MSPs Introduce Service Level Refunds

From the United States to Australia, a growing number of managed service providers and SaaS (software as a service) companies seem to be using a new tactic to boost sales: If the MSPs and SaaS providers don’t fulfill their service level agreements (SLAs), customers receive some form of a financial credit, cash back or discount. Here’s how two such programs — from RightNow and Axxis Technology — work.

Two cases in point:

1. RightNow: The $140.4 million SaaS company focuses on CRM (customer relationship management). And going forward, RightNow will give customers cash back if their SaaS service levels drop below a 99.9% up-time commitment — which is roughly 9 hours of downtime per year.

As a publicly held company, RightNow’s SLA guarantee further raises the company’s profile. And even before announcing the guarantee, RightNow was growing fast: Fourth-quarter revenue rose 18 percent. The company signed 59 new customers during the period and 260 new customers for the year.

2. Axxis Technology: One of Australia’s leading SMB managed service providers, Axxis Technology, offers 5 percent of a monthly service fee back to the customer if Axxis doesn’t meet stated incident response times in a given month. Axxis founder Mathew Dickerson explained his overall approach during a seminar I attended in October 2008.

At first glance, SLA guarantees may seem like old news and basic business concepts. But I think most MSPs — especially small ones that compete with Axxis — use vague SLA language to ensure they have wiggle room with customers during system outages and unexpected network downtime.

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