A service-level agreement (SLA) is a contract between a provider and the end user that states the level of service that the customer should expect from that service provider. That said, they also serve a company's internal operations as well. They're frequently used when a company is signing up new customers for a service.
In the event that the service-level agreement is between the marketing and sales departments, the SLA will detail the company's sales and marketing goals, such as the number of leads it intends to generate monthly and the action that the sales department will take to support the marketing department's efforts.
A service-level agreement is important because it:
There are three basic types of service-level agreements:
This type of SLA is between a business and a customer. It's also referred to as an external service agreement. It includes:
This is when a company has a service-level agreement in place internally, between its marketing and sales departments. For example, the sales team may have a goal of earning $10,000 in sales per month. If they know that each sale is worth $500 and they know that they have a closing rate of 20%, then they know they need to receive at least 100 qualified leads per month from the marketing department.
The two departments could put an SLA in place where the marketing department commits to delivering a minimum of 100 leads each month by a certain date. Part of the agreement could include sending weekly reports to the sales department to ensure the teams are on pace to hit their monthly goals.
This type of SLA outlines what's expected of the different parties when there is more than just one end user or one service provider. You could use this as a way to support customers or as part of an operations strategy. For example, your marketing and sales departments could also include the customer service team as part of the SLA to incorporate customer retention into the agreement.
Here is a look at the different information that goes into a service-level agreement:
Image via Unsplash by chrisliverani
A key performance indicator (KPI) is a tool for measuring how well a business is performing in light of its strategic goals. A KPI can help a business identify areas where the organization is veering off track from its primary objectives.
The SLA outlines what the customer will receive and what they should expect from their service provider. It does, however, include measurements for evaluating the service provider's performance, which is where there can be overlaps between KPIs and SLAs. A service-level agreement defines KPIs in order to measure service performance. This means that, in the end, the metrics provided by the SLA become KPIs that the business will monitor and report on as measurements of success.
It can be challenging to choose metrics that are fair for all parties involved. However, it's best to choose performance metrics that:
It's also important to specify a reasonable baseline for the metrics, or a number that the company commits to hitting at the very least. This baseline can be shifted as more data is collected, and the service provider better understands what's possible for the client.
Here are some service-level agreement templates that you can use to define the service you will offer end users:
A service-level agreement is essential for protecting a company and ensuring it maintains a good relationship with end users. By reaching a clear understanding of what standards are important and what the consequences will be if those standards aren't met, you can ensure that the relationship will be positive for all parties involved.
It's also a good idea to review your SLA as your business changes and grows, as the SLA should reflect its evolving needs and capabilities. If you need help creating a service-level agreement or would like to revisit one that you currently have in place, Contracts Counsel can help. We are happy to connect you with a fully-vetted lawyer who can help you create or review your service-level agreement. Contact us today to get started.
ContractsCounsel is not a law firm, and this post should not be considered and does not contain legal advice. To ensure the information and advice in this post are correct, sufficient, and appropriate for your situation, please consult a licensed attorney. Also, using or accessing ContractsCounsel's site does not create an attorney-client relationship between you and ContractsCounsel.
How ContractsCounsel Works Hiring a lawyer on ContractsCounsel is easy, transparent and affordable. 1. Post a Free Project Complete our 4-step process to provide info on what you need done. 2. Get Bids to Review Receive flat-fee bids from lawyers in our marketplace to compare. 3. Start Your Project Securely pay to start working with the lawyer you select.I focus my practice on startups and small to mid-size businesses, because they have unique needs that mid-size and large law firms aren't well-equipped to service. In addition to practicing law, I have started and run other businesses, and have an MBA in marketing from Indiana University. I combine my business experience with my legal expertise, to provide practical advice to my clients. I am licensed in Ohio and California, and I leverage the latest in technology to provide top quality legal services to a nationwide client-base. This enables me to serve my clients in a cost-effective manner that doesn't skimp on personal service.
Creative, results driven business & technology executive with 24 years of experience (15+ as a business/corporate lawyer). A problem solver with a passion for business, technology, and law. I bring a thorough understanding of the intersection of the law and business needs to any endeavor, having founded multiple startups myself with successful exits. I provide professional business and legal consulting. Throughout my career I've represented a number large corporations (including some of the top Fortune 500 companies) but the vast majority of my clients these days are startups and small businesses. Having represented hundreds of successful crowdfunded startups, I'm one of the most well known attorneys for startups seeking CF funds. I hold a Juris Doctor degree with a focus on Business/Corporate Law, a Master of Business Administration degree in Entrepreneurship, A Master of Education degree and dual Bachelor of Science degrees. I look forward to working with any parties that have a need for my skill sets.
Tim advises small businesses, entrepreneurs, and start-ups on a wide range of legal matters. He has experience with company formation and restructuring, capital and equity planning, tax planning and tax controversy, contract drafting, and employment law issues. His clients range from side gig sole proprietors to companies recognized by Inc. magazine.
Josh Bernstein has been serving real estate and corporate transactional clients since 2002. His experience is varied, and he enjoys working on and puzzling out novel and complex corporate and real estate matters. Josh’s experience includes, among other things, the following: representation of public companies in connection with SEC reporting and compliance work (proxies, 10-K’s; 10-Q’s; 8-K’s, etc.); representation of public and private company securities issuances (including private placements, and other similar offerings); assistance in structuring and drafting joint ventures, both for investors and operating partners, and including both real estate and corporate ventures; handling public and private company mergers and acquisitions; and asset sales and dispositions; assisting clients, big and small, with real estate acquisitions, sales and financings; managing large-scale and multi-state real estate portfolio acquisitions, dispositions and financings; complex condominium creation, structuring and governance work, including: commercial condominiums, use of condominiums as a land planning tool, wholesale condominium property acquisitions and dispositions, and rehabilitating failed or faulty condominium legal structures to make ready for sale; development of restrictive covenants and owners’ association documents for master-planned communities; compliance with federal statutes governing real estate sale and development (including, without limitation, the Interstate Land Sales Full Disclosure Act, the Housing for Older Persons Act, and the Americans with Disabilities Act); representation of real estate lenders, for both improved and unimproved property, and including numerous construction financings secured by real estate; assistance with commercial leasing; from both the landlord and tenant side, and including condominium leasing; training residential home and condominium sales staff for compliance with applicable local and federal law; and workouts of all kinds. When he’s not busy lawyering, Josh may be found watching 80’s commercials, flying a single-engine plane, playing poker, or trying to be a good dad.
