Wondering what powers your SaaS business’s growth engine?
It’s the number of customers that actively engage with your platform every month.
And this is where you’ll need the Monthly Active Users (MAU) metric.
In this article, we’ll introduce the MAU metric and discuss how to calculate it. We’ll also explain why it’s important for your SaaS business along with an example, explore its limitations, and provide a few tips to improve this metric.
Further Reading
- Think customers totally dig your product? Track the effectiveness of your referral program using these SaaS Referral Metrics.
- Want to maintain a healthy profit margin? Then you better start tracking your CAC Payback.
- Learn all about CMRR in SaaS to get an accurate projection of your recurring revenue.
This Article Contains
- What Is the Monthly Active Users Metric?
- How to Calculate the Number of Monthly Active Users?
- Is There a Benchmark for the MAU Metric?
- Why Is MAU Important for Your SaaS Business?
- An Example of Effective Use of the MAU Metric
- 2 Limitations of the MAU Metric
- 4 Effective Tips to Help Improve Your Company’s MAU Count
Let’s hit the road!
What Is the Monthly Active Users Metric?
MAU is a Key Performance Indicator (KPI) that measures the number of unique users who interact with your SaaS product over a 30-day period.
It, along with its sister metrics, Daily Active Users (DAU) and Weekly Active Users (WAU), provides an insight into how your SaaS product is received by its users.
What’s an interaction?
How you define “interaction” here depends on your platform and its growth stage.
For example, a social media platform can qualify likes and shares as an “interaction”. However, a project management tool may consider task creation as an interaction.
Let’s look at what kind of companies can benefit from counting their monthly active users.
Which Companies Need to Track Their MAU Count?
MAU is a useful metric for all SaaS businesses and social media companies as it indicates how much value users find in your product.
Young SaaS startups should, