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Knowing your daily active users (DAU) is vital to growing any SaaS product, be it a digital app or website.
You get actual usage data based on user activity and user behavior on a given day, which helps you analyze your user base.
And more importantly,
Why is it essential to track and measure?
- Check out the 5 best practices to improve your SaaS Conversion Rate and turn free users into paying customers.
- Explore 5 effective tips to increase your company’s Weekly Active Users.
- Monitor these 12 Vital SaaS Retention Metrics so you and your customers remain BFFs!
This Article Contains
- What Does Daily Active Users (DAU) Mean?
- Why Is it Essential to Track and Measure Daily Active Users?
- How to Calculate the DAU Average and DAU Ratio
- Daily Active Users: What Is a Good Benchmark?
- How to Improve Daily Active User Rate
- 6 DAU-Related Metrics to Track
- Daily Active Users FAQs
Let’s get down to business.
What Does Daily Active Users (DAU) Mean?
The daily active user count is used to identify the total number of users who engage with a particular SaaS product, social media platform, or mobile app within 24 hours.
You can utilize various analytics tools like Google Analytics to monitor and measure the count of your active users on a daily basis.
However, to measure your DAU numbers accurately, you’ll need to:
A. Avoid DAU Duplicates
One standard method for avoiding duplicate DAU numbers is a “distinct count” approach.
For example, if “User A” returns multiple times or has several user sessions or interactions with the app or social media platform on a given day, that would count as one daily active user.
However, when calculating the DAU ratio, you’ll need to first identify and count your unique users for the selected time frame.
What’s a unique user?
A unique visitor or user is a single, engaged user who uses your app one or more times within the selected time.
So, if you’re calculating the DAU ratio for five days, then their active use on all five days counts as a single unique visitor, not as five unique ones (more on this later).
B. Define the DAU Criteria Accurately
Since a wide array of tech products and services exist, defining active use can vary from business to business. For some, it could be a user logging in daily, but for others, a daily user could be someone who posts content, makes a purchase, or uses a specific app feature.
For instance, the daily user activity for the Facebook messenger app could be based on emojis used, AR filters tried, video calls made, and so on.
Similarly, user activity for Microsoft Teams could be based on the number of documents shared or meetings that have been organized.
You’ll need to decide how you define an active user for your SaaS platform.
Which Companies Track the DAU Rate?
Tracking and measuring the DAU rate applies to SaaS companies and platforms that thrive on active user participation and consistent usage.
- Collaboration and productivity tools.
- Social media platforms.
- Communication tools or mobile apps.
- Gaming companies.
In a nutshell:
Any digital business that relies on monetization strategies such as advertising, subscriptions, in-app purchases, or premium features greatly benefits from DAU monitoring.
For instance, Facebook tracks the DAU rate to demonstrate the platform’s value to advertisers, helping them optimize ad placements, targeting options, and pricing structures.
But remember that the DAU is just one of the many metrics commonly used to measure and derive insights from product usage.
However, watch out!
Note: While the DAU counts the number of new users per day, the DAU ratio is a percentage of daily active users (DAU). We’ll get to the calculations in just a bit.
First, let’s determine the importance of tracking and measuring your daily user count.
Why Is it Essential to Track and Measure Daily Active Users?
By leveraging DAU data, companies can make informed decisions based on data analysis, leading to product enhancements and business growth.
Here’s how you can benefit from tracking and measuring the DAU:
1. Enhance User Engagement
By tracking and measuring daily usage, you can quickly identify patterns and trends in user behavior. For example, you can identify which times of day have the highest number of users.
You can also identify features and content that daily users engage with the most.
But you’re probably wondering….
How does this help?
The truth is: You’ll need to dig into the product usage data along with other related metrics.
You may spot valuable insight that could help solve an existing design, content strategy, or navigation problem or spark a new idea to enhance your user experience.
2. Increase User Retention
Besides enhancing user engagement, you can use insights from DAU to increase user retention.
You can quickly identify the retention rate by monitoring the rise and fall in daily users and user activity. For example, a high DAU rate could reveal what type of content or product features your users engage with most on a daily basis.
Similarly, a low DAU rate could point out potential issues with the user experience, such as slow loading times, navigational roadblocks, or a loss of interest.
Further analysis may help you identify the reasons for a drop in your customer retention rate. Once you know the exact cause, finding the solution or getting more returning users becomes effortless.
3. Improve Monetization
A healthy DAU ratio is like a money magnet — it demonstrates that the platform’s loyal user base values the content, features, and user experience.
What happens when you consistently attract and retain users?
It can lead to increased revenue through advertising and paid subscriptions. It could also bring your company under the spotlight of investors looking for businesses with substantial revenue growth potential.
