What Is a Service Level Agreement (SLA)? and How to Write One

Why are SLAs important? 

SLAs are common in the technology industry but can be used in any industry. A service level agreement is an essential 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. 

• In specifying the services provided, terms and conditions of the service, and the standard of performance measurement, an SLA aligns everyone’s expectations.  

• 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.   

How to write a service level agreement in 5 steps

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: 

1. Define the service. 

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 particular period. 

2. Verify service levels.

Service levels quantify the performance or output of a service. 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. 

3. Determine performance metrics.

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. 

4. Prepare the service level agreement document. 

Prepare your service level agreement document using the information you gathered in the first four steps. Here’s a checklist of everyday 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

5. Review the SLA with all stakeholders. 

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.  

SLA takeaways and best practices

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. Use precise terms to define the service, service level, conditions, performance metrics, etc., so stakeholders understand the SLA. 

Get started with Coursera. 

Online courses can be a great way to learn business best practices, including service level agreements, and discover career options. Receive professional-level training from HubSpot, including sales training for high-performing teams specialisation.