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What Is An SLA For Sales And Marketing?

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Everything You Need To Craft An SLA For Sales And Marketing This Afternoon

SLA Between Sales and MarketingA service-level agreement (SLA) is a contract that establishes a set of deliverables that one party has agreed to provide another.

This agreement can exist between a business and its customers, or between a department that delivers a recurring service to another department within that business, like the sales and marketing departments.

According to a study by CEB, “87% of the terms sales and marketing teams use to describe each other are negative.”

So it makes sense that progressive sales and marketing teams are putting SLAs in place. 

HubSpot research shows that companies with an active SLA are:

  • 34% more likely to experience greater year-over-year ROI 
  • 21% more likely to get greater budget allocations
  • 31% more likely to be hiring additional salespeople to meet demand

But what does an SLA between marketing and sales look like?

Simply, it’s a contract or an agreement that specifies exactly what marketing will do to support the company’s revenue goals and exactly what sales will do to support the company’s revenue goals.

Both marketing and sales leadership agree to all of the terms, conditions and parameters, so that complete alignment around execution is now contractually agreed to.

When it’s created by representatives or leaders from both teams, you get very tight alignment and agreement on exactly how the sales and marketing teams are going to execute. You get tight alignment and understanding around exactly what’s expected from both teams, and you foster an environment of open and transparent conversation, collaboration and co-creation.

We have an in-depth article around the different components of an SLA for sales and marketing; check it out here.

But what we wanted to do in this article is give you some examples you can cut and paste today to get your SLA in place before the end of the week. Notice the SLA does not need to be a 100-page document; short and sweet wins the day here.

However, it does need to be clear and concise to get everyone in both departments on the same page.

Here is an example of an SLA we created for one of our clients (with names removed).

Company Goals

It’s important for this SLA to bring two traditionally misaligned teams together, so having a set of common company goals under which to align both teams is critical.

Company A has stated business goals of driving from $10,000,000 in annual revenue to $15,000,000 in annual revenue. This translates into a current run rate of $833,000 in monthly revenue to a goal run rate of $1,250,000 per month. The company has a business goal of hitting that new run rate by June 2020 and sustaining it or surpassing it from June to December. By the end of 2020, the company should have realized $15,000,000 in annual revenue for 2020.

  • Goal 1 – Generate monthly revenue of $1,250,000 by June 2020 and sustain that through the end of the year.
  • Goal 2 – Generate enough excess revenue from June to December 2020 to make up for the growth in monthly revenue below $1,250,000 from January through May 2020.
  • Goal 3 – Finish 2020 with $15,000,000 in annual revenue.

Marketing Goals

Make sure that marketing is clear on what it has to do to help hit the company’s overall business goals.

Based on Company A’s stated business goals, the marketing team needs to generate $550,000 in lead value each month. The current conversion rates and projected improvement in conversion rates should produce the desired revenue if marketing delivers $550,000 in lead value each month.

Lead value is calculated as follows:

  • Referral leads – $5,000
  • Content leads – $1,000
  • Webinar leads – $2,000
  • Web-based sales-ready leads – $4,000

Sample month for lead value:

  • Referral leads – 10 at $5,000 = $50,000
  • Content leads – 200 at $1,000 = $200,000
  • Webinar leads – 50 at $2,000 = $100,000
  • Web-based sales-ready leads – 50 at $4,000 = $200,000

Sales Goals

Drive Revenue Acceleration: 5 Proven Techniques That Ensure Sales And Marketing Alignment. Download NowThere are going to be some similar conversion-related sales goals for the sales team to focus on, but you also need timing-related sales goals and agreed-on terms, too.

Sales sometimes treats marketing-related leads as second class citizens, and with all this effort and budget devoted to marketing-generated leads, they need to be followed up on in a timely manner.

Based on Company A’s stated business goals, the sales team agrees to follow up on ALL marketing-generated leads within an hour, or during the first hour of the next business day for leads that come in after hours.

The timing starts once the reps are notified by the marketing automation platform of the lead’s interest in our company. This refers to only those leads requesting follow up by sales, not webinar leads or early-stage-buyer-journey leads.

The sales team also agrees to the following goals:

  • Increasing the close rate from 25% on proposals submitted to 35% by June 30, 2020 and to 50% by the end of the year
  • Decreasing the days in our sales cycle from 45 days to 40 days by June 30, 2020 and to 35 days by the end of the year
  • The sales team agrees to use the sales process as documented in the CRM and as defined in the 2020 sales team kick-off meeting
  • The sales team agrees to use all the tools, templates and content built into the CRM as shared and outlined in the 2020 sales team kick-off meeting

Identify Communication And Feedback Channels

Sometimes the biggest challenge between marketing and sales is speaking the same language. Here is some language for an SLA that attempts to clearly define how communication and feedback should be shared between the teams:

The sales and marketing teams will share feedback and work proactively to quickly address any revenue-related challenges facing the company. Any feedback between teams will be shared within 24 hours and discussed to resolution at the weekly sales and marketing team huddles. Marketing will provide feedback on sales execution related to lead follow-up and quantitative data on the effectiveness of the sales process (conversion rates at different stages of the sales process). Sales will provide feedback related to the quality of leads and the effectiveness of sales tools that marketing provides.

