The ABCs of Customer Service SLAs

Your eyes meet across the room. Ten minutes later you're sitting in a darkened corner laughing together. Six months down the line, will you be driving each other up the wall or embarking on your happily ever after?

In business, just like in romance, when two parties come together, it could be the start of something beautiful. It could also be the start of an unmitigated nightmare. Anticipating which one it will be might make the difference between success and failure for your business.

Nightmare scenarios are often the result of a gap between expectations and reality, so it’s critical to be clear on what to expect from a relationship – and then ensure those expectations are met.

And that’s where customer service SLAs come in.

What are SLAs in customer service?

A service level agreement (SLA) is a documented agreement between a service provider and another party clearly laying out the services to be provided as well as the expected level of those services.

SLAs help you:

• Set expectations for both you and your customers
• Focus on the needs of your customers
• Provide measures to keep you accountable
• Ensure service is consistent
• Encourage improvements to your service

What are the three types of SLAs?

There are three types of SLA you might commonly come across. 

1. Customer. A customer service-level agreement takes place between a service provider and an external customer. In a customer-based SLA, the customer and service provider negotiate an agreement around the services that will be provided. For example, a company may negotiate with a SaaS provider that helps them deliver customer engagement.
2. Internal. An internal SLA takes place between a company and another entity that’s considered an internal customer. Typically, this would be a different department within the company. These types of agreements could exist between marketing and sales departments, for example.
3. Multi-level. A multilevel SLA splits an agreement into different levels that correspond to specific tiers of customers. For example, a SaaS provider might have multiple price ranges depending on the level of service provided. These different levels of service will be part of the structure of the SLA.

Why is an SLA important in customer service?

An SLA is absolutely fundamental in customer service because it crystallizes promises into contractually agreed upon terms of service. It also formalizes the process on how to respond when these promises are broken, giving customers a way to hold service providers to account. If the agreed upon conditions aren’t met by the service provider, the customer can claim compensation to help soften any potential negative impact — financial losses, for example.

Before you start: Setting service standards

Service standards provide metrics within SLAs to specifically define what customers can expect from a service – in terms of timeliness and accuracy, for example. Just like setting any other goals, service standards need to be SMART, which means:

1. Specific. Clearly apply the standard to a particular situation.
2. Measurable. Make it quantifiable so meeting the standard can be proved.
3. Achievable. Only choose standards that resources available to you allow for.
4. Realistic. Make sure standards reflect customers’ needs.
5. Time-bound. Set clear parameters around times and frequencies.

What is an example of an SLA service standard?

An example of a service standard in customer service using the SMART methodology might be:

'We will respond to your live chat request at any time of day or day of week within one minute, 98% of the time'.

Remember, achieving something 100 percent of the time simply isn’t possible, so never guarantee you can do it. Far better to include a more realistic target for how often the desired standard can be achieved. 

To make sure your team is hitting this standard, you would need to check against the relevant KPI — in this case, the Time to Response metric.

Note: it's always a good idea to double check with customers that your standards of service are acceptable.

Commitment: What to include in SLAs

It’s important to avoid any confusion when it comes to SLAs. So, when creating one, remember to follow these two vital rules:

• Keep the language clear and simple
• Keep it short (no more than a few pages long)

Although SLAs shouldn’t be complex, they should definitely be comprehensive. That means making sure you:

1. Describe the service. Be clear on what your customer can expect to receive from your service.
2. Determine the reliability of the service. Include when the service is available to customers. For example, your call centers may only be open at certain times, or you may offer 24 hour customer service through chatbots, promising 99.99% uptime.
3. Specify response and resolution time. Clearly state the service standards on how long it takes to respond to your customers and resolve issues via phone, email etc. This time period may differ depending on context, e.g. a response within five minutes on live chat but 24 hours via email.
4. Detail the procedure for reporting problems. Let your customers know how they can report an issue, both in terms of the process itself and who they need to report to. Allow them to contact you through their choice of channel.
5. Put performance monitoring in place. Outline the process of using data to assess performance compliance and how this will be reviewed and discussed between the two parties.
6. Lay out any penalties. There needs to be agreed compensation or remediation to refer to if the service level agreement is broken.

Bear in mind that SLAs are 'living' documents and require regular reviewing to stay up to date.

How do you manage SLAs?

Service standards give you a yardstick against which to measure your performance. Ensuring these standards are upheld requires management through careful monitoring and analysis.

That means making use of a number of different strategies:

1. Keep on top of things with visual countdowns and timers

Service level agreements are usually based around very specific time frames, so time tracking is critical.

Monitoring software — usually included as part of help desk software — provides the accuracy you need to track SLA countdowns. Color-coding is a good way to go. In other words, green = good, red = bad! This makes SLA deadlines difficult to miss.

2. Make use of automated notifications and warnings

Whilst countdowns and timers make it easier to stay on top of SLAs, SLA breaches can, and will, happen.

Warning notifications before breaches occur can help mitigate this to some degree. For example, if you guarantee a live chat response in five minutes, software should automatically notify you at four minutes thirty seconds.

When SLA breaches do occur, make sure all relevant parties are aware. Automated messages of acknowledgement could be sent with next steps according to the SLA laid out, e.g. applying or some sort of compensation.

3. Harness reporting and analytics

Knowing how many SLAs were met (or indeed missed), is vital information to improve your compliance rate and offer your customers a better service. But if you’re working with a mess of spreadsheets, accurate tracking may prove tricky.

Using service level agreement monitoring and reporting software that records each and every instance — you can even get free versions such as Paessler PRTG — ensures accurate reporting and analytics. SLA reports provide insight into what could have been done differently, as well as measure your SLA compliance rate for accountability.

4. Segment and customize

Monitoring software should be customizable to your own unique needs. For example, you need a way to assign different SLAs to different situations. Not all circumstances require the same SLA. In fact, some may not require an SLA at all.

Segmentation means a system can assign SLAs appropriately and automatically. For example, only customer queries marked ‘Emergency’, or just queries from customers in certain payment plans. This ensures SLAs won’t require labor-intensive manual checks.

5. Create multiple metrics to track

Most service level agreements are time-based, so any system should measure the start of something and its completion action, as well as the time in between. There are a few particular service standards to look out for:

• First response time. This is the number of minutes/hours between a customer opening a case and a customer service rep responding.
• Time to resolution. This is the average amount of time it takes a customer service team to resolve a case after it has been opened.

It’s possible SLA monitoring software will have SLA metrics hardcoded into them and you can’t just create your own. This is not ideal. If they don’t have what you need, look for a more comprehensive software.

A framework for success

SLAs provide peace of mind for companies and customers alike. They also minimize time-wasting caused by any unnecessary finger pointing or back-and-forth playing the blame game. Entering into business relationships with no idea what to expect and no protection against poor service is a risk no one should have to take. We can all agree to that.

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Nicholas Vouros

Account Executive

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What do you think? Does an SLA help you better manage your working relationships? Let us know in the comments.

Benedict Clark

Content Editor

Benedict Clark is a psychologist, writer, and former digital marketer. He writes about the interplay between customer experience and psychology for Acquire.