Sendspark Blog > What Is a Service Level Agreement?

What Is a Service Level Agreement?

In the competitive world of sales, trust is your most valuable asset. To build and maintain that trust, professionals rely on Service Level Agreements (SLAs). These are contracts that lay out client-provider relationships clearly, leaving nothing to chance or misunderstanding. 

SLAs complement and complete Master Service Agreements (MSAs). Where MSAs describe the nature of the relationship, SLAs focus more on specific services, deliverables, etc. 

What is a Service Level Agreement?

A Service Level Agreement (SLA) is a formalized contract between a service provider and a client. This agreement explicitly details the quality, scope, and delivery timelines of the service offered. 

With an SLA, both the provider and client have a clear understanding of responsibilities and deliverables. The primary purpose of an SLA is to define the level of service a client can expect from a service provider. It acts as a safeguard for both parties, ensuring that…

  • The provider is held accountable for delivering as per the agreement
  • The client understands their responsibilities and obligations in the partnership.

Why is a Service Level Agreement Important?

The significance of an SLA extends beyond a mere contractual necessity. It's a foundational element in building trust between a service provider and a client. 

When service providers consistently adhere to the terms set in the SLA, they cement their credibility and reliability. Further, SLAs introduce a clarity and transparency that prevent potential conflicts, as every responsibility and expectation is detailed and agreed upon.

A clear SLA ensures that performance is measurable, promoting the maintenance of high service standards. It also gives clients a tangible means to assess those standards.

Last but not least, SLAs help us predict future costs and revenue. They let us forecast future income, predict cost of goods sold, and more. All of this helps understand and improve business performance. 

3 Types of SLAs

The 3 main types of SLAs are…

Customer-Based SLA

Tailored to individual clients, this type of SLA addresses all the services the client has agreed to use. It’s unique to that client's specific needs and services.

Service-Based SLA

This is a one-size-fits-all agreement. All clients using a particular service have the same set of agreements with a provider.

Multi-Level SLA

This SLA is divided into various levels, each tailored for different sets of customers using the same services. It can segment into corporate, customer, and service levels, defining different scopes within the same service.

What are 4 Most Important Elements of SLAs?

With a well-crafted SLA, organizations can solidify their commitment to clients and establish a strong foundation of trust. The 4 most important elements in doing so well are:

Service Scope: A thorough description of the service, including its parameters and any exceptions. This is the core of the SLA, detailing exactly what the client should expect.

Performance Metrics: These are quantifiable benchmarks used to measure the quality of service delivery. Metrics might include response times, resolution times, and uptime percentages.

Penalties and Rewards: This section outlines the consequences if the agreed-upon service levels aren't achieved. It may involve financial penalties, compensatory services, or the potential termination of the agreement. Conversely, exceeding expectations might entail rewards or bonuses.  

Review Mechanisms: Periodic reviews ensure the SLA remains relevant and adheres to the ever-evolving business needs. This section states when and how the SLA will be reviewed, ensuring it remains a dynamic and current document.

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