Service levels: Overview, definition, and example
What are service levels?
Service levels refer to the specific standards and metrics established in a service agreement or contract to define the expected level of service that one party will provide to another. These levels often include measurable criteria such as response times, resolution times, uptime guarantees, availability, and other performance metrics that ensure the service is delivered to the satisfaction of the customer or client. Service levels are particularly common in industries such as IT services, telecommunications, customer support, and facilities management.
The service levels set expectations for both parties and provide a basis for assessing whether the agreed-upon services are being delivered effectively. They are often outlined in a Service Level Agreement (SLA), a formal contract between service providers and customers.
Why are service levels important?
Service levels are important because they provide clarity and transparency about the quality and performance of the services being delivered. They help manage customer expectations and provide a clear framework for evaluating whether the service provider is meeting its commitments. Service levels also protect both parties by defining remedies or penalties if the agreed-upon levels are not met.
For service providers, defining service levels ensures that they can effectively allocate resources and manage customer demands. For customers, service levels offer assurance that they will receive a certain quality of service and have recourse if the service provider fails to meet those expectations.
Understanding service levels through an example
Imagine a company enters into an agreement with an IT service provider to manage their network infrastructure. The service level agreement (SLA) specifies that the IT provider will ensure 99.9% uptime for the network and will respond to any critical technical issues within one hour. If the network experiences downtime beyond the agreed-upon threshold or if response times exceed the SLA, the service provider may be required to offer compensation or penalties as outlined in the agreement.
In another example, a business has a customer support agreement with a call center provider. The service levels may define that the call center will answer 95% of customer calls within 30 seconds and will resolve 90% of inquiries on the first call. These service levels help the business ensure that its customers receive timely support and that the call center provider meets the agreed-upon standards.
An example of a service levels clause
Here’s how a service levels clause might appear in a service agreement:
“The Service Provider agrees to meet the following service levels: (i) 99.9% uptime availability of the hosted platform, (ii) response times for high-priority issues of no more than 30 minutes, and (iii) resolution of critical issues within 4 hours of identification. If the Service Provider fails to meet these service levels, the Customer will be entitled to a service credit equal to [X]% of the monthly fee for each instance of non-compliance.”
Conclusion
Service levels are essential for setting clear expectations regarding the quality and timeliness of the services being provided. They offer both service providers and customers a clear framework for measuring performance and accountability. By defining service levels, companies can ensure customer satisfaction, improve operational efficiency, and protect both parties’ interests in case of underperformance. Service level agreements are a vital tool for managing relationships in service-oriented industries.
This article contains general legal information and does not contain legal advice. Cobrief is not a law firm or a substitute for an attorney or law firm. The law is complex and changes often. For legal advice, please ask a lawyer.