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How do SLAs Impact Customer Satisfaction?

It isn’t the SLA itself that drives Customer Satisfaction; it is the way you achieve SLA commitments.

If you ask a group of support leaders which metrics they measure for their team, you will inevitably hear ‘First Response Time’ (FRT) and ‘Next Reply Time’ (NRT) as common responses. These and other expectation-setting metrics often form Service Level Agreements (SLA) with customers. SLAs are commitments on how your products and services will perform and the potential penalties if they fail to do so. These metrics are prevalent in support and are often discussed with customers early on in the customer journey. They include support response times, product up-time guidelines, critical notification expectations, warranties, etc.

The hope is that by defining these SLAs up-front, your customers will be satisfied when you achieve them. But is that the case?

For example, conventional wisdom is that customers want a fast FRT. Many businesses do in fact see a positive relationship with higher customer satisfaction when they respond faster. Luis Hernandez, VP of Customer Success at Geckoboard, said that they have “found that timeliness and speed has a direct correlation with satisfaction. A first response perceived as fast, can set you on the right track for a positive first impression.”

Forrester agrees: “77% [of customers] say that valuing their time is the most important thing a company can do to provide them with good online customer service.”

But others think we overuse these measurements. Scott Davidson, a researcher with Customer Think, notes that “many organizations may still be too internal looking, using SLAs to evidence the effectiveness and efficiency of their complaint handling operations.”

Can these contradicting observations both be correct? Let’s explore the relationship of SLAs and customer satisfaction.

Variability in SLAs and CSAT

Ultimately, businesses provide value to their customers through their products and services. CSAT often measures that value from a support perspective. The premise is that if customers are satisfied, they are getting value and are likely to continue using the products. However, CSAT is not always the best measure of that loyalty. For example, a person may be pleased with the reception and coverage of their mobile phone network but absolutely hate the service cost or provided customer support.

Depending on this company’s CSAT survey questions, the assessment of satisfaction will vary, and the likelihood of this person staying a customer may lessen over time. The authors of ‘The Effortless Experience,’ Matthew Dixon, Nick Toman, and Rick Deisi, found the same: “We find that fully 20 percent of the customers who reported that they were satisfied … also expressed at the same time that they were actually intending to leave … and buy from someone else. … [and] 28 percent of customers who reported that they were dissatisfied told us they fully intend to stay.” Being satisfied or not doesn’t appear to change customer loyalty.

Just as with CSAT, SLAs have a lot of nuance to them as well. Customer expectations will differ significantly based on the type of industry and nature of the problem. It’s easy to understand that a 30 minute SLA for a fire department as your house is ablaze is not appropriate, but that same SLA might work very well for most issues at retail stores.

The situation’s criticality will dictate the needs of the customer. Beyond the nature of the issue, different SLAs exist for different parts of the customer journey. For example, support chat and phone response times need to be faster than email responses in most cases, and up-time SLAs might differ for different parts of your software product. Variability means that defining the perfect SLA is difficult and even if you do meet them consistently, the situation may mean that even that is not enough to drive satisfaction.

SLAsDefining SLAs for Customers

Because CSAT and SLAs vary so greatly, an essential aspect to positively correlating them is understanding your customers’ requirements first. Don’t build SLAs based on existing templates or what others in your industry are doing. Instead, they should be created after listening to your target market’s needs. Ask your customers questions like these to clarify how they want to be served:

  • What is an acceptable response time for email or phone responses?
  • How do [the customers] rate the priorities of potential issues?
  • What service levels are needed to ensure high customer satisfaction?
  • What are the preferred communication mediums and channels?
  • What terms are relevant for cancellations or returns on a product?
  • Are there any hours, days, or seasons that have higher/lower demand?

All of these questions help you set clear expectations with your customer based on their requirements, not on your estimation of their requirements. Aligning expectations with your customers’ needs and then creating a support team to meet them is a great way to achieve high customer satisfaction.

Another possibility for SLA definitions is creating customer segmentations where you want to exceed those SLAs more frequently.

For example, if a customer has a poor experience in their first contact with you, it could be more impactful to your business than if they had ten awesome experiences followed by a poor one. In this case, you might internally attempt to exceed SLAs for new customers versus existing customers to show the best you have to offer earlier in the customer lifecycle.

SLAsHigh Context and Personalization

Agreement on service level commitments is one way to work towards strongly correlated customer satisfaction. Another is achieving the SLA through personal and meaningful services. Akhilesh Saxena, VP Global Service Delivery for EXITO, writes: “The foundational components critical in driving CX are simplicity and personalization. … organizations need to go beyond the basics of just offering SLAs and helpdesks by understanding the customers’ business, their stakeholders and their unique needs.” For example, if you’ve set a FRT SLA, instead of using automated responses or impersonal macros to respond in time, offer something useful or reset expectations. Which of these emails would you rather receive:

“Dear Customer, Thank you for your email. Your request has been received, and we will get back to you as soon as possible. We appreciate your patience.”

Or

“Hello Jane, I am sorry to hear you are having trouble with the form widget in our application. I will need to troubleshoot the logs from your most recent activity and will send you my diagnosis by noon tomorrow.”

Neither of these emails is particularly useful, but one is more personal and provides a clearer timeline. If these emails were both sent within the FRT SLA, the second one is more likely to create a satisfied customer.

The same concept applies to critical failures, such as an application outage. If you have a crisis notification SLA, you must meet or exceed it. But the communication cannot simply be “We’re working on it.” That message doesn’t provide enough information for the reader, and likely adds to customer frustration. Give details that help the customer understand what is happening. eg:

  • Who is working on it
  • When is the next update
  • Will data be impacted
  • What number is used for help

Along the same lines, always involve the customer in the process. Showing the customer your thought process is a fantastic way to meet your SLAs and to potentially have the customer solve the issue for you with minimal effort. By explaining your thought process, especially in a technical situation, your customer may be able to follow your logic to resolve their own issue. This outcome is the best-case scenario.

Ultimately, it isn’t the SLA itself that drives Customer Satisfaction; it is the way you achieve SLA commitments.

SLAsWhere to Focus Your Attention

Individually, Service Level Agreements and Customer Satisfaction are essential components of a strong support department. They just aren’t the entire story. As Dixon et al. say in The Effortless Experience: “CSAT is one of those metrics that’s simply taken for granted in companies. We’re not suggesting it’s a bad thing to measure, just that it’s not nearly as predictive of future loyalty as [we] always assumed.” Neither of these metrics in isolation are the goalpost for success. They are part of the overall customer experience.

And so, that means there is no easy answer to the question of how SLAs impact CSAT. Intuitively, you can assume that frequently not meeting your agreements will, over time, frustrate many of your customers. So there is clearly an impact. However, correlating CSAT with the difference between a 30 or 90 minute first response time is unlikely to be a useful exercise regardless of how often you hit those targets.

So shift your focus to be less on the impact of SLAs on CSAT and more on ensuring that:

  • your expectation setting is done well,
  • you have a team staffed to meet those expectations,
  • the right tools and policies are available and can adjust on the fly,
  • and you provide a positive customer experience throughout the customer journey.

Taking these steps will create satisfied customers who love the value you offer to them.


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Craig Stoss Craig Stoss

Craig has spent time in more than 30 countries working with support, development, and professional services teams building insight into Customer Experience and engagement. He is driven by building strong, effective support and services teams and ensuring his customers are successful. In his spare time Craig leads a local Support Thought Leadership group. He can be found on Twitter @StossInSupport

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