Have you ever ordered from Amazon and been given the option of Amazon Prime shipping. This feature guarantees the speed of product delivery from Amazon to the customer. This is a prime (pun intended) example of a Customer Based Service Level Agreement, promising to uphold their delivery time quote.
However, if the company does not deliver at the intended time leaving the customer unsatisfied with their services, there may be a predetermined compensation or other offers if the mistake was due to internal efforts. This ensures that customers are more likely to continue using their company’s services in the case of an error.
What is an SLA
A Service Level Agreement is essentially a contract between the customer and business that defines the standard of the service provided. SLA’s ensure customer satisfaction as well as company success/reputability. It may outline the quality, physical properties, and timely nature of the product. SLA’s can be utilized by companies internally or externally:
- Customer based SLA: This is a service level agreement between your company and an individual customer or a specific group of customers.
- Multi-level SLA: is a customized agreement split into different levels designed to fit the specific needs of multiple customers seeking the same services.
- Internal SLA: involves an agreement among an organization and its internal employees service standard rather than customers.
SLA’s in the Tech World
In the Information Technology (IT) world SLA’s may be used to guarantee the quality, availability, and timeliness of the software provided to the customer. Although SLA’s can be used between the customer and company, they may also be used internally within a company or combined on multi-levels. Further we will discuss the different ways in which SLA’s can be utilized in your IT business:
When writing an SLA agreement it is important to incorporate all inclusions and exemptions in the contract. This ensures that each counterpart is working under the same impression, minimizing the risk of mis-communication as the contract provides clear expectations. However, if an issue arises, individuals may refer back to the contract to determine further action.
1. Customer based SLA
In a customer based SLA, the customer and service provider negotiate specific expectations of the services that will be provided. This type of service level agreement can vary from customer to customer accommodating to their individual needs. For example, a customer based SLA at a software company may define the specific amount of time required to respond and resolve any customer inquiries.
2. Multi-level SLA
Multi-level SLA’s are used for different customer groups with varying needs where each group is provided with the same level of service at different quantities. This type of SLA can be divided into different tiers including corporate level, customer level, service level, and issue based. This allows customers to select the proper service plan based on their requirements. For example, an IT company providing a software service plan may have various groups of customers ranging in size. This means the company is providing the same software at different price points relative to the number of users at each company. SLA contracts may be vary based on the value of the customer.
3. Internal SLA
Internal SLA’s can be used within companies for purposes such as connecting teams to work cohesively towards improving company success. For example, this may be acquired by creating a contract agreement between the IT Department leaders and the internal customers they serve. Metrics that can be pre-defined are first time response once the service request has been submitted and total time to resolve the issue. These key performance indicators (KPI’s) are typically measured over a period of time and presented as a average. This ensures each counterpart is responsible for a specific service standard within the internal functions of the company.
Important Factors to Include in an SLA
SLA’s must incorporate many different aspects into the agreement including a detailed description, exemptions, availability standard, service standard, penalties, and data handling method. It is important to the contracts viability to properly outline each, ensuring both parties hold up their end of the agreement.