Discover what goes into a service level agreement (SLA), why businesses need SLAs, and how to write one.
SLA stands for service level agreement and refers to a document that outlines a commitment between a service provider and a client. It includes service details, the standards the provider must adhere to, and the performance metrics.
1. A customer SLA is an organisation and a third-party service vendor agreement. For example, an organisation might hire an office supply company or a design agency to fill specific business needs.
2. An internal SLA is an agreement between teams within an organisation. For example, the sales team might enlist the marketing team for support in generating leads.
3. A multi-level SLA is an agreement between multiple parties, such as an organisation and various vendors, more than two teams within an organisation, or a vendor providing services to customers with different service plans. For example, sales and marketing teams within an organisation might need to enlist the help of a third team—customer support—to improve customer satisfaction.
SLAs are common in the technology industry but can be used in any industry. A service level agreement is an important component of the business procedure with several benefits for organisations, teams, and vendors:
An SLA establishes trust and peace of mind among all parties involved.
An SLA aligns everyone's expectations by specifying the services provided, the terms and conditions of the service, and the standard of performance measurement.
A consistent and collaborative SLA practice can lead to new business opportunities. Vendors can offer clients transparency, address concerns, and describe a high level of service when all parties contribute to an SLA draft.
Although SLAs can vary across industries, vendors, and types of services rendered, there are several key components of a standard service level agreement:
Agreement overview
A list of stakeholders
The goals of all stakeholders
A description of services
Service levels
A list of services excluded from the agreement
Conditions of cancellation
A plan if goals aren’t reached
Service performance metrics
It’s a good idea to create a basic SLA template and keep it handy, whether you are hiring a vendor or are a vendor offering your services. That way, you can be prepared for any business situation and tailor the template to the needs of stakeholders.
Follow the steps below to write a service-level agreement:
Your SLA will need to define and outline the service clearly. Be sure to cover these points:
List of stakeholders and points of contact, along with their roles
Service scope, including specific services provided, as well as services excluded
Customer obligations, including the amount the customer will pay and how frequently
Vendor obligations, including specific actions the vendor needs to take
The specific conditions for cancelling the agreement, such as when goals remain unmet over a specific period.
Service levels quantify a service's performance or output. For example, a call centre might define a service level as the number of calls answered every hour, while a bakery might define a service level as the number of baked goods delivered to a client daily.
Service levels look different for every SLA. Work with stakeholders to verify the deliverables and deadlines.
Clear performance metrics mean stakeholders can determine whether a service has been rendered successfully. Here are some examples of potential SLA metrics:
Quality of the output
Error rates
The cost of meeting SLA goals
The impact of the output on the client
Include a statement about how metrics will be monitored, such as through different software and business tools or during regular team meetings.
Prepare your service level agreement document using the information you gathered in the first four steps. Here’s a checklist of common items included in an SLA:
Agreement overview
A list of stakeholders
The goals of all stakeholders
A description of services
Service levels
A list of services excluded from the agreement
Conditions of cancellation
A plan if goals aren’t reached
Service performance metrics
Before finalising the SLA, review the details and invite all stakeholders to offer feedback. After all stakeholders agree to every item, gather signatures on the final SLA and distribute it.
Remember: An SLA is an important business tool, as it can establish trust and peace of mind among stakeholders and enable everyone to expect the same outcomes. Create an SLA template that you can tailor for any business situation.
Here are five SLA best practices to keep in mind:
1. For every SLA, ensure all stakeholders agree to everything before the service delivery begins.
2. Design an SLA with end users in mind. Who ultimately benefits from the services rendered? How will they benefit? How can the SLA ensure that end users’ needs and desires are met?
3. Set realistic and achievable service levels.
4. Reserve time to review the SLA, even after the service delivery begins, to make necessary adjustments.
5. Define the service, service level, conditions, performance metrics, etc., using precise terms so stakeholders understand the SLA.
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