Service-level agreements (SLAs) are increasingly less useful in what Gartner is calling the Digital Experience Economy. Experience-level agreements (XLAs) are the way of the future, argues Yolanden Moodley, Head: Centralised Warehouse, Logistics & Rework at Altron Managed Solutions.
One of the most significant shifts in economic fundamentals over the past few years has been the growing emphasis on experience – customer experience and employee experience. This shift, which is closely tied to the move onto digital platforms, is prompting a move away from traditional SLAs to XLAs or a combination of both. “SLAs are essentially quite crude measures
of performance and take limited account of customer satisfaction, which is a product of the customer experience. It’s common for service providers to have met or exceeded their SLAs and still have dissatisfied customers,” Moodley says. “Service providers have to accept that the game is changing, and customer expectations are higher.” XLAs put customer experience at the
centre of service performance, ensuring that all service interactions and touchpoints are considered when assessing whether the service is acceptable. The key point, Moodley says, is that XLAs take into account the business outcomes that the customer desires. This, in turn, means that the service provider has to invest in building a deep understanding of the customer’s business because it’s necessary to define not only the needs they articulate but also their unarticulated needs. “It’s these unarticulated needs that create the gap between the SLA and what the customer actually experiences,” he says.
A dynamic process
Building an XLA is not a once-off project. The digital, global business environment is fastmoving
and highly competitive, with new threats and opportunities emerging all the time. Companies have to adapt rapidly, and the XLAs they have with service providers need to be flexible and dynamic enough to keep adapting as their environments and requirements change. One could say that an XLA involves moving away from the tick-box approach inherent in SLAs and working to align the service provider with the customer’s business and what is important to it. This may involve investment from both parties. Moodley also points out that, to be effective, we need to measure XLAs against objective data. Measurable data points will provide the framework for the customer experience to be assessed and govern a `virtuous cycle’ of improvement.
When building an XLA, measurable data points have to be identified and then reported on. Examples could include:
“By scoring these and other similar influencers of customer experience, one can introduce rigour in measuring what the customer experience is. As an exercise, one can then compare this score of the aggregated key customer-experience influencers with the SLA and also the Net Promoter Score,” he says. “You will find that the XLA and the Net Promoter Scores are very similar, whereas the SLA would typically be higher—what one might call the experience gap.
“By combining quality of service with quality of experience, the XLA provides a much better way of ensuring that service providers deliver what their customers want, and that’s the foundation of a long-lasting business relationship.”
Altron Managed Solutions