Have you been thinking of improving the association between your company and the service provider company? Do you want an improvement in the quality of service and productivity from the services that you outsource? Then you need to introduce a robust Service Level Agreement (SLA).
This blogpost gives you the chance to understand how to establish a well-founded SLA that will be of much value to your company.
According to a recent study, an estimated 25-60% of all outsourcing projects fail. Consultants and service providers will agree that failed outsourcing deals mess up the business landscape. As a businessman, announcing failures is not something you want to do. So, how do you address this? How can you plan to save your company from failed outsourcing projects?
You can achieve this by carefully drafting a good Service Level Agreement.
What is a Service Level Agreement?
A service level agreement, commonly known as SLA, is a deal signed by the business and its customer. It lays out particular aspects of the service, such as expected quality of service, responsibilities, and service availability. It further defines the penalties and remedies to be affected if the outlined service levels below the target. It is an integral part of any contract between a customer and a vendor detailing a service-level contract, whether it is customer-level, or internal-level, or multi-level service.
Service Level Agreements (SLAs) is a feature of CRM and a task that helps one outline the degree of support or service that a business agrees to extend to its client. It also defines key roles and outlines expectations and objectives while it gives an accurate measure of performance. A typical service level agreement consists of metrics that can measure and manage the involved duties and responsibilities.
One important aspect is choosing the right metrics for your SLA. The crucial question is how to choose the right metrics for an outsourcing company. The task proves to be the most challenging to many managers that attempt to use SLA to improve the relationships between their companies and their service providers.
Rules for Choosing SLA KPIs
The first step in creating a good SLA is defining what you want to accomplish by the SLA. Laying out what you intend to achieve will help you determine which metrics to use.
It is important to note that it gets more expensive to staff when you have a stricter service level target. A refined Service Level Agreement feature available via CRM software can help you manage costs and ensure all the money you spend on labor towards an intentional objective. Listed below are the seven most important tips that will help you choose the right metrics for your SLA.
1. Focus on Customer Certification
It is essential first to understand your customers' expectations before you focus on meeting your numerical targets. Speaking to your customers alone might not yield a clear understanding of their expectations in measurable terms. For instance, a customer may tell you that they do not want their business processes interfered with because there is a service downtime. Or that your systems should always protect their data to avoid embarrassing security breaches. The right approach is by first capturing these expectations and including them in the SLA. The next step should be identifying measurable key performance indicators (KPIs) for the expectations. Note that you do not have to include too many KPIs, but ensure that you capture the key aspects that will directly influence decision-making and behavior. For instance, you can state that all priority incidents should be resolved within two hours.
Emphasize Motivating Behavior
The metrics that you settle on should be focused on motivating the right behavior. It might not be an easy task as there are many aspects of behavior. Understand the behavioral factors that are critical for your business and focus on them. Decide on which set of metrics directly relate to those factors. Remember that realism is an essential aspect of this process, and you might have to trade some of the factors to improve performance in another area. Both the company and the service provider must try to optimize their actions to meet SLA objectives.
2. Choose Metrics that are Easy to Measure
You are at an advantage if you put a cost-effective system that automatically collects metrics rather than having your employees spending company time collecting metrics manually. Try and put in place metrics that are readily measurable and easy to calculate.
Sometimes the data you require may not be readily obtainable. In this case, you will have to either compromise or device other methods of obtaining the data. Another option is to purchase a metric analysis tool.
While doing this, keep in mind that your KPIs have to remain customer-focused. Some KPIs may be easy to measure but only crucial to the service provider company and not relevant to customer expectations. An example is a KPI like, 'Number of incidents per service desk agent' should be changed to, 'Number of incidents not resolved within agreed times.' Another KPI like 'Average time to find the root cause of a problem,' should be changed to 'business impact on top problems.' Such measures directly report how well the service provider is helping the business in meeting its goals.
3. Choose Simple SLA Metrics
You might be tempted to gather reams of information from your metrics. However, it is more effective to keep it simple and settle on metrics that provide data that you can quickly analyze and digest. Contractual relationships may sometimes involve lengthy and complicated SLAs. Avoid SLAs whose KPIs are the basis for financial rewards and penalties to the employees. As such, SLAs may complicate the relationship, making it dysfunctional and confrontational.
An unpleasant example is when a service provider tells the service desk agents to focus on priority two incidents and ignore critical incidents because priority one is already on target. In comparison, there is a risk of not hitting the mark for priority two incidents. Such practices might be lucrative in terms of numbers and targets but harmful to the business.
4. Include Factors that are Within the Control of the Provider
If your service provider cannot control the factors you choose, then the metrics are likely to cause unnecessary problems. Avoid metrics that tend to dictate how the service providers will do their jobs. Whenever necessary, make your metrics double-sided. If a service provider's ability to perform a given task depends on you, the metric should also measure your performance.
5. Reports Should be Futuristic
Your provider should organize a face-to-face meeting with your company after a given period to update and brief you on information about KPIs. These reports are typically presented monthly, and the details involved depend on the existing relationship between your business and the service provider. You should ensure that they tailor their reports to help you understand how service delivery is influenced by the measurement and reporting of these KPIs.
6. Agree on SLA Even if the Customer is in Doubt
Few customers can be reluctant to accept SLAs. Such customers may think that SLA is a tool to shield the IT department. Some customers may look at SLA as a way of negotiating for a lower level of availability to provide an excuse when it fails. In such a case, it may not be easy to put SLAs in place. However, that should not be a reason for you to ignore SLA.
These seven rules will help you choose the right metrics for outsourcing. They will provide a basis for developing a practical SLA that will be essential for you in forging a partnership with your service provider, setting realistic project expectations, and providing a way to assess performance accurately.
Customer Service Satisfaction (NPS) Scores and SLS
Service Level Agreements are not the overall solution in achieving customer satisfaction. Combining SLAs and other service management level strategies like NPS will help you understand your performance against SLAs and your employees' satisfaction with the experience and service. The NPS score reporting should be kept simple to increase participation and ease follow-up in case of dissatisfaction reports. As a good manager, you should avoid a counter-productive approach to fixing reported service issues. For instance, throwing money at problems should not be the only way to fix them. Better strategies to improve customer service satisfaction include reliable solutions like automation and strengthening communication channels between customers and the help desk.
Driving Customer Satisfaction with SLAs
One of the most challenging roles of a service provider is managing customer expectations. One proven way to manage expectations and drive them into service satisfaction is by integrating well-crafted SLAs with the NPS scores of a company. The best way to go a perception of pleasure is to negotiate expectations well in advance and measure your ability to meet them.
Action Point as an Outcome
Factors that are critical to your success should be listed and well defined. Then have a list of metrics to indicate whether you are achieving these objectives.
Review your existing SLA to check if the metrics follow the above rules. If not, take some time to adjust them to align with the outlined regulations.
Put our proven experience into work to help you provide the best tech support for small and medium-sized companies.
In short, invest in a CRM that has an SLA feature. Some of the top most popular CRM Software outlined by GoodFirms like Microsoft Dynamics 365, HubSpot CRM, Salesforce CRM, Zendesk Sell, Keap, Zoho CRM, Pipedrive, NetSuite CRM, Freshworks CRM, ActiveCampaign, Insightly, etc., comes with built-in Service Level Agreement (SLA) functionality that can be used for several different agreements.
So, invest in the best CRM software and utilize the facility to draft a Service Level Agreement efficiently.
