Service Level Agreements: What a Printer Needs to Know

According to Wikipedia, a Service Level Agreement, or SLA, is “a commitment between a service provider and a customer. Particular aspects of the service — quality, availability, certifications, compliance, responsibilities — are agreed between the service provider and the service user.”

On the surface, it seems fairly simple, but for commercial (including direct mail, transactional, book, etc.) printing companies, facing increasingly short turnaround times, with increasingly smaller run lengths, using an SLA to clearly spell out the expectations and deadlines for all elements of a job or ongoing program can mean the difference between an efficient operation with happy customers, and a disorganized one with frustrated clients.

While it can vary from print services provider to print services provider — and job to job — a typical SLA has a few basic parts:

• The summary of the agreement, which is a basic outline of the job and what each party is expecting from the interaction.
• The goals of the interaction, which should focus heavily on what your customer hopes to get from the completed job. This is especially important if you are working on a job that has multiple touch points or elements that will all need to work together to achieve the end result.
• The requirements to get the job done and meet the goals in a satisfactory manner. This is where items such as the deadlines for submitting files, the delivery dates, and any specifics should be spelled out in detail.

If the job requires 100 individualized postcards to be printed and mailed once a month for the next year, the SLA should include not only that information, but the dates by which the files for each mailing are due, what information the customer is providing, how long it will take to print them, and even the dates that the finished postcards will arrive in the mailboxes of the end customer. The more details, the better.

• Your SLAs should include the names and contact information for all responsible parties, both in your shop and with the customer. Who are the decision makers? Who will be sending the files? Who should be called if there is a problem, or if it’s looking like a deadline might be missed? Spell it all out.
• Speaking of missed deadlines, what will happen if something is missed? If a file isn’t received, a deadline isn’t hit, or a goal isn’t met — what are the consequences? Who will take responsibility? This goes both ways; make sure to spell out what will happen if your customer fails to provide the required materials on time and how that will impact production.

While no one wants to miss a goal or disappoint a customer, having a well-thought-out plan of action in place before the job even starts will alleviate the stress, and allow everyone to get busy fixing whatever problem might have come up in a timely fashion.

• Finally, you’ll want to spell out the conditions for cancellation, and any penalties that will incur. There could be a number of legitimate reasons to end a contract, but you will want to include a section that details who is responsible for what in those situations, as well as elements such as what happens to any deposits made, or what should be paid if a job is only partially completed.

Again, not something anyone wants to think about, but it is far better for everyone involved to have a clearly stated policy in place that is part of the initial SLA so there is no confusion.

Printing Industry SLAs in Action

While you might not think SLAs are right for commercial printing operations, the fact is many of your peers are already using them.

“IWCO regularly enters into SLAs with our clients,” David Klempke, director of Portfolio Management Office at Chanhassen, Minnesota-based IWCO, points out. “Each SLA is individually negotiated to reflect each client’s individual needs, and designed to foster partnership through the identification of key metrics, penalties, and incentives. Recognizing that all programs are collaborative efforts between IWCO and our customers, SLAs encompass the obligations of both parties.”

“SLAs have been an important part of our business since the mid-2000s,” Ken Gammon, senior VP of Chicago-based RRD Healthcare Solutions, says. “It started primarily with regulated communication documents, but now includes virtually all communications we produce.”

Anthony Marchioni, president of Compu-Mail in Grand Island, New York, says his company has been using them for more than five years. “It started because of the type of verticals we approach — as a direct mail company, we have promotions and offers going out — and this was a chance to get into more legal and compliant mailings, where SLAs are more important. Think a bank acquisition that needs to notify members. That has to be a legal correspondence, and also timed to leave the facility at a specific day and time.”

Clear agreements and communication are critical to building good relationships with clients, according to Brian Johnson, VP of Customer Experience, at Quad in Sussex, Wisconsin. “It’s also important to use objective data to develop the SLAs. That’s how you hold both parties accountable. SLAs are very powerful for creating lasting client partnerships. They are an excellent example of how critical transparency and collaboration are for everybody’s success.”

That said, even for those who have been using SLAs for years, what SLAs include and how precise they need to be has evolved. In particular, where an SLA in the past might have just given the broad strokes of a job, with a time frame for deadlines, today many of them are giving exact dates and being clear on exactly what needs to happen at each step along the way.

“To comply with client schedules, deadlines have to be met both by the client — whether that’s a publisher, a cataloger, a direct mailer, a retailer, or anyone else — and by us as the printer,” Johnson adds. “To help ensure we have frictionless workflows for printing, binding, delivery, and all other elements of print production, it’s important to have defined time frames. Committing to SLAs helps us make the marketing experience more streamlined, impactful, flexible, and frictionless by managing our resources and delivering quality work on time.”

