User engagement is when your customer is realising value from your product, service, website, or app. User Engagement impacts the growth of your business on multiple levels. If users are getting value then they are going to stay around for longer. If you can retain each user for longer, you will have more opportunity to generate revenue from each user (a greater Lifetime Value, so you can afford a higher cost of Customer Acquisition) and more opportunity to have each user refer other new users – all of which leads to growth. User Engagement leads to Retention, which leads to Revenue and Referrals, both of which lead to Growth.
Monthly active users (MAU) is the aggregate sum of daily active users over a period of one month.
Daily active users (DAU) is a measurement of how many users take an action within a website or app on a daily basis. Many start-ups and investors consider DAU to be a critical measure of product stickiness and growth. Stickiness is generally calculated as the ratio of Daily Active Users to Monthly Active Users. A DAU/MAU ratio of 50% would mean that the average user of your app is using it 15 out of 30 days that month.
In most cases, to be considered a “monthly active user,” a person has to open or view an app at least once in the period of one month.
There are two problems with DAU:
- It’s not actionable. You can’t do anything with a falling DAU except wonder what’s going wrong, and vice versa.
- It can be easily manipulated. Every company that releases its DAU numbers calculates them in a different way, making them effectively useless even for comparisons between apps.
The key to calculating DAU/MAU Ratio is defining what ‘active’ is for your product. This could be anything from a purchase (for ecommerce or mobile apps), pages viewed, videos watched, comments (for media/publisher), or product login/usage (for mobile apps).
Once you’ve defined ‘active’ for your product, determine the number of unique active users in a 24-hr period and also the number of unique active users over the past 30 days (usually based a rolling 30 days). With these two metrics, you can divide DAU by MAU to get the ratio percentage.
A variation of this metric is to swap MAU with the total number of unique weekly active users (WAU). This gives you the DAU/WAU Ratio.
Now you know what to measure, the next thing you’ll need is a strategy to help you improve your user engagement.