Customer Service, what do you measure when SLAs don’t work? Processes, outcomes, and benefits

“The measure of intelligence is the ability to change.” ― Albert Einstein

If you work in a B-2-B [Business-2-Business] environment, you will, at some point, have the opportunity to be in a customer account review. This is where you will be reviewing the performance of your organisation against the business commitments that the customer has contracted with you.

A recent account review sparked this article as the account review I attended was interesting for a number of reasons, not least of which, was the intense discussion on what we should be measuring to gauge the success of the services that we were providing.

Service Level Agreements and the Water Melon effect
The first topic that came up was SLA’s – or Service Level Agreements. SLA’s are is a part of a service contract where a service is formally defined and documented in the contract. Particular aspects of the service – scope, quality, responsibilities – are agreed between the service provider and the service user as part of the contract negotiations and these are then used to measure how well you are providing the services.

The customer brought up the concept of the “water melon effect” and there were a number of people in the room who did not know what that was, nor where it came from. I did! The source of the concept came from a publication from EquaTerra / KPMG in 2013, please see the enclosed for the article:

The water melon effect is where, on the outside the SLA’s are green and are green every month, but the customer feels that the service is not. Inside the water melon, however, issues abound. Often, SLAs are developed based on some form of fault tolerance. Uptime, mean time between failures, mean time to repair, call time, time to resolution and like metrics may register as compliant in the monthly report. However, these SLAs don’t do much to measure the things that really matter such as quality, working as a team, delivering on the business objectives, and working as a valued partner. So the definition is wrong, the target is wrong, and the calculation is probably wrong as well. Those who rely on service and support day to day know too well the operational issues and the impact on the business. Established at the beginning of the relationship in good faith, these SLA measurements tend to lose their meaning later in the contract, becoming pawns in an emotional game where the stakes are penalties, breach of contract, renegotiations, and even the search for a different provider of service. None of which actually add any value to the organization. And this is what was happening to the relationship we had with the customer. The customer themselves, recognised that the original set of SLA’s were not reflective either of their business, how they were looking to the future and more importantly, how we could support their business.

Processes, Outcomes, and Benefits
What then followed was a wide-ranging discussion on what the customer wanted and in fact what we could do to change? After all, without having to make major changes to the contract – in effect tearing it up and re-writing it, which neither party wanted to do, how could we work together in a mutually beneficial way?

We could, of course change the process measures, but keep the overall SLA’s the same – in effect “cheat the SLA framework”. But this did not go far enough. We were already measuring first-time fix, the percentage of calls resolved within 4 hours, etc. It did not feel radical enough.

We could of course measure outcomes, in effect change the measures around. Instead of first time fix, we could measure availability of store devices, ie, uptime of tills. This would mean we could reflect better the customer’s requirements, that of service availability to their customers, rather than how quickly we could get something fixed. Better, and more reflective of the customer’s world.

Why not go one step further and measure benefits? What were the benefits of the service and SLA’s we were tracking to the customer? This is where we were really putting ourselves into their shoes. Reflecting their business on the service we were providing. What did they really want? The fastest throughput of service for their customers. So that is what we are going to focus on. We are going to pilot a number of preventative services, targeting failing areas of the business. We are also going to be proactive in working with the customer on this. We are going to use the intelligence we have built up on their products and how they are used to suggest different approaches to how we will service them.

This is going to be the most difficult and will take time. But it makes much more sense than being known as a water melon provider!!

As always, I leave you with a quote.

“The true measure of a man is not his intelligence or how high he rises in this freak establishment. No, the true measure of a man is this: how quickly can he respond to the needs of others and how much of himself he can give.” ― Philip K. Dick


“The essence of the independent mind lies not in what it thinks, but in how it thinks.”  ― Christopher Hitchens, Letters to a Young Contrarian

A recent article entitled, “Can you buy in to these 5 contrarian concepts of Sales” from Inflexion Point Partners; on how you might like to think differently about the art and science of sales; made me question what I think are some of the norms of delivering customer service. The original article can be found at the link below. It also has green goldfish!!:

So, what are the 5 contrarian ideas? What is the definition of “contrarian” itself? So, lets start with the definition – ‘Contrarian is opposing or rejecting popular opinion or current practice’. So, with this in mind, I’d like to propose the following as contrarian ideas and see if they ring true for how you deliver Customer Service:

[1]. Focus on the Employee first, not the customer.
A book published in 2010, entitled Employees First, Customers Second: Turning Conventional Management Upside Down by Vineet Nayar – HCLT’s CEO at the time – recounts how he defied the conventional wisdom that:-

Companies must put customers first, then turned the hierarchical pyramid upside down by making management accountable to the employees, and not the other way around.

Creating a sense of urgency by enabling the employees to see the truth of the company’s current state as well as feel the “romance” of its possible future state

Creating a culture of trust by pushing the envelope of transparency in communication and information sharing

Inverting the organizational hierarchy by making the management and the enabling functions accountable to the employee in the value zone

Unlocking the potential of the employees by fostering an entrepreneurial mind-set, decentralizing decision making, and transferring the ownership of “change” to the employee in the value zone

I was given this book at a Gartner symposium in 2011 and read it with relish. This is a fantastic approach to how to motivate and enable a workforce to focus on the really important aspects of customer service. Not the internal company bureaucracy, but the way in which you deliver the service. Don’t forget, this is not about making the employees more important than the customers, after all the customers come first. Rather, think of the following as the two different approaches

# Traditional Approach Employee First Approach
1. Executives Employee
2. Managers Customers
3. Employees Managers
4. Customers Executives

[2]. Don’t focus on error removal, instead promote best practice in customer service,
The traditional approach is to always focus on the negative in customer services. What went wrong? Who screwed up? why this or that failure occurred? This does more to drive down innovation; ownership; positive outcomes and puts negative focus onto the services teams.

I have spoken and written before about Appreciative Inquiry (AI) and believe that using positive and empathic language to find out what has worked well in the past is my preferred approach in understanding and sharing best practice. I would recommend reading the following to understand what AI is and how I have used it to effect change in services.

[3]. The cost of customer retention v’s Just focusing on the existing customer service:
Most B2B companies focus on the customer service aspects and pay little notice to an explicit customer retention policy. Churn in customers is inevitable no matter what market you are in. Even in our personal lives, these days there appears to be a dwindling loyalty to brands, companies and services in the high street. It costs at least 10xs as much to obtain a new customer as it is to retain one. So why do we not focus on retention, rather just focus on the day-2-day in the now service. I give you some of the major cost areas to acquire new customers:

a. The time you spend on getting people onto your sales pipeline through direct marketing
b. The time your sales people spend Networking at Events
c. The time you spend converting a customer from warm to paying
d. The time you spend on support or install calls to help a customer roll out the product within their network
e. Integration work to include your product into their system or data flow
etc etc etc

So if you think about it, you might want to develop a customer service retention plan – WHILST you still have the customers!

[4]. Deliver to the customer needs v’s SLA’s
Ever heard of the water melon effect? Green on the outside, but red on the inside, it is a term coined by KPMG, to describe how service-level agreements (SLAs) don’t reflect the real service given, nor the service experienced by users. While teams think they are doing a great job hitting green targets, their customers view it quite differently and only see red.

One of the big challenges for people in organisations is being able to set and measure meaningful and relevant performance targets and key performance indicators (KPIs). It’s too easy to set up SLA metrics based around service activities, rather than agreeing realistic and useful measures of business value and success. SLAs are, of course, very useful components of service delivery and management, although too often they are regarded as the de facto measures of overall service quality.

SLAs should focus on customer needs and should provide a business-focused set of measures. So, service departments need to engage at a business level, build relationships and get real agreement with customers. They should think of systems and SLAs as components of a service – not the other way round.

The KPMG article is available here:

[5]. Finally, Seek to be different, rather than compare yourself to your competitors in your market:
Too often, I have been asked “Who are our key competitors? What are they selling? What is their value proposition?” etc etc. So if you are seeking to be the best in the market, why compare yourself to others? Even if one of your competitors appears to be in the top spot for service? All you are doing is seeking to be the same as them.

Why not think about the market you are in; the customers you serve AND wish to serve; their expectations, needs, hopes, and wants. Have you spoken to them? Asked them what they want? Have you planned how you will deliver those services and solutions based on this analysis? That is seeking to be different. After all, why follow the herd!

As always, I leave you with the following quote….

“Because even among contrarians, I’m a contrarian. But all of this is just words of bronze, third place rhetoric. What do I really mean when I say we want to shock society into awareness? Do we mean we want more originality and individuality? Less TV, more reading, writing, actual thinking? Less sheep, more shepherd pie? Yes, yes, and a little more pie, please. Oh, and some more sweet tea, too” ― Jarod Kintz, I Should Have Renamed This