Service Level Agreement: How Accountability Fosters Sales and Marketing Alignment

Every week during our check-in, MadKudu Co-Founder & CRO Francis Brero & I talk about our current priorities. Our regular call also become an opportunity for Francis to download some knowledge from his time working with some of the top SaaS Sales & Marketing organizations. What started as an effort to onboard me with recordings & note-taking has turned into a series I call MadOps. I first heard about a Sales SLA in my first week after joining MadKudu. I was familiar with a Service Level Agreement (SLA) - a commitment from the engineering team around reliability with varying repercussions if we violated the SLA - but I had never interacted with a Sales SLA, despite being in marketing. When one of our customers is having trouble with hitting revenue goals, the Sales SLA is almost always where we start, so let’s start there.

Sales SLA: A contract between Sales & Marketing

A Sales SLA is an agreement between marketing & sales whereby:

Marketing commits to generate N Very Qualified Leads per quarter, and

Sales commits to reach out to 99% of those leads within H hours, and to contact them at least N times in the first D days

Most marketing teams have a quarterly lead generation goal. A Sales SLA doesn’t measure MQLs or SQLs - it measures Very Qualified Leads: MQLs with the potential to become customers. Marketing agrees to create enough expected revenue, and Sales agrees to convert it into the revenue target.

“The only people who create value out of nothing is Marketing. The role of sales is to keep the value of those leads constant until they close.”

Marketing not only needs to generate increasing amounts of value but to be able to measure its potential to become revenue. Sales needs to reach out quickly and to continue to connect with that lead enough to feel like everything possible was tried. A typical adage is "8 times in 15 days", but again, this varies for each customer journey.Each variable of a Sales SLA comes with its own questions: what makes a lead very qualified? How many touch points and how quickly should a lead be reached out to? Should it vary based on lead source?

“Do we need a Lead Score?”

The Sales SLA requires scoring each lead as they sign up. Many early-stage SaaS companies wonder how they are supposed to have a Sales SLA from day one without having a lead score.

Let's put it out there: everyone has a lead score.

Filtering spam at signup is scoring. Escalating fortune 100 companies at sign up is scoring. While simple, it allows you to begin defining lead quality by answering “who do you want to ignore and who do you want to talk to?” Since everyone has a lead score, everyone therefore should have a Sales SLA. The earliest iteration can be simple: “If someone signs up through a demo form, you need to follow up faster than if they sign up for a trial.” Putting something simple in place is better than nothing at all.

Implementing a Sales SLA

The tactical owner of a Sales SLA will almost always be Sales Operations, because they are ultimately the ones managing SDR workflows today. Marketing tends to ask for a Sales SLA. It ends the cycle of sales bemoaning lead quality and marketing bemoaning sales conversion rates. The Sales SLA will move that existential, emotional debate to a practical, data-driven report.In order for you to be able to maintain a Sales SLA properly, you’ll need to be able to track all outbound communication inside your CRM. If you’re using third party emailing tools, every email you send out needs to be tied to a lead as an activity. Otherwise you’ll get false positives or adjust your sales SLA based on current activity metrics.

Contract & Education

A Sales SLA doesn’t have to be written; however, in practice, a written agreement can be useful for onboarding new SDRs. Every new SDR should know what their team expects of them from day one. And every SDR should know what happens if they don’t respect it. When the Sales SLA is broken, some organizations choose to put leads back into round robin. Others send it to a marketing nurturing funnel, or escalate it to a manager. How you implement the Sales SLA is up to you, as long as you’re tracking the metrics necessary to uphold it. Once your Sales SLA is in place, much like a infrastructure monitoring tool, you should be able to detect outlier scenarios more quickly. SDRs may be on vacation or no longer with the company and still get leads routed to them. Certain campaign leads may get bulk routed to an old admin account. Or new team members may get routed leads before they’ve learned about the Sales SLA. None of these problems are anyone’s “fault,” but they need to be noticed & dealt with quickly.https://twitter.com/LiamBoogar/status/1014909985149669376

Procrastination in Hyper-Growth

Sales SLAs can look daunting on paper, especially if you’re still in the early days of building your sales organization. At it’s core, a Sales SLA defines the handoff between marketing & sales. At MadKudu, for example, the handoff happens at signup today. Sales handles everything after lead generation, because we don’t yet have a need to automate that part of the funnel. We have a number of indicators (company size, technologies used, etc.) that we know correspond closely to someone needing MadKudu. This allows us to be pretty explicit about what makes a lead Very Qualified.

“People don’t put SLAs in place because they want to avoid having tough conversations”

Creating a Sales SLA is going to shed a spotlight on all the cracks in your sales funnel, especially when you’ve been in dealing with hyper-growth recruiting. If leads aren’t getting followed up on, you’re going to have to look at what the cause is. Are you understaffed? Are you not scoring/routing/prioritizing properly? Or are your Sales reps not reacting quickly enough? When a Sales SLA is breached, it’s a symptom of a bigger problem, and usually no single person is at fault. Without a Sales SLA, it’s easy to overlook one of your sales reps not following up, or low-quality leads getting faster follow-up than high-quality leads. Start the discussion around Sales SLAs early and you'll address problems that won't go away unless you shed light on them.https://soundcloud.com/madkudu/madops-sales-sla