If you're looking for a great metric to track user engagement and growth on your platform, you might want to measure your daily active users (DAU). But keep in mind that while DAU is a good starting point, it’s not necessarily a holistic metric for measuring performance. Not only can this number measure traction (depending on the service or product you're building), but it's a useful metric for the product team: DAU shows the product team how users engage with your platform and indicates if you're building for stickiness, which in turn helps minimize churn.
In this post, we'll discuss who's considered a daily active user, why DAU is a useful metric to measure, how to measure it, and measurement misconceptions.
So, What Is DAU?
DAU is the number of users who actively engage on your platform on a daily basis.
We can categorize DAU into two types: the new users who just joined the platform to explore your features and the returning users. Returning users are the ones you're usually happy to see, because who doesn't love seeing users that like your platform enough to keep coming back regularly? The total of both of these is your DAU.
What Is Considered a Daily Active User?
The thing about DAU is that you have to define what it means to you. Otherwise, it could turn into just another vanity metric that offers little to no insights. If you're measuring solely the number of sign-ups you have, your DAU may seem exciting—especially if your platform was recently featured or other marketing strategies are starting to pay off.
You have to monitor whether your plethora of sign-ups is actually converting into real engagement. Are users interacting with your site and services, or are they just signing up and dropping off? Most importantly, are they coming back? Again, this depends on the type of platform you're building.
Why DAU Matters and How It Works
DAU turns out to be a very handy metric to monitor engagement. Unlike metrics like the number of downloads and registrations, DAU helps highlight areas that may require improvements to boost user engagement such as a new update/feature users don’t appreciate or a bug causing users to drop off.
DAU is also helpful with product pricing, as you're better able to monitor customer behavior and adjust accordingly to the needs of your target market.
Building towards product-market fit is a never ending journey, and measuring your DAU can help you take a step in the right direction.. DAU is also useful for measuring the relevance of your application. Monitoring drop-off points comes in handy to learn what features should be tweaked or removed, see which features are most popular, and understand if your user base is growing or stagnant.
Essentially, DAU, combined with other key metrics such as churn, Lifetime Value (LTV) and Monthly Recurring Revenue (MRR), can be a great way to monitor the overall health of your application. For example, Twitter adapted this to best suit their needs with mDAU (monetizable daily active users);this shows the number of authenticated users to whom ads can be shown. This is one way you can adapt DAU to your company’s specific needs.
How Do I Find the Daily Active Users of a Website?
First, define what "active" means to your business. These could be new users who explore your platform, returning ones, or both. Defining active also includes identifying activities such as signing up or signing in, purchasing a product, booking a ride, or engaging with content.
Do users actually interact with your platform, or drop off immediately after joining? Knowing this enables your product team to better understand and measure the platform functionality, as well as how users engage with different aspects of your product.
You can easily calculate your website DAU by noting the total number of unique users each day. Analytics tools such as Google Analytics (Panoply offers this as one of our integrations) offer services to monitor website engagement.
Another method is to calculate your monthly active users (MAU) and dividing that by the number of days in that given month.
Common Misconceptions
Daily use doesn't necessarily correlate to value - your DAU shouldn't be the only metric you measure, it can be combined with your LTV, customer acquisition cost (CAC) and customer churn rate.. Also, depending on the nature of the platform, there are products where the interaction doesn't have to be early, but each episodic use offers high value such as e-commerce platforms or ridesharing apps which have higher demands on weekends or rush hours. In such cases, DAU won't be the right value to use when measuring growth.
Suppose your platform involves users interacting on a day-to-day basis (social media, for example). In that case, you're more likely to get value out of the results from measuring your DAU. Otherwise it's best to find other KPIs that work for you, like net promoter score (NPS), which measures the likelihood of your product getting recommended, churn rate, trial conversion rate, customer experience score (CX score), etc. Again, all of these depend on the SaaS product in question.
Daily Active Users vs. Monthly Active Users
DAU vs. Monthly Active Users (MAU) is somewhat self-explanatory; DAU is the number of users engaging each day, and MAU is the count for a given month.
The ratio of these two is helpful when measuring the growth and retention of your product - it helps you notice high vs. low engagement days and weeks, and month-over-month trends. A high DAU/MAU ratio shows how sticky and engaging your platform is.
The metric that is most useful to you depends on your platform, industry, and target market; there isn't one benchmark that applies equally to each one.
That said, here are some helpful benchmarks for your DAU/MAU ratio to give you an idea of what you should be aiming for based on a report by Mixpanel. For SaaS B2B and B2C apps, the benchmark is a 13% average DAU/MAU ratio, while the ratio for non-SaaS B2C apps such as social media platforms is usually about 20% to 50%. The range is lower for B2B apps as they may not be used regularly.
Andrew Chen, a seasoned investor, wrote a compelling piece on where DAU/MAU fall short as a metric for measuring engagement.
Conclusion
Depending on the SaaS application or service you're providing, DAU can be a great way to measure engagement and present it as a growth metric. Before embarking on tracking your DAU, just be sure to determine if it’s a “vanity metric” or something that truly generates business insights. Looking to get started? Panoply’s Google Analytics integration helps you easily track your DAU.
This post was written by Gift “Gigi” Kenneth. Gift is a machine learning engineer with a background in biochemistry. She has gained experience from building projects, startups, working on research, and contributing to open source. She’s passionate about technology, especially artificial intelligence, its applications in a variety of domains, and how it will impact the future of work. She loves writing, reading books, and learning new things.
