The most important number you can track is the number of referrals from existing and former clients. You’ve got to know how many referrals you’re getting from these people each month.

If the number of referrals from people who have actual experience with your service isn’t increasing you’re in trouble. A steady or declining number of client referrals is a big red flag indicating trouble.

When this number isn’t increasing you’re doing something wrong.

Fact – you have more existing and former clients every month. This is a cumulative number – it’s always increasing.

Fact – these people are the people with the greatest knowledge of the service you provide.

Fact – these people will send their friends and family to you when the need arises if they’re happy with their experience.

How do you collect the data? You should ask every new client how they found you. You may need to probe deeply to really determine how they ended up in your office. We have some trouble with people telling us they found us through our website. We probe further and find that they were often referred to the website by others. What we really want to know is how they were first referred to us or to our site. We dig around until we’ve got an answer.

What do you do with the data? Once you know the source of the client, start categorizing the referrals. Some come from advertising, some come from other professionals and others come from existing and former clients. Create a spreadsheet and start totaling up the referrals by category.

Create a graph and plot the data. You should see a line for referrals from clients and former clients that climbs steadily. It’s essential. This is not optional. You must see an increase in these referrals month after month.

If you’re not seeing that steady rise on your graph then you’ve got to figure out what’s happening. Bottom line – your clients aren’t happy. You’ve got to find out why. Ask them. Dig in. Don’t ignore the problem. Failing to correct this situation will, ultimately, lead to your failure. You’ve got to fix it quickly.

The number of referrals from former clients is truly the most important thing you can measure. It’s your most important leading indicator. Measure it, graph it and take action when it’s not headed in the right direction.