The importance of a Service-level Agreement (SLA) should never be overlooked. It is the SLA that formalizes the commitment sales and marketing teams make to meet shared goals for revenue growth.
It’s a two-way process: The marketing team commits to delivering a certain quantity and quality of leads each month to help the sales team meet its quota. The sales team then commits to follow up on those leads in a timely manner, and to make a specific number of contact attempts before abandoning the lead.
To set up the SLA for the marketing team, start by asking these questions:
- How many quality leads does the sales team need to make quota?
- What percentage of those leads is originated by marketing? Your sales team may be doing some of its own prospecting, and therefore the marketing team isn’t responsible for 100% of the leads needed to make quota.
- What percentage of those leads is influenced by marketing? Even if the leads originate from another source, the marketing team may be required to nurture those leads until they are marketing qualified.
Once you’ve answered those questions for your company, compute the SLA based on the percentage of the pipeline that the marketing team needs to drive. But here’s a tip to make the SLA even more convincing for your sales team: Base the SLA in the units that are most relevant to a sales person. You'll typically want these units to be in dollars.
BASE EVERY DECISION ON REAL DATA
It’s important to use data to determine the sales team’s responsibilities. Ask yourself, “How many contact attempts should the sales team make for every Marketing Qualified Lead (MQL) of a certain type? How many follow-up attempts per lead should the sales team be able to complete?” Even though your chances of a successful connection increase each time you call a lead, those calls also have a cost associated with them: the sales rep’s time. At some point, the potential return for making additional calls will diminish.
That’s why you need to determine the optimal number of times to call a lead based on the profitability of that activity. Here’s one way to find that optimal number:
- Start With Stale Leads: Select a portion of leads that had been in the sales pipeline for at least a few months.
- Group Data: Look at your Customer Relationship Software (CRM) records to determine how many times the sales team attempted to contact each of those leads before closing. Create cohorts of leads that were contacted once, twice, three times, four times, etc.
- Make Estimates: Estimate how much each contact attempt costs your sales team. You can do this by estimating how many hours a month a rep spends making calls and the average number of contact attempts he or she can make each hour. Then, determine the cost-per-call by dividing the average hourly cost of a sales rep’s time by the average number of calls per hour
- Benchmark: Benchmark the profitability of these contact efforts by dividing the average revenue for each customer by the cost of calling a lead once, twice, three times, etc.
- Plot Data: Plot that data in a chart that uses the number of contact attempts as the X axis and the profitability score as the Y axis. Because additional contact attempts tend to generate more sales, you should see a line that gradually rises in profitability with the number of attempts.
- Note Results: Note where the lines level off – meaning the profit-per-customer isn’t increasing despite the additional contact attempts. This leveling-off point is the recommended number of contact attempts to use in your SLA.