4. Optimize Your Product and Marketing Strategies
DAU data reveals user preferences, highlighting popular content, features, and in-app purchases and identifying areas for improvement.
But be warned: Data without any valuable insight is useless.
So dive into your product usage data and talk to your loyal customers to get the whole picture.
It sounds tiresome, but doing so may help refine your marketing campaigns and strategies, including product features, design, and navigation.
That said, let’s discover how the DAU metric is calculated.
How to Calculate the Average DAU and DAU Ratio
The DAU metric is most useful when measured over an extensive period of time and when compared against your total number of users.
That’s where the average DAU and DAU ratio comes in.
Here’s how to calculate that:
- To begin, establish a specific time frame for analysis.
- Next, count the number of daily active users within the specified time frame and keep a running total of those counts.
- Lastly, you divide the sum by the number of days within your timeframe.
The average DAU calculation is as follows:
|Average DAU = Sum of daily users / Total number of days|
Next, to get your DAU ratio, you’ll need to divide the average DAU by the total number of unique users for the same period — multiply it by 100, and you’ll get the percentage.
Note that a unique user is an individual who uses your app once or multiple times over that time frame.
|DAU Ratio = Average daily active users / Total number of unique users in that time frame * 100|
What DAU Looks Like in Action
Let’s look at an example of the average daily active users (DAU) for a software company over 5 days:
- Day 1: 10,000 total users, 3,000 unique users
- Day 2: 11,500 total users, 4,500 unique users
- Day 3: 12,200 total users, 6,000 unique users
- Day 4: 11,800 total users, 4,000 unique users
- Day 5: 13,000 total users, 6,500 unique users
The calculation looks like this:
- Average DAU: (10,000 + 11,500 + 12,200 + 11,800 + 13,000) / 5 = 11,700
- DAU ratio: 11,700 / (3,000 + 4,500 + 6,000 + 4,000 + 6,500) x 100 = 48.75%
A 48.75% DAU rate suggests that a significant portion of the company’s user base uses the product or platform daily.
Now, the aim of the company should be to ensure that this level of engagement remains consistent and grows over time. For that it could work on improving the customer satisfaction, introduce new useful features, offer incentives, and more.
How Often Should Companies Measure the DAU?
Tracking the DAU daily is a fantastic way to catch drastic increases or decreases in user engagement. It’s like having a radar that alerts you right away.
However, if you want to grasp the whole picture and dig deeper, it’s worth considering measuring the DAU over a broader timeframe.
Think weekly, monthly, quarterly, or even annually.
A consistently declining DAU rate could mean a significant user engagement or product usage problem. In such cases, you’ll need to dig into the usage data, actively gather customer feedback, and evaluate the user experience to tackle it effectively.
For that, let’s find out what DAU figures you should aim for.
Daily Active Users: What Is a Good Benchmark?
The DAU benchmark for SaaS B2B and B2C and non-SaaS B2C companies may vary depending on how you define an active user.
For example, for social media, a TikTok user or Facebook user simply opening the application is considered active.
Similarly, Google Chrome activity can be measured in terms of time spent on a page, downloads, pageviews, etc.
For a B2B SaaS company, this could involve utilizing particular product features or tools, such as task management, invoicing, sales monitoring, or providing specific personal information.
Keeping that in mind, here are some indicators of a high versus a low DAU ratio:
- High DAU ratio: A high DAU ratio ranges between 10-13% for SaaS B2B and B2C companies and 20-50% for non-SaaS B2C companies. A high DAU ratio signifies customer stickiness — high product adoption and user engagement.
- Low DAU ratio: A low DAU ratio (usually below 5%) could signify poor user experience, lack of compelling content or features, or intense competition from similar platforms.
Looking to improve the DAU rate?
Here are some hot tips.
How to Improve Daily Active User Rate
Here are some tried and tested methods to improve your DAU rate:
1. Improve Customer Satisfaction
Enhancing customer satisfaction can be achieved through various approaches.
Developers can optimize the platform’s usability, functionality, and design to create a more engaging and enjoyable experience.
These changes could be based on insights derived from your DAU data. You could also consider iterating based on user feedback.
Psst… Don’t forget to share customer success stories and testimonials to showcase how your product or service has positively impacted others.
2. Offer Incentives
Incentives like discounts, rewards, or exclusive content can motivate users to use the platform or app regularly, increasing the DAU.
For example, a discount or coupon program can provide users with tangible benefits. Alternatively, a rewards program with leaderboards and social sharing features can encourage friendly competition and user collaboration.
More user engagement!