But an SLA can specify more than just the turnaround times. For Marchioni, these agreements also spell out the exact technologies and capabilities the shop is bringing to the job, and what will happen if a particular machine goes down. “They are certainly specific in capabilities and delivery times, but also that you have redundancy should something happen,” he says. “It is great to be trusted as a sole source provider, but what happens if a facility goes down — you still have to legally mail. What backup plans do you have?”

This kind of transparency is really what an SLA is all about — it’s more than just a contract stating the customer is buying a specific product or service from your operation. It is a clear outline of expectations that ensures everyone is on the same page.

The modern marketer is looking for new services and products that will increase ROI and deliver better metrics for response rates and customer actions, Johnson points out. “SLAs increase transparency in the process and clarify expectations for both the client and the vendor. They also allow for better definitions on quality and delivery. This is especially important when we’re working on today’s new and innovative marketing solutions.

“That’s why it’s critical to know and meet our client’s expectations — from final print execution to getting the piece of content into the customer’s hands on time,” Johnson says. “A direct mail piece that’s advertising a sale is only valuable to our clients if it is printed correctly and delivered on time to drive sales. Establishing SLAs helps us manage that process so that it’s seamless for the client.”

Challenges and Opportunities

With all that said, while SLAs bring a number of benefits to the table, they also bring a few challenges that shops need to be prepared for to be successful.

Gammon notes, “there are a couple [challenges] that come to mind: Shifting the mindset that SLAs are not going away, and we need to embrace them; and agreement and alignment with customers on realistic SLAs that both parties are willing and able to deliver on.”

In particular, the process of spelling out all the details of a job can be difficult for sales teams not used to dealing with this type of structure in a contract, as well as for customers who aren’t necessarily used to thinking ahead about what they need to provide and when in order to complete the job on time and to the standards they expect.

“The biggest challenges are usually receiving comprehensive process inputs and deliverables and resource availability (human and technology),” Klempke notes. “Equally important are establishing the correct expectations across partnering organizations.” He continues, “The foundational expectation of SLAs is first and foremost consistent attainment of a schedule, whether that is activity completion or production and delivery. In addition, the ever-changing demand from our clients is focused on continued reduction in established turnaround times. SLAs are the first step in a continuous improvement process designed to drive quicker turnarounds.”

On the flip side, Marchioni notes that while creating the SLA can be challenging, the end result is a much deeper relationship with your clientele. “It brings validity to the relationship with customers,” he says. “When we’re more focused on marketing — and we still love that work — you’re only as good as the last thing you’ve done. Those are not long-term relationships. But when working on compliance pieces, there is a high level of trust that really solidifies you as a thought leader. Our goal is to be the customer’s ‘easy button’ to make them look good.” SLAs, he says, are how Compu-Mail ensures it can do just that.

Remember that your SLA should include what happens when something goes wrong? This is another benefit that Johnson points out to using them. “SLAs promote transparency between the client and the vendor. They give us a way to be direct with our clients when there are issues. Print production is complex, and we need skills not only to do the job but also to have the conversations that will allow us to work through any problems together with our clients. SLAs provide good parameters for those conversations.”

Getting Started with SLAs

If you’re ready to start taking a closer look at using SLAs to create deeper, more meaningful, and more efficient relationships with your customers, there are a few pieces of advice that can help ease the way forward.

If you haven’t been using SLAs, give them a try, Johnson urges. “When everyone understands expectations upfront and there are metrics and KPIs in place, that can really drive mutual success and enhance the marketing experience. SLAs will be different for a catalog or a direct mail piece that has to arrive in-home so a customer action can be taken in a short period of time, versus a publication that’s being consumed in a more leisurely manner. SLAs may be more or less stringent based on time sensitivity and other factors. Take those things into consideration when you’re developing your SLAs — but do dive in and start to work with SLAs.”

SLAs have become a key component in the printing business, so figure out how you can embrace them for a competitive advantage, Gammon advises. “It’s acceptable to offer mutually agreeable SLAs; just ensure when evaluating potential penalties that you are prepared to meet the client’s needs under challenging situations.”

“Predictable/improved outcomes and capability differentiation primarily drive hardware and software investment. SLAs are the mechanism that we put in place to ensure confidence in delivering against these expectations,” explains Klempke, who adds that investing in equipment to offer not only enhanced experiences and new capabilities, but also to ensure redundancy, are a critical part of success when using SLAs.

“Ensure a comprehensive understanding of process and deliverables capabilities are in place prior to establishing business partnership SLA expectations,” he adds.

The most important thing is to fully understand what your company’s capabilities are before you overextend yourself, Marchioni notes. “We are cautious to make sure we’re not over-promising and under-delivering. That is the single most important thing.”

SLAs are a shift in the way you think about print sales and customer relationships, but it is worth the effort to work with your team and your clients to develop mutually beneficial ones. As job requirements continue to get more complex, and turnaround times continue to get shorter, ensuring transparency and getting everyone on the same page is a critical element to staying profitable and successful.

Automation and efficiency can only take you so far — now it’s time to start streamlining your contracts and relationships, and SLAs are the template to get it done.