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SLAs and Why They Are Important

Sep 16, 2021 9:59:00 PM / by Taylor Faircloth

SLAEvery detail in business operations plays a crucial role in maintaining relationships with clients. A convenient way to set expectations and define roles and responsibilities when creating contracts is to establish a service level agreement (SLA).

An SLA comprises a simple document that lists the expectations and roles of each party. It provides the resources necessary to improve relationships between businesses and clients. By outlining responsibilities and expectations, both parties establish a level of trust essential to any business transaction.

SLAs ensure that the service provider will meet the customer’s specific needs. Maintaining a record of client expectations allows employees to have a reference for quality assurance, creating a level of confidence in both the provider and the customer.

What Are SLAs?

An SLA outlines the clarified expectations of each party. This handy tool helps strengthen business-to-business relationships as it creates a standard for the services performed and the quality of deliverables.

Many people will overlook SLAs when creating contracts; however, those who do utilize this tool can increase efficiency and improve customer relationships.

A typical SLA will consist of four parts:

  1. Statement of objectives: Ranging from call times to response timeframes, the statement of objectives outlines the expected performance of a provider. Objectives will vary based on the size and type of each company. The statement of objectives forms the basic foundation of any SLA.
  2. Service list: Like the first part of an SLA, the service list consists of performance expectations on the customer’s end. The service list acts as a handy resource for the service provider to refer to when comparing the current scope of work to the expectations of the client.
  3. Conflict resolution procedures: Unfortunately, we cannot always avoid mistakes or accidents. When disagreements occur, having a conflict resolution plan goes a long way in resolving the issue efficiently.
  4. Penalties for unsatisfactory performance: Service providers may still fall short of a client’s expectations despite the careful steps taken and the work put in. When this happens, the customer will expect some remedy. Penalties typically consist of the service provider paying fines or giving service credit to the client for future use.

Service level agreements can be as simple as a single page of objectives or a detailed booklet. Of course, every business contract will have an SLA unique to its expected services, but creating the document following these four main components will prove helpful.

How Can SLAs Improve Your Business?

Creating an SLA when initiating contracts constitutes a simple way to improve your relationship with the client. They outline the basic expectations of each party and establish guidelines for performance quality.

Clarify Objectives and Guidelines

Every service provider remains responsible for performing tasks that meet the specific needs of the client. SLAs define the responsibilities and expectations of both parties. When creating an SLA, each party needs to account for clearly recording their distinct notions.

The SLA allows customers to transfer their particular expectations and requirements to a paper given to the service provider. This provides the opportunity for the client to discuss expectations with the provider before the initiation of service. Should the provider fail to meet expectations, the client has the SLA as a record to refer to when discussing penalty options.

The SLA produces a convenient document for the service provider to reference when comparing the current scope of work to expected outcomes. Should a customer claim that expectations are not met, the service provider can refer to the SLA to compare the expected and final results.

A quality SLA will define expectations, objectives, and communication boundaries.

Customer Retainment

Any business professional will tell you that attaining a new customer costs significantly more than retaining an existing customer. Customer relationships can be the reason a business fails or succeeds, which means keeping your current clients happy is essential. SLAs offer a simple way to improve customer relationships and, in turn, customer retainment.

SLAs provide the opportunity for both the supplier and the customer to meet and negotiate terms and expectations. Service providers who work with the client to meet their expectations before the contracts are even signed show initiative and reflect exceptional customer service.

Creating a lasting first impression goes a long way in maintaining a relationship with the customer. SLAs enhance that first interaction while ensuring that the performance aligns with the set expectations. Maintaining a positive relationship with the client from the beginning to end emerges as a key to customer retainment.

SLAs Enhance B2B Relationships

Business-to-business relationships especially rely on customer retainment. Maintaining a constant supplier simplifies the day-to-day activities; however, most businesses don’t fear finding a new provider if they experience poor service. Standing out against the other providers becomes the best way to keep your customers coming to you.

Relationships between businesses are unique. When one business requests service from another, they have several other potential providers to turn to should they experience poor service. SLAs give the service provider an edge by creating a simple extra step in building a relationship with the client.

Businesses searching for services from another have their own responsibilities and deadlines. Having a reliable service provider is essential to ensuring their operations run smoothly.

Service level agreements define both party’s roles and expectations. They provide details on what to expect when you call customer service, when you should expect deliveries, and the plans in place to address conflicts. Minor factors such as these will have a lasting impression on the customer and help improve your business relationship with them.

Do I Need an SLA?

If you can answer “yes” to any of these questions, you should consider using SLAs.

  • Are you involved in business-to-business transactions?
  • Do you want to increase your customer retainment percentage?
  • Do you want to add a “wow” factor to your customer service?
  • Do your business transactions often require contracts?

If you answered “yes” to any of these questions, reach out to Chekhub today to learn how to implement SLA’s through our operations management platform. See everything Chekhub can do for your business with a demo. Get in touch with us by emailing contact@chekhub.com.

Tags: Insights

Taylor Faircloth

Written by Taylor Faircloth