When it comes to running a successful business, having clear goals and standards in place makes all the difference. You want to know how well you’re progressing towards your objectives, and ensure customers receive consistent, quality service. This is where performance metrics and service level agreements come in handy. 

In this post, I’ll explain what these tools are, why they matter, and—most importantly—how to create metrics and agreements that truly work for your organization. Let’s dig in!

Connect Your Metrics to Overarching Goals

First things first—your performance metrics should directly support your core business goals. If they don’t, you’re tracking meaningless numbers.

Start by asking, what are our 3-5 critical success factors? In other words, what key results absolutely need to happen for us to hit our objectives? Your answers might include things like:

– Hitting revenue targets

– Retaining customers 

– Releasing high-quality products 

– Controlling costs

Once you’ve got your critical outcomes defined, choose 2-4 metrics to track for each. These need to provide cold, hard data on how you’re progressing.

For instance, metrics for customer retention could be:

– Churn rate

– Repeat purchases

– Survey satisfaction scores

The point is to pick quantifiable metrics that will give you real insight into those make-or-break goals. If done right, they provide a clear picture of where you stand.

Make Your Metrics Quantifiable 

Speaking of quantifiable metrics—that’s our next topic. Vague, fluffy metrics don’t work. You need specific, measurable ones like: 

– Revenue in dollars

– Uptime in percentages

– Support response time in hours

Get the idea? When metrics are quantifiable, you can actually collect the data, set targets, and benchmark over time. 

Let’s compare some vague versus measurable metrics:

Vague: Improve customer satisfaction

Quantifiable: Increase satisfaction scores from 7/10 to 9/10

Vague: Faster shipping

Quantifiable: Decrease delivery times by 24 hours 

See how specific, numerical metrics make things much clearer? It also helps when metrics are:

– Achievable 

– Relevant

– Time-bound  

That ensures you can realistically get the data, it provides useful insights, and ties back to set time periods.

Define Service Level Agreements

Now, let’s talk service level agreements or SLAs. SLAs outline standards for service delivery from internal teams or external partners. 

Your SLAs should spell out:

– Exact services provided

– Performance targets 

– Timeframes for delivery

– Each party’s responsibilities

– Penalties for unmet SLAs

– Reporting frequency 

– Process for updating 

For instance, SLAs could state:

– 99.9% uptime

– 24 hour response for high priority issues

– Emails answered within 8 business hours

The goal is to create standards that encourage great service while being realistic. Refer back to your SLAs regularly to ensure consistency.

Turn Your Metrics into Action

Metrics are pointless unless they drive action. Here are some tips:

– Assign metric ownership to teams or individuals. They’ll be accountable.

– Analyze the data to find issues and prevent recurrence. 

– Display metrics on visual dashboards to spot trends.

– Establish targets to aim for.

– Tie metrics to rewards when possible.

– Automate reporting for easy analysis.

– Review metrics in team meetings. Discuss trends and next steps.

Proactively using your metrics this way leads to better decisions and outcomes. The numbers tell a story—make sure you listen.

Reevaluate Your Metrics 

Finally, revisit your metrics and SLAs regularly—at least every 6 months. Ask yourself:

– Are these still tied to our goals?

– Is the data relevant?  

– Do our targets need updating?

– Should we track something else?

– Are our SLAs still appropriate?

Be prepared to change or replace metrics that no longer make sense. Focus on the essential ones.  

You may also classify metrics as:

– Key performance indicators -Critical to success 

– Diagnostic – Provide additional context

– Predictive – Suggest future outcomes

Doing this helps identify your true KPIs versus supplemental metrics.

The Bottom Line

There you have it—a blueprint for creating performance metrics and SLAs that work! Align them to your goals, make them measurable, and take action on the data. Revisit them routinely to ensure relevance.

Done right, your metrics and service agreements will keep everyone aligned, accountable, and motivated. They ensure you’re tracking what matters most to achieve success and offer outstanding service.

So put these tips into play for your business. Thoughtfully designed metrics and SLAs provide immense value and will serve you well.

Make Metrics Actionable

For performance metrics to drive improvement, they need to lead to tangible actions. Simply reporting numbers without making adjustments is a wasted opportunity.

Here are tips for making your metrics more actionable:

Assign ownership – Have specific people, departments, or teams responsible for improving each metric.

Root cause analysis – When issues arise, dig into the data to identify root causes so you can prevent recurrence.

Build scorecards and dashboards – Display key metrics visually so they are easier to monitor and share.

Set targets – Establish metric targets so people know what they are aiming for.

Tie to incentives – Connect metrics to compensation, rewards, or other incentives when appropriate.

Automate reporting – Automatically generate metric reports to simplify analysis.

Share insights broadly – Make sure everyone understands how their work influences the metrics.

Review in team meetings – Discuss latest metrics, trends, and actions frequently in team huddles.

By promoting visibility, accountability, and incentives around key metrics, you are more likely to see meaningful improvement. Metrics inform better decision making.

Conclusion

By following best practices like the ones covered in this article, you can develop performance metrics and SLAs that provide tremendous business value. Aligning metrics to core goals, quantifying them, and taking action on the data will empower your teams and optimize operations. Setting clear SLAs will maintain high service standards.

Remember to connect metrics directly to the handful of success factors most vital for your organization. Dig into the numbers frequently to understand what’s driving performance. Revisit top metrics and SLAs regularly and adjust them as the business climate evolves.

Well-defined performance metrics and SLAs may require an initial investment of time and effort, but the long term dividends will be well worth it. Your organization will be able to execute more effectively on strategy and exceed targets. Metrics and SLAs provide the roadmap for improved efficiency and results.