's job to keep these customers happy and successful while using the product. In a multi level SLA, Company X can have sales director, Kendra, send monthly "customer friction" reports to Joan, the VP of service, based on dialogue the sales team has regularly with its clients. This helps the customer service team build a knowledge base that better prepares them for the pain points customers call them about.
You can learn more about customer service's increasing role to business growth in the HubSpot Academy.
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Once you and the other party have considered the steps above, gather all the information you have, format it in a document, and share it with all stakeholders. Allow everyone time to read through the details and provide feedback.
After each party has agreed to the conditions of the SLA, have them sign it on a final draft and distribute.
Keep in mind that SLAs should exist as a living document. Therefore, if issues arise and the service level needs to be adjusted, the document should be revised to reflect the changes and redistributed to all stakeholders.
The details of an SLA will differ among internal and external agreements. Nonetheless, there are common building blocks that each SLA should include, whether the recipient of the service is your customer or your sales team.
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HubSpot's Sales & Marketing SLA Template is the ideal resource for outlining your company's goals and reaching an agreement between these two crucial teams. Download it now for free.
The first item on your SLA should be an overview of the agreement. What service have you agreed to deliver to the other party? Summarize the service, to whom it's being delivered, and how the success of that service will be measured.
In external SLAs — those between a business and its customers — the goals stated in the agreement are primarily those of the customer. If this is your intention, work with your client to marry their needs with the abilities of your product, and come up with a measurable goal that your company can feasibly meet for the client on a regular basis.
Is this an internal SLA between your sales and marketing departments? Both teams should have their goals outlined in this section of the contract, while making sure that when Marketing hits its goal, Sales can reach its own goal as a result.
SLAs should include what each party needs in order to reach their goals. In agreements that serve a customer, keep in mind their needs might go beyond simply "the product." They might need more than that to reach their goals — such as weekly consulting, reporting, and technical maintenance from you.
SLAs between sales and marketing teams should describe what they might need from the opposite department in order to help them hit their targets. Marketing, for example, might need weekly status reports on Sales' pipeline so the marketers can adjust their lead-generating campaigns accordingly.
Who's in charge of making sure each party's goals are met? Sort out which team does what, and who talks to whom, in this section of your SLA. Is there a separate employee using the services, in relation to the employee who reports on performance every week? Make it clear who's involved in the SLA, and how.
You might not want to think about it, but there should be formal consequences when a goal isn't met as part of an SLA. Don't freak out, though — these consequences aren't always business-ending situations. Include a form of compensation to the service's end user for when the service doesn't meet their agreed-upon goals. In external SLAs, according to PandaDoc, this compensation can come in the form of "service credits." Grab PandaDoc's free SLA template here to find out more.
For Sales and Marketing SLAs, work with your sales team to establish a plan for how any lost revenue is to be made up as a result of an unreached sales quota. You might settle on a strike system that holds certain employees — in both Sales and Marketing — accountable for diagnosing and resolving issues of low performance.
Under what circumstances will your SLA be terminated?
Whether your contract serves a customer or two internal departments, you'll typically find yourself putting the SLA on the chopping block when it's just not working. Maybe your goals have gone unmet for the last three months, or the current agreement simply doesn't have buy-in from everyone involved.
Come up with formal conditions under which you'd cancel the current SLA in pursuit of, hopefully, a better SLA.
Align Sales & Marketing goals with this free template.
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As a marketing department, not only should you have a concrete goal for each campaign you run, but you also should have a high-level numerical goal that aligns with the sales team's operations. At the end of the day, that'll mean qualified leads and actual sales from those leads.
Salespeople are driven almost entirely by their sales quotas — the numerical goals that correlate with their compensation and job security. If Marketing commits to a similar, related numerical goal, it shows that the team is being held accountable in a manner similar to Sales. The trick, however, is to make sure your numerical goal can effectively power the sales team's numerical goal.
In order to calculate the marketing side of your SLA, you'll need the following four metrics:
Then, it's time to do some calculations:
It might also be a good idea to reevaluate the marketing side of the SLA each month, as a variety of factors can change the numbers used in your calculations over time. To do so, create a document that tracks your SLA calculations by month, which should include the following metrics:
You will also need:
With the figures above, you can re-calculate the metrics you started with on a monthly basis, or at whichever interval suits your business — quarter, year, etc. Just make sure the same measure of time is used for both Sales and Marketing to maintain alignment. Have a look:
You could also take it one step further, and incorporate quantity and quality into these metrics. The above calculations provide you with a quantitative volume goal of marketing-generated leads. However, we know that not all leads are created equal, and as a result, some may be considered higher- or lower-quality than others.
For example, a decision-making executive might be a more valuable contact than an intern. If that's the case, you can do the above analysis for each subset of leads, and set up separate goals for each type/quality level.
Want to take it even further? Measure in terms of value, instead of volume. For example, a CEO may be worth $100, for instance, while a director is $50, a manager is $40, and so on.
The sales side of the SLA should detail the speed and depth to which a salesperson should follow up with marketing-generated leads. When establishing this end of the SLA, consider these two sales statistics:
Bottom line? Not all leads may be fit to send to sales immediately. They often need to meet some minimum level of quality, like reaching a certain activity level, which can only take place after being nurtured by Marketing.
Nonetheless, engaging a lead the short time after he/she converts is critical to maintaining a relationship with them — the question you have to answer is what that engagement should look like. Either sales or marketing should take action to start building that relationship, make nurturing easier, and set up the sales rep for success when she eventually does reach out.
Keep in mind this advice is futile if you don't consider the bandwidth of your sales reps. Sure, in a perfect world, they'd make six follow-up attempts for each lead — in reality, though, they may simply not have enough hours in the day to do that. For that reason, you'll also need to factor in the number of leads each rep is getting (based on the marketing SLA), how much time they spend on marketing-generated leads versus sales-generated leads, and how much time they have to spend on each one. If you're looking to conserve time, some of the follow-up — email, in particular — could be automated, so look into options there.
Align Sales & Marketing goals with this free template.
