Whether you’re the service provider or the customer, a well thought out and clearly executed SLA can strengthen your rela- tionship by setting reasonable expectations, clear measures of performance, and rewards when performance is excellent or remuneration if it falls short.
To see this more clearly, let’s consider a typical consumer agreement for telephone service compared with a SLA between a telecom provider and a call center. Our examples look from the customer’s point of view, but feel free to imagine yourself on either side of these agreements. Consider the role the agree- ment does or does not play in keeping the customer loyal.
Put on your consumer hat for a moment. As a residential customer, you have a service agreement with your local tele- com provider. You agree to pay a certain amount per month and the provider agrees to give you a dial tone. You may also contract with this same provider for additional services, such as
A promise or guarantee of performance between a
service provider and a customer.
Traditionally, SLAs are used in busi- ness-to-business settings, for agree- ments with telecommunication, IT (information technology), ASP (appli- cation service providers) and ISP (Internet service providers) firms.
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caller ID, last call return, phone or line repair, and the like. You decide to add a second line for your new home office. You call and to make an appointment for line installation. “Our techni- cian will be there between 8 and noon.”
You don’t want to take the entire morning off work. Isn’t a more definite appointment available?
“No. We’ll call you when the technician is on the way. That’s the best we can do.”
So you take the morning off work, wait for the tech ... and wait ... and wait. At 11:50, you call the dispatcher for a status check . . . again.
“Oh, the other job ran long. The tech won’t be able to make it. We’ll have to reschedule. How about 8 a.m. to noon, a week from today?”
You may get angry, but short of switching service providers, there’s not much you can do.
Now, put on your business hat. Your organization also con- tracts for telephone services. Let’s imagine, for example, that you have a customer contact center where 105 service repre- sentatives handle incoming customer calls 24 hours a day, 7 days a week. It’s imperative for your business that customers have 24/7 access, so you need a very high level of perform- ance from your telecom provider. So, you establish a service- level agreement.
In it, you detail accountability. Is your provider just bringing a dial tone to your internal telecommunication system? Or is your provider responsible for ensuring that your internal
telecommunication system is functioning correctly? What about third-party software or hardware? Will your provider take
responsibility for telephone lines installed by another vendor?
And what will the provider be responsible for if fire, flood, or an act of God interrupts your service?
Next, you detail performance levels. What amount of time, if any, is it acceptable for your phone connections to be “down”?
How quickly will new lines be installed when you choose to expand your service? Every key aspect of performance is cov-
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ered, in a quantifiable way, so you and the service provider know when the performance level is met and when performance is unsatisfactory.
Finally, you detail in your SLA remuneration. Remuneration is what the service provider promises to give you if it fails to meet performance levels. Usually, it’s a percentage of the fee for service. This part of the SLA can also include rewards if the provider gives an exceptional level of service performance.
You want to bring in three new phone lines. You call and make an appointment. In accordance with your SLA, installing new lines of this type may take as long as 48 hours. Because the sooner the lines are in, the more the provider makes, the com- pany has an incentive to do a speedy job—and it does, getting your new lines up and running less than 24 hours after your call.
As the customer, it’s easy to see how the SLA benefits you.
Thinking of the consumer example, you may even wish you had an SLA to hold over the head of your local telecom service provider. However, from the service provider’s point of view, the SLA is more than a big stick wielded by customers to get per- formance.
Remember our definition of customer relationship manage- ment: a comprehensive approach for creating, maintaining, and expanding customer relationships. The crafting of the SLA pro- vided an opportunity to create a customer relationship with rea- sonable and achievable expectations. It was a time for engaging the customer in the creation of a service plan that works for both the provider and the receiver. Clear expectations for both the everyday events of the service relationship, such as expanding
what each party to the agreement—the service provider and the customer—is responsible for.
Performance levels Expectations for how the requirements of the agreement will be fulfilled.
Remuneration Compensation when performance fails to meet the agreed-upon level.
service, and fallbacks and compensation for those times when, despite best efforts, things didn’t work as we’d hoped, also keep the customer relationship on an even keel.