Authored by: Juanita Coley
In the fast-paced world of business and technology, ensuring a seamless and efficient relationship between service providers and customers is paramount.
This is where Service Level (SL) plays a crucial role.
What is SL?
SL is an acronym for Service Level. Service level is a performance target setting a goal for an “acceptable” standard performance. You would often hear SLA referenced
in interactions between businesses and their vendors; SLA stands for Service Level Agreement. The SLA is the established agreement put in place that says IF the performance target isn’t met then this is the agreed upon penalties that the vendor and/or outsourcer will be responsible to pay to the business.
The purpose of SLAs is to establish clear expectations, responsibilities, and consequences to ensure that the agreed-upon service standards are consistently maintained.
SL and SLA therefore serve as a roadmap, clearly defining the services to be provided and the expected level of service. The specifics of an SLA can vary significantly between
vendors, services, and industries, making it essential for businesses to carefully choose the right one for them and customize their agreements to meet their specific needs.
Components of SLA
- Service Scope and Description. This part clearly outlines the service/s that will be provided, detailing the tasks, responsibilities and deliverables, leaving no room
for any uncertainties.
- Service Level Objectives. This defines measurable objectives that the service provider commits to achieving. This usually includes response times, resolution times, and performance benchmarks.
- Responsibilities and Obligations. This clearly articulates the responsibilities and obligations of both the service provider and the customer. This ensures a shared understanding of who is accountable for what aspects of the service.
- Performance Metrics. This outlines the key performance indicators (KPIs) that will be used to measure the service provider’s performance.
- Review and Reporting Processes. This part establishes a framework for regular reviews and reporting on the service provider’s performance. This allows for continuous improvement and identification of any adjustments to the SLA.
How are Service Levels Established?
Companies generally arrive at their service level goals as a result of (1) a business–imposed (external vendor-imposed agreement) service level agreement OR
(2) a customer service inspired (internal company metric) service level agreement.
What’s the difference between the two and why does it matter?
If the SLA is a result of a company imposing an SLA, then there are generally penalties imposed as a result of missing the SL targets.
Let’s say for example #1:
“Always on Time Airlines” hired “Customer Service R Us” as a BPO. A BPO (Business Process Outsourcer) is a company that handles a specific process on behalf
of another company. Generally, the company that has hired the BPO to take their customer service calls will implement an SLA saying that the BPO will handle
X% of calls within X time, and if this target isn’t met, the BPO will incur a fee for each call not handled within that timeframe.
If this is the case the BPO (Customer Service R Us) is incentivized beyond just collecting their fee for service and obviously not losing a customer (Always on Time Airline) BUT also in not PAYING the customer for doing the work. Because who goes into business to pay to do the work? Absolutely NO ONE!
Now, let’s say in Example #2:
“Always on Time Airlines” choose to handle their OWN customer service which means they aren’t penalized if they don’t answer X% of calls within X time BUT not doing so may negatively impact the customer experience. Therefore, they may SELF-MANDATE an SL for them to govern themselves, ensuring they deliver a consistent customer experience.
So, How do Companies Determine SL?
The percentage of Calls Answered within a certain time is the most infamous aspect referred to as SL. However, it is important to understand that there are various types
of service levels. Here are just a few:
- Average speed of Answer
- Abandon Rate
- First Call Resolution or FCR
Before determining an SL, you should first determine where the SL’s target is coming from. Is this target customer imposed or internally by the company?
Knowing this is crucial for you might be self-imposing the wrong SL target in the first place.
Choosing an SL target, whether self-imposed or agreed upon as an SLA between businesses and vendors, boils down to the math and cost!
To be able to hit a certain target performance, it requires a specific number of people/resources. It’s that simple.
So, the next time you hear an 80/30 SL target, (meaning you are required to answer 80% of calls within 30 seconds or less) you simply need to do the math
to determine a few things:
- Do you have enough people or resources (if we aren’t talking about calls) to serve at that level?
- How much will it cost the business to answer 80% of calls in 30 seconds?
Every SL target and SL type comes at a cost, and knowing that cost is just a part of doing good business.
We could probably go on and write a book on SL and SL types. (LOL!) However, I am hoping that this gives you enough insight to (1) better understand what SL is
and why it matters, and (2) also understand how to help guide your leadership in selecting the right performance targets for your organization.
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