Product management glosary

Customer service level agreement (SLA)

What is Customer Service Level Agreement (SLA)?

A Customer Service Level Agreement (SLA) is a formal, documented agreement between a service provider and a customer that outlines the level of service the customer can expect from the provider. SLAs are essential in ensuring that both parties have a clear understanding of the service expectations, performance metrics, and remedies or penalties for non-compliance. They are commonly used in various industries, such as telecommunications, information technology, and managed services.

Key Components of a Customer Service Level Agreement

While the specific contents of an SLA may vary depending on the industry and the nature of the services provided, there are several key components that are typically included in an SLA:

  1. Service Description: This section outlines the services that the provider will deliver to the customer, including any specific tasks, responsibilities, and deliverables.
  2. Performance Metrics: These are the measurable indicators that will be used to evaluate the provider's performance in delivering the services. Common metrics include response time, resolution time, and uptime.
  3. Monitoring and Reporting: This section describes how the provider's performance will be monitored and measured, as well as the frequency and format of performance reports that will be provided to the customer.
  4. Service Level Objectives (SLOs): SLOs are the specific targets for each performance metric that the provider is expected to meet. For example, an SLO for response time might be that the provider must respond to customer inquiries within one hour.
  5. Remedies and Penalties: This section outlines the consequences for the provider if they fail to meet the agreed-upon SLOs. Remedies may include financial penalties, service credits, or even termination of the agreement.
  6. Term and Termination: This section specifies the duration of the agreement and the conditions under which either party may terminate the agreement.
  7. Dispute Resolution: This section outlines the process for resolving any disputes that may arise between the parties regarding the SLA.

Benefits of a Customer Service Level Agreement

Implementing a Customer Service Level Agreement offers several benefits for both the service provider and the customer:

  • Clear Expectations: An SLA establishes a clear understanding of the service expectations between the provider and the customer, reducing the likelihood of misunderstandings and disputes.
  • Performance Measurement: By setting specific performance metrics and targets, an SLA enables both parties to objectively measure the provider's performance and identify areas for improvement.
  • Accountability: With an SLA in place, the provider is held accountable for meeting the agreed-upon service levels, which can help to ensure a high level of service quality.
  • Risk Management: SLAs can help to mitigate risks by outlining remedies and penalties for non-compliance, providing an incentive for the provider to maintain a high level of performance.
  • Improved Customer Satisfaction: By delivering consistent, high-quality service in accordance with the SLA, the provider can help to improve customer satisfaction and build long-term customer relationships.


A Customer Service Level Agreement is a crucial tool for managing service quality and ensuring that both the service provider and the customer have a clear understanding of the service expectations. By establishing performance metrics, monitoring processes, and remedies for non-compliance, an SLA can help to promote accountability, improve service quality, and ultimately enhance customer satisfaction.