Agree On Feedback, Meeting And Communication Rhythms

Here is some language to ensure marketing and sales are communicating together, working together, sharing feedback constructively and making positive progress:

The marketing and sales teams agree to work as a team constructively to hit the company’s revenue goals and each individual team’s stated goals.

The leadership of both marketing and sales teams agree to meet weekly for 30 minutes to review the past week’s performance against stated goals. They agree to share what worked well over the past week and what didn’t work so well over the past week. They agree to proactively create shared improvements that can be implemented in the coming week to correct any challenges or issues.

The entire marketing and sales teams agree to meet for an hour once a month to share their 30-day plans for the upcoming month. Marketing will share any changes to the existing marketing execution and any specific campaign tactics scheduled for launch in the upcoming month. Sales will share any changes to the existing sales process execution and any specific needs that require marketing’s help over the next 30 days.

Both teams will share their KPIs, goals and actual performance metrics from the past month as well as their expectations around performance against KPIs for the upcoming month.

Agree On Conflict Resolution

It’s important in an SLA to talk about how conflicts (should they arise) be handled. When these are defined up front, it’s easier to act and quickly resolve conflicts by using the agreed-on and defined processes.

Any conflicts or unresolvable challenges will be presented to a three-person panel including the lead marketing executive (CMO or VP), the lead sales executive (CSO or VP) and the CEO. Marketing will select a representative to share its side of the issue or challenge. Sales will select a representative to share its side of the issue or challenge. Each team will have 15 minutes to present, and then a decision will be made. The decision by the panel is binding and each team agrees in advance to follow the resolved direction.

If there is a Chief Revenue Officer who has responsibility and accountability for both marketing and sales, that person will be the sole arbitrator in any of these conflicts.

Rewards When Goals Are Met

Work should be fun. Marketing and sales teams that work together and achieve goals together should also be rewarded together. It’s important for SLAs to also outline the agreed-on rewards and when those rewards will be distributed. Here’s a sample reward section for your SLA:

The marketing and sales teams will be measured together, sit together, meet together and be rewarded together as well. When both teams hit their monthly goals and the overall revenue goals of the company, both teams will share in a pool of $5,000 to be distributed at the discretion of the team leaders. When both teams hit their annual goals and the overall revenue goals of the company, both teams will be rewarded with an all-expenses-paid trip to Mexico, with spouses.

Ramifications If Goals Are Not Met

It’s equally important to define consequences if goals are not met. Here is some language to clearly define a course of action if shared goals are not achieved:

Both teams are being measured on a set of shared goals. Therefore, both teams will live and die based on the performance against those shared goals. For the goals to be truly shared, both teams must be accountable for all the goals, not just those in their lane. Should goals NOT be met, the following actions will take place.

If shared goals are not met after 30 days:

  • Review goals along with plan to hit the goals and actual performance
  • Have discussion within the sales and marketing teams to create an action plan to address shortfall
  • Create an action plan that can be implemented immediately to ensure the team doesn’t miss the goals over the next 30 days
  • Select and assign smaller SWAT team to implement recommended upgrades

If shared goals are not met after 60 days:

  • Review goals along with plan to hit the goals and actual performance
  • Have sales and marketing team representatives meet with the executive team
  • Create an action plan that can be implemented immediately to ensure the team doesn’t miss the goals over the next 30 days, and present that plan to the executive team for sign-off or revisions
  • Select and assign smaller SWAT team to implement recommended upgrades
  • Have SWAT team report to the executive team weekly on progress

If shared goals are not met after 90 days:

  • Review goals along with plan to hit the goals and actual performance
  • Have executive team take responsibility to create action plan to deliver desired goals
  • Have executive team review leadership, organization structure, individuals, roles, past performance, current sales and marketing strategy, and current sales and marketing execution plans
  • Select and assign an executive SWAT team to implement recommended upgrades
  • Have executive SWAT team report to the full executive team weekly on progress

Final Sign-Off

For an SLA to have value in your organization, it has to be more than just a piece of paper. It has to be a living agreement that everyone in both sales and marketing is responsible and accountable for executing.

Therefore, the papered agreement should be part of a more detailed presentation and discussion with active participation by all parties. This is not to be entered into lightly.

Everyone in both departments should be signing the document and keeping copies of it in highly visible places within their workspace (at home or in the office). The document should be referred to regularly in conversations, in communication and in meetings.

It should be a “living document.” This means it’s unlikely that you’ll get it perfect on your first try. It might need some adjusting, editing or additions. Be open to making those changes and sharing those changes with everyone. Over time, you’ll get an SLA that influences and drives behavior, and that should translate into repeatable, sustainable and scalable revenue growth.

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Topics: sales and marketing alignment, SLAs for sales and marketing

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