The Problem
Cash Out, Confidence Down
Service credits start as a safety valve but can become a cash drain and a trust killer. When credits spike, it's rarely just "bad luck"—the SLA structure, operational capacity, or client environment has drifted. Without a structured response, teams pay out, patch up, and repeat.
The Framework
Risk Conditions (Act Early)
Catch credit risk before it becomes a payout:
- Near-breach forecast (next 7–14 days) based on current trajectory
- SLA compliance trend ↓ (30d rolling) even if not yet breached
- High-impact tickets aging toward breach or incident backlog ↑
- Client environment change (volume spike, new scope, infrastructure shift)
Action: Surge capacity on at-risk SLAs; communicate proactively; review SLA fit.
Issue Conditions (Already in Trouble)
If these are true, credits are flowing:
- Credits paid in last 30 days > threshold (absolute or % of MRR)
- Same SLA category breached multiple times (pattern, not one-off)
- Client escalations or renewal risk triggered by credit payouts
- Margin erosion visible at account level
Action: Run a credit post-mortem; propose remediation plan; renegotiate SLA structure if needed.
Common Diagnostics
Quick checks to focus the fix:
- Root-cause clustering: Are 2–3 categories or CIs driving most breaches?
- SLA realism: Are targets achievable given current staffing, hours, and client environment?
- Vendor/OLA gaps: Are third-party dependencies causing delays blamed on you?
- Process debt: Are handoff delays, approval queues, or tool gaps contributing?
- Volume fit: Has ticket/request volume outgrown the contracted capacity?
Step-by-Step Guide
Immediate Stabilization
Actions:
- Identify the top 3 SLA categories driving credits; assign owners
- Surge capacity (overtime, cross-train, escalate) on at-risk work
- Communicate a stabilization plan to the client within 48 hours
Expected Impact: Control the immediate payout risk.
Fix the Engine
Actions:
- Run a credit post-mortem: timeline, root causes, and contributing factors
- Map breaches to operational gaps (staffing, tools, process, vendor OLAs)
- Quantify the cost of credits vs. the cost of fixing the root cause
Expected Impact: Data-backed case for structural fixes.
Cap Exposure
Actions:
- Propose a credit remediation agreement: milestone delivery tied to credit offsets
- Review SLA structure—re-tier if targets don't match environment reality
- Convert chronic out-of-scope work into a Change Request or scope amendment
Expected Impact: Structured path vs. open-ended payouts.
Rebuild the Safety Net
Actions:
- Add near-breach alerts (7–14 days out) to dashboards and escalation paths
- Codify credit caps and SLA exclusions for vendor/OLA-caused delays
- Run quarterly SLA reviews to catch drift before it becomes a crisis
Expected Impact: Early warning and contractual guardrails.
KPIs to Track
| Metric | Target |
|---|---|
| Credits paid (30d) | ↓ 50%+ in 60 days |
| SLA compliance (breach rate) | At/above agreed threshold |
| Near-breach forecast accuracy | > 80% true positive |
| Root-cause coverage | Top 3 drivers identified and addressed |
| Account margin | Stabilized or recovering |
Warning Signals
Real Scenarios
Response Time Breach Pattern
Context
P2 response time SLA breached 8 times in 30 days. Credits totaling $12K paid. Pattern shows Friday afternoon breaches.
Steps
- 1.Analyze breach timeline—confirm Friday pattern
- 2.Review staffing model for Friday PM coverage
- 3.Add on-call or shift coverage for at-risk window
- 4.Propose SLA adjustment for non-business hours or staff augmentation CR
- 5.Track P2 compliance for next 30 days
Vendor-Caused Cascading Breaches
Context
Network vendor delayed hardware replacement, causing 4 SLA breaches on related tickets. Client expects credits.
Steps
- 1.Document vendor delay timeline with evidence
- 2.Review contract for SLA exclusion language on vendor delays
- 3.Communicate root cause to client with transparency
- 4.Propose OLA improvement plan with vendor
- 5.Negotiate credit waiver or split responsibility with client
Quick Wins
Start with these immediate actions:
- Pull a "credits paid by category" report for the last 60 days
- Identify the top 3 SLA categories driving credit payouts
- Check near-breach forecast for the next 14 days
- Review SLA exclusion language for vendor/OLA-caused delays
Related Playbooks
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