Insights

What is a Service Level Agreement (SLA) and Why Do You Need One?

[fa icon="calendar"] Jul 2, 2014 12:00:00 AM / by DIA Team

DIA Team

What is a Service Level Agreement (SLA) and Why Do You Need One

Sales and Marketing Alignment is a hot topic these days, and justifiably so.  Your marketing and sales teams drive a key part of your business: customer acquisition and retention.  Marketing communicates with your audience and gathers lead intelligence, capturing prospects from a variety of channels with messages representative of your company’s personality and professionalism.  The sales team takes the leads and educates them on your specific products or services, closing the sale and securing revenue. Hooray for your bottom line!
Looking for some quantitative proof?

A study by Aberdeen Group reinforced the importance of sales and marketing alignment. It found that highly aligned organizations accomplish an average annual revenue growth of 32%, while their less well-aligned counterparts experienced an average decline of 7%.

What happens when these two teams aren’t in sync? It may not be a disaster, but you definitely won’t be reaching your company’s full potential. If teams can work together more efficiently, that means quality leads, more and better information about those leads, and ultimately higher customer conversion rates and sales.

So, what is one key to achieving these results?  Service Level Agreements, or SLAs.

What is a Service Level Agreement?

A service level agreement is simply a goal based on sales and marketing’s common metrics and definitions.  This is a mutual understanding, an agreement reached by sales and marketing working together, remembering that it should be specific and measurable. A few important things to keep in mind when establishing service level agreements:

  • Simplicity
  • Specificity
  • Reciprocity

Simplicity

Keep it simple. You can put a number to a defined term with a time limit.  For example, marketing might commit to giving sales 20 sales-qualified leads every month.  Simplicity, check.

Specificity

Ensure the service level agreement is simple but specific enough to avoid confusion. Going back to our previous example, it is specific? We said 20 SQLs/month. Specificity, check.

Specificity applies to qualitative data as well.  Perhaps you establish a minimum amount of information marketing must have about a lead before passing them to sales.  Have teams decide what that information is (e.g. name, position, company, company size, possible product interest) and include that in the service level agreement.

Reciprocity

Establishing service level agreements is a two-way street, so each team will have their own.  Marketing will have goals on what to give sales. Sales will have goals on what to give to marketing. Service level agreements are action-oriented, so it makes sense to shape service level agreements between teams around a specific action accomplished in a certain amount of time.  For example, sales might commit to following up with a lead marketing delivered within a 3-day window.

Service Level Agreements and Qualitative Feedback

What happens to those leads that don’t convert?  Do they end up discarded as bad leads? Do they get lost in some CRM software limbo? Does no one remember them?

Leads don’t convert for a variety of reasons, and those reasons are valuable information for marketing folks.  Those reasons influence messaging, targeting, and the like.  Maybe the sales team rejects a lead they feel isn’t going to be ready or willing to buy.  The reason behind that choice is vital information for marketing to keep in mind for future lead nurturing efforts.  A good service level agreement here might be the maximum amount of time sales has to pass rejected leads, with feedback, back to marketing.  These leads could be placed back into the marketing system for additional nurturing, or marked as unqualified based on established lead criteria.  Why leads don’t buy is just as important as why they do, and communicating those reasons across team lines makes for not only better internal relationships but also for better external relationships.

Key Take-Away

The relationship between your sales and marketing teams should be like a good marriage.  Two separate entities that work well together based on a foundation of open and frequent communication and commitments that are kept.  To support this foundation, having monthly or quarterly meetings is a good idea and ensures that teams have what they need and are communicating efficiently and effectively to help your business reach its full potential.

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About Digital Impact Agency

Digital Impact Agency is a creative firm specializing in interactive media and inbound marketing strategies for manufacturing and technology companies, professional service firms (architectural, engineering, construction, legal and consulting), nonprofits and enterprise companies. We are a team of innovative entrepreneurs focused on creating the most strategic and effective communication channels for our clients.

Topics: enterprise inbound marketing, Sales & Marketing Alignment, Sales Enablement, Sales Strategy, marketing strategy

DIA Team

Written by DIA Team