You’ve worked hard to build your organization, and now you want to see prolific growth from your sales and marketing departments. What you need is a way to measure their efforts so you can work on improving the right pieces of the sales and marketing puzzle.
Want to know how to calculate SLA for your sales and marketing team? Find out why you need a sales and marketing SLA and how to measure results.
One way to bolster cooperation between your sales and marketing teams is to create a sales and marketing service level agreement. This agreement acts as a contract between the two departments and sets them up for success through a series of goals and performance standards. These standards will require you to calculate SLA, but don’t let that scare you off – it’s a simple process.
First, you should know that service level agreements are common in the service provider industry. They set the standards for accountability and results between two businesses, departments, or parties. It usually means that a certain performance standard, i.e., generate x number of leads or make y number of sales, in a given time period, such hourly, daily, monthly, quarterly and of course, annually. Some common examples of service level agreements are:
While each of these types of service level agreements will be different, there are some common elements of SLAs that you want to consider:
Defining Key Performance Indicators (KPIs) is a critical aspect of any service level agreement (SLA). It's essential to have a common understanding of what constitutes a lead, a customer, and the specific actions that qualify as a sale. Sales and marketing departments must establish a shared vocabulary and clear definitions of key terms.
For example, when defining leads, the two departments may decide that a lead is a potential customer who has shown interest in the company's products or services by filling out a form on the website or attending a webinar.
It's crucial to specify what information must be provided for a lead to be considered valid. This could include contact information, company size, or a specific pain point the lead is trying to solve.
Similarly, establishing the definition of a customer is vital for calculating the success of the SLA. Is a customer someone who has made a single purchase, or must they make multiple purchases within a specified timeframe? Should only sales-generated customers count, or should marketing-generated customers also be included? The answers to these questions will affect the KPIs used to measure success.
Lastly, defining what constitutes a sale is critical for both sales and marketing departments. Does a sale only count when a customer purchases a high-value item, or does every sale count towards the SLA goal? These details need to be agreed upon to ensure that both departments are on the same page and working towards the same goals.
Hammering out the meaning of KPIs is a crucial step towards creating a successful SLA. By establishing clear definitions and shared vocabulary, both departments can work together towards achieving common goals and improving performance.
A marketing SLA can be for a service you offer to a client or it can be an agreement between two departments in your company with common goals, like sales and marketing. These agreements support your organizations’ long-term goals by ensuring you meet the standards of the contract.
An SLA isn’t just a document you sign that says you’ll do a great job – it outlines exactly what you’re going to do and how well you’re going to do it.
The end goal of your marketing efforts is to close more business. This means you need to use your sales data to craft your marketing SLA. The four metrics you need to calculate SLA are:
For your sales goal, you’ll want to consider it in terms of your revenue quota. The revenue number needs to explicitly come from your marketing leads rather than your sales-generated leads.
You’re trying to generate numerical metrics you can use to improve your marketing efforts. There are three calculations you can use to make the most of your marketing service level agreement:
It’s good practice to routinely recalculate your SLA numbers. You may want to approach this monthly in the beginning as it will give you insight into what changes you need to make in your marketing efforts.
If you’re going to calculate SLA regularly, you’ll want to measure your performance before making any new calculations. Three calculations you can use to measure performance are:
These calculations should be done often in the early stages of your marketing efforts. You can even find other ways to slice your data, like segmenting the data by region or services sold. This can drive the direction of your marketing and sales efforts.
When you want to make the most of your time, an SLA calculator is a quick way to get the numbers you need to improve performance. You don’t have to spend an enormous amount of time plugging numbers into calculations in a spreadsheet. You can plug them into a calculator in just a few seconds.
Using an SLA calculator means you’ll need to have access to certain information. For an internal SLA between your marketing and sales department, you can use a calculator to model your sales funnel.
The sales and marketing funnel metrics that you’ll need to put together to measure your sales funnel include:
For reference, MQL is a marketing-qualified lead and SQL is a sales-qualified lead. You’ll want to outline the parameters for these in your marketing service level agreement.
Without measuring your performance and putting rigorous standards in place, you’re really just throwing things at the wall and hoping they work. Calculating SLA gives you measurable indicators for both your marketing and sales departments.
Calculate your marketing service level agreement and put together a model for your sales funnel to see the most lucrative results from your marketing efforts.
Looking for an easy-to-use SLA calculator? SAP BW Consulting, Inc. has the perfect tool for you to calculate an SLA for your sales and marketing teams.
More reading:
8 Secrets to SAP Enabled Spend Performance Management
Leverage SAP BW to Increase Supply Chain Inventory Accuracy