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Service Level Notes: A Primer on Service Level Agreements

As any call center manager soon learns firsthand, it takes a lot of collaboration, both among parties within the contact center and with other departments and outside organizations, to ensure that operations run smoothly. As services have become more complex, these interdependencieshave both proliferated and become more critical. Given the time-sensitive nature of call centers, when communication breaks down or commitments arenot met, ensuing problems can ripple through the organization and bring call center services to a standstill.

Understandably, effective call center managers put much focus on ensuring that the call center is getting the support it requires. Enter service level agreements (SLAs). Traditionally, SLAs have been tools—or, more specifically, agreements—that define the performance expectations between a service bureau and client company. Increasingly, however, SLAs are also used to identify and describe requirements between departments or contact center groups within an organization, and establish agreements to ensure that key commitmentsare met.

Typical Components of an SLA

  • Products supported
  • Services provided
  • Service level and response time objectives
  • Hours of operation
  • Response-time objectives for ancillary work
  • Abandoned call objectives
  • First-call resolution
  • Quality procedures and standards
  • Reporting requirements and timelines
  • Forecasting and planning methodologies
  • Disaster recovery expectations and procedures

  • Components of a Service Level Agreement

    There is often confusion surrounding the terms SLA and service level. Service level is a specific measure that refers to the objective of answering "X percent of calls in Y seconds." SLAs, on the other hand, are broader in nature and touch on all significant areas of performance. Usually, a service level objective is an important element of an SLA, but does not comprise all or even most of the agreement.
    Typical components of an SLA (explained here in the context of a traditional service bureau/client relationship) include:

    • Products supported. This section of the SLA specifies the client organization’s products and services that are covered by the contract.
    • Services provided. This section itemizes the services that will be delivered: sales and support of specified products, technical support of those products, channels provided (e.g., telephone, email, Web chat), etc.
    • Service-level and response-time objectives. Itemizes the specific service-levelobjectives for those transactions that must be handled when they arrive (e.g., answering 90 percent of inbound calls within 15 seconds), and response-time objectives for transactions that do not have to be handled when they arrive (e.g., handling email within 24 hours).
    • Hours of operation. The days of week and times of day that operations will provide services; whether or not operations will be open for specific holidays should also be addressed.
    • Response-time objectives for ancillary work. Specifies the time frames in which work that is not directly related tohandling contacts will be completed, e.g., updating online resources with new information or updates to customer records.
    • Abandoned call objectives. Specifies the target abandoned rate, often between 2 percent to 4 percent. (Note: We discourage establishing abandonment as a strict standard, because it is driven by customer behavior that cannot be directly controlled by the call center; nonetheless,abandonment is influenced by service levels and is often set as a general guideline.)
    • First-call resolution. This is the objective for the percentage of calls that do not require any further contacts to address the caller’s reason for calling (calls resolvedupon initial contact/total calls); e.g., 85 percent.
    • Quality procedures and standards. This general category varies widely from one SLA to the next, but it is nonetheless important to a successful relationship. It can include things such as monitoring methods and frequency, statistical methods for analyzing reports, training, etc.
    • Reporting requirements and timelines. Identifies the reports that will be produced, e.g., on sales, service levels, first-call resolution, etc., the formats required, and when and how reports will be delivered.
    • Planning and management methodologies. Specifies such things as the methods by which forecasting data will be pulled into planning, how agent groups willbe set up and managed, and minimum staff to supervisor and supervisor to manager ratios.
    • Disaster recovery expectations and procedures. Outlines plans for preventing and recovering from service outages, and specifies the backup network services in place, staffing contingency plans (i.e., in the event of storms or call spikes), power backup, etc.

    In short, well-defined service level agreements help to clarify expectations, open communications, and overcomeconcerns about the quality of work that will be provided.

    Basic Requirements

    The components of an SLA can vary widely, especiallyoutside the realm of a service bureau/client environment. For example, the call center may establish an SLA with an internal group tasked with providing technical support to the call center or with departments that provide associated customer services (e.g., financing or billing services). To be effective, any SLA must:

    • Identify the services to be provided, along with expectations and key dependencies among parties.
    • Ensure that the major resources/costs required tomeet objectives are understood.
    • Provide concrete objectives against which to measure performance.
    • Establish an ongoing process for communicating results.
    • Establish the repercussions should objectives not be met.

    Preventing Problems

    While SLAs offer great potential for establishing and clarifying performance expectations, they can backfire. Problems with the SLAs are often the result of assumptions that are not well-defined or a lack of understandingof call center principles. Examples include:

      Education and Communication

      An important prerequisite to avoiding these problems is to ensure that managers both inside and outside the call center have a basic understanding of how call centers operate. Decisions based on little more than "common sense" can damage the call center and the organization it supports. This involves education around several key issues, including:

    • Objectives in contention. For example, both service level and abandoned rates are often included in SLAs, but they are rarely in sync. A service level of 90 percent in 10 seconds is relatively aggressive and, in most environments,will never be met if the organization is managing to an abandoned rate objective of 5 percent.

    • Not fully defining objectives. For instance, telephone service levels can almost always be met by "busying out" enough trunks so that queue size will always remain small. To help clarify the objective, it may be best to put another in place—in this case, percent busy.

    • No definition around calculations. Some managersassume that service level is service level, first-call resolution is first-call resolution and so on. But the assumptions built into calculations can vary widely. For instance, the top ACD (automatic call distributor) manufacturers use four different calculations for service level, and someorganizations further customize these defaults. To avoid interpretation problems, SLAs should spell out the specific calculations to be used.

    • No "teeth" in the SLAs. What happens if objectives are not met—or if objectives are exceeded? The SLAs should clearly spell out applicable penalties and incentives. If the SLA is between organizations, it’s also important to ensure that the requirements and implications spelled outin the SLA are legally sound, and that they are in sync with other contracts that may be in place.

    • Agreements that are one-sided. Client organizations want outsourcers to take "ownership" for producingresults, but it’s rare that an outsourcer can take complete responsibility. What happens when a marketing program is not communicated effectively and work load is 25 percent over projections? Exceptions should be noted in the SLAs for those situations that "nullify" certain objectives.

    • The time sensitive nature of the call center, and the unique planning and management requirements. Oh, for all the world to understand the implications of random call arrival and why the right people and supporting resources must be in the right places in the right times!

    • The financial implications of specific objectives. An abandoned rate objective of one-half percent sounds impressive, but decision makers need to understand that aggressive goals result in higher costs. The cost may well be worth it, but this needs to be understood by all parties.

    • The need to keep the call center abreast of changes and developments, e.g., marketing plans, new products and services, changes in policies. Forecast and staffing scenarios are effective in illustrating the need for planning accuracy.

    • As straightforward as these issues may seem, don’t assume everyone has the same understanding of their importance. A little education up front goes a long way. Further, a lack of attention to details can cause a service level agreement to provide little or no value to either organization. Actual results should be reported regularly, and compared to objectives. Further, written reportsshould not be the only form of communication; the organizations or departments involved should also have regular planning and review meetings to discuss performance and ensure that expectations and results are in sync—and to identify improvement opportunities. With the right amount of attention to detail, the SLAs will help to drive performance activities that will meet program goals.


      The call center is an important part of a much bigger process, and managers who consistently get the best results know that. They take the initiative in coordinatingwith other departments and with outside firms, and work hard to ensure all parties are meeting their commitments. Some go one step further and establish SLAs, which, done right, are proving to be valuable tools in that effort.

    • Editor’s Note: This article was coauthored by Jay Minnucci.