The last 10 years have seen a revolution in the way business-to-business (B2B) software companies find customers. In the late 2000s, software companies like Salesforce and HubSpot were experiencing hyper-growth in customer demand and had to quickly grow their sales and marketing teams in turn. Yet whenever the company didn’t hit its sales goals in a quarter, it led to infighting between the teams—the sales team said marketing wasn’t getting them good enough leads, while marketing said that the sales team wasn’t doing enough to close those leads. Clearly something had to change for these companies to have a scalable model that worked in both good times and bad.
The solution: A service level agreement
The answer was a service level agreement (SLA) between sales and marketing. This internal contract (in the non-legal sense) spelled out the requirements for how a marketing lead would be qualified before it’s handed off to the sales team, to ensure that the customer fit the appropriate target profile for the company. It even specified the method by which the leads are handed off to the sales teams. In return, the sales team had to commit to how and when they would reach out to the leads they receive—often within a specific time range and via a specific channel.
The concept of a service level agreement borrows from cloud computing, where SLAs are part of the contractual basis for a product’s service. A company will promise uptime and system performance, data privacy protections and remedies for failure to meet uptimes. A big benefit of SLAs for sales and marketing teams is that they are made in advance when everyone can talk with a level head, rather than debating in the heat of battle when revenue (and/or compensation) is at stake. The implementation of internal SLAs was so successful, it led to increased specialization among the sales and marketing teams. For example, specific teams focused on setting up meetings, additional teams specialized on closing the customer and still other teams specialized on making the customer successful after on-boarding.
Service level agreements in solar developers
A similar dynamic happens in solar developers between sales/business development and engineering teams (including SolarCity/Tesla, REC Solar and NRG Solar). As developers grow quickly, they often staff up teams before they are able to iron out all processes. While that will work on easy projects, challenging projects will lead to finger-pointing between the sales and engineering teams. After all, the incentives are not always aligned between the teams—sales teams want to maximize revenue and/or profit, whereas engineering tends to be more conservative and prefer caution over growth.
An additional problem with solar development is that each project is highly dynamic. There are often many rounds of feedback with the customer as the sales team uncovers the customer’s priorities, their budget, any restrictions on development and changes to the timeline. Involving both the sales and engineering teams in the sales process can lead to significant delay, as each piece of new information needs to be filtered through the engineering team and incorporated into the project plan (e.g. design, costs and financing options).
Increasingly, solar developers are establishing SLA structures between the sales and engineering teams. Of course, these are slightly different from the marketing/sales SLAs among software companies, but they formalize the way the two organizations can work together to streamline the overall sales and development process, including:
- The types of customers that the sales team can/should engage with
- The design assumptions (including how to design around shade, which modules and inverters to use, which cost assumptions to use) that the sales team should use when putting together the proposal for the customer
- The timelines and caveats that must be used when finalizing the details with the customer
- The triggers where the sales/BD teams need to get engineering involved for an approval
- The steps that must be taken in order to qualify the customer before initiating permits or beginning procurement
- The speed with which engineering must get back to the sales/BD teams on requests for exemptions, etc.
Ultimately, this process has benefits for both the sales and engineering teams. The sales team is empowered to make decisions independently, incorporate new information into the proposal and get back to the customer more quickly. They can prospect for new clients, sit down with customers to finalize the design and costs and quickly incorporate new information into the project plan. The engineering team is freed up from working on early-stage prospecting, or the repeated back-and-forth design process with some customers. In return, they are able to more quickly provide assistance on the projects that do demand their attention.
Like any contract, an SLA between sales and engineering should provide considerations for both sides. This framework isn’t just a tool for engineering to rein in the sales team, or for the sales team to circumvent or subsume the engineering team. It should be an agreement that is agreeable to both teams, and ultimately helps them both achieve what they want—after all, they’re all part of the same company, with the same goals.
While many solar developers don’t realize it, they are borrowing best practices used by many of the biggest software companies—and that is a good thing.