Why a Service Level Agreement with Sales is a Bad Idea – Part I

Service level agreements (SLA)for lead follow up are all the rage in marketing and sales organizations. Promoted by marketing analyst firms as one of the things that help with sales and marketing alignment, in my view they do the opposite for the following reasons:

  • SLAs are good when required if the goals of two organizations aren’t aligned 100%.  If sales and marketing aren’t aligned to begin with you have bigger issues
  • They don’t work.  Crappy leads with an SLA won’t get followed up on any faster with an SLA.
  • The sales team doesn’t care about your SLA, nor does the VP of Sales or the CEO. All they care about is revenue.
  • SLAs prevent a deeper discussion around perceived lead quality and the time to follow up
  • Ask any VP of Sales how long he wants his sales team to wait following up on a hot lead and he will usually say “immediately”. That’s an SLA!

Let’s go through these.

Sales and marketing need to be aligned on one thing – revenue.  When marketing organizations get screwy goals that don’t include revenue, it sets the stage for perverse incentives.  My teams are pushed to get a certain leads per week per rep to the sales organization.  That is their part in there overall goal of revenue creation. There income is tied to revenue, not the leads. But their daily happiness as a member of the team is whether they are contributing to the teams effectiveness by delivering their part of the problem – leads.  It is a subtle difference, but keeps everyone aligned.  We all get mad if we cycle sales team time on junk since we know it is hurting the team — all of us.

An SLA, however, is a perverse mechanism that I typically see between companies and outsourcers. You outsource your IT help desk, and put in place an SLA as part of the contract. That makes sense, The outsourcing company is aligned with your goals only so far. They have their own targets they have to meet.  But the SLA makes sure you agree on a few key points like response time.

Marketing is not outsourced from company – the CMO sits next to the VP of Sales at staff meetings. They are peers. They are on the same team and they probably both have similar bonus structures tied to revenue.  This isn’t an outsourced relationship.

An SLA just sets the wrong tone.

In Part II – we will look at why sales doesn’t care about SLAs, why it doesn’t change behavior and the only SLA that matters.

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