Metric of the Month No 4 – Service Level Agreements

Welcome to the latest edition of Metric of the Month, the series where I hope to help demystify some of the jargon of marketing and demonstrate that a few key metrics will help every business leader understand and improve their marketing activities.

This month we are going to look at Service Level Agreements – or SLAs, why they are so important and why dismissing them as someone else’s KPI can be fatal to a marketing function.

A Service Level Agreement is simply a target that is set internally to create a benchmark for how well you want to provide a service. In the world of sales and marketing, common examples are…

  • The proportion of incoming calls that we will answer within 45 seconds
  • The time it takes us to turn an inquiry into a quote
  • The speed of response to post sales enquiries, or heaven forbid, complaints.

Its important to note that once your SLA is set, you measure how frequently you achieve it. For example, if your SLA is that you will respond to all enquiries within 24 hours, you measure the % of enquiries that achieved this goal. Therefore the Metric is SLA Achieved = 85% and not “the average response time was 24 hours” as we know averages can disguise a multitude of issues.

Instinctively, most people will assume that the target SLA, should be 100%. That you must achieve your target service level 100% of the time. In an ideal world it would be. But if you think about most businesses, we get peaks and troughs of demand throughout a daily, weekly, seasonal and annual cycle.

service

Imaging having a call centre, for example, so big that no matter how many calls you received you handled them all within your SLA. How overstaffed would you be for the rest of the time?

So the art of a good SLA is to set one that keeps the team focussed, sounds alarms when teams are becoming overwhelmed and achieves that level of “good enough.”

Let’s now think about why this is so important to the marketing function and why you, as a business leader, should be alarmed if your Marketing Director considers SLAs to be the sole responsibility of the sales or customer service or operations teams.

Imagine how wasteful it is to continue burning through your marketing budget, when the demand you generate can’t be fulfilled. With so many marketing channels now controllable, literally by the minute, the SLAs should be a vital part of the spend / don’t spend decisions

It’s just as wasteful too if the SLA is looking too good. Imagine your sales teams operating with excellent conversion rates (explained in a previous MoM here) and able to handle more leads, but the phone’s aren’t ringing. Has your Marketing Director got the feel of the organisation, measured by an SLA at their finger tips? Have they also got the confidence and authority to overspend their budgets if things are going so well?

It really is a very powerful indicator and a great Metric of the Month.

Let me know if you would like to chat about what SLA’s would suit your organisation, how to set them up and how (and who) to report them.

I hope this helps and thanks for reading.

Joe – Joe@joelynchconsulting.co.uk (07921 038051)

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