3. Personalize the Experience
Adding a personal touch can enhance an individual user’s experience, making the product more relevant to their interests and needs.
So, what’s the secret?
Marketers can leverage targeted marketing campaigns, personalized recommendations, in-app messaging, or push notifications, to name a few.
4. Increase Social Engagement
Encouraging users to share their experiences with friends and family on social media can increase engagement and drive new users to the product.
For starters, consider leveraging user-generated content (UGC) or providing opportunities for users to connect and interact with you or other users.
Additionally, you can gamify the experience by including leaderboards, badges, and challenges that allow users to engage with the platform in new ways.
5. Introduce New Features
Entice your users and keep them hooked on your product or service by adding new valuable content, improving existing features, or integrating with other products or services.
Marketers should create a buzz when launching new features by promoting them through marketing and social networking channels.
6. Implement Referral Programs
Incentivize existing users to invite friends and family to join your platform or app.
It helps foster a sense of community and belonging among users while reducing customer acquisition costs.
To sum up: The DAU can help SaaS companies increase user engagement and retention, improve monetization, and optimize their products and services. But to do this effectively, you should also track other vital KPIs (Key Performance Indicators).
Let’s explore these briefly.
6 DAU-Related Metrics to Track
Here are six other SaaS metrics that are worth tracking:
- Churn rate: The churn rate is a vital DAU related metric that measures the percentage of customers who stop using a company’s products or services during a given time. A high churn rate can directly affect customer lifetime value (CLV) and acquisition cost (CAC).
- Monthly recurring revenue (MRR): The monthly recurring revenue (MRR) metric reflects the revenue a company can expect monthly from its existing customer base. It helps plan for growth and make informed pricing, marketing, and sales strategy decisions.
- Annual recurring revenue (ARR): ARR is like MRR — the only difference being it provides a predictable annual revenue estimation. It’s an essential metric for businesses seeking funding, providing a snapshot of the total revenue a business can expect to generate from its existing customer base.
- Customer acquisition cost (CAC): CAC helps you understand how much it costs to acquire a new customer. As a result, you can determine whether your sales and marketing efforts yield a positive return on investment (ROI).
- Customer lifetime value (CLV): Businesses use the CLV metric to understand the total value each customer brings over the entire period they remain a customer. The CLV is not limited to the initial purchase but any future purchases they make and any referrals that convert.
- Net promoter score (NPS): Businesses use this DAU related metric to measure customer loyalty and satisfaction with their products or services. The net promoter score is based on a survey sent to a representative sample of customers through various channels such as email, website, or mobile app.
Have some more questions?
Daily Active Users FAQs
Here are a couple of common DAU-related questions and their answers:
1. Daily Active Users Vs. Weekly Active Users Vs. Monthly Active Users: What’s the Difference?
Let’s explore the key differences between DAU, WAU, and MAU:
- Daily Active Users (DAU): It measures the number of users who engage with a digital product or service within 24 hours. The DAU is a valuable metric for SaaS products that are used on a daily basis, such as Slack, Microsoft Teams, Facebook Messenger, WhatsApp, Time Doctor, Dropbox, etc.
- Weekly Active Users (WAU): The weekly active user rate measures the user numbers that engage with a digital product or service within seven days. It’s a helpful metric for products and services used less frequently, such as an online marketplace or fitness app.
- Monthly Active Users (MAU): It measures the number of users who engage with a digital product or service within 30 days. Products and services with a longer customer journey, such as an e-learning platform or a cloud-based software provider like Salesforce, HubSpot, etc., typically use the monthly active user rate or MAU ratio.
2. What Are the Common Mistakes When Tracking the Daily Active User Metric?
Here are some common mistakes that companies make when tracking the DAU average or ratio:
- Not defining DAU clearly: If the definition of DAU isn’t standardized across the company, it can lead to inconsistent data, making it difficult to draw accurate conclusions.
You could also have an inflated DAU ratio if you don’t have a way of filtering out duplicates.
- Overlooking user churn: While increasing the DAU is essential, watch out for user churn.
A high user churn may signify that users need help finding value in your product or service or that there are issues with the user experience.
- Ignoring behavior and engagement patterns: Consider how users engage with your product or service when tracking and measuring the DAU.
Ignoring this information may result in you failing to identify vital insights, which may negatively impact the success of your product or service.
DAU: A Key Metric for Measuring User Engagement and Retention
The DAU is essential for assessing your product’s stickiness and determining whether users find it valuable.
But your DAU definition and DAU calculation must be accurate to do that. Additionally, you’ll need to track other key metrics to get the complete picture.
This detailed guide will help you with everything, including helpful tips on improving the DAU.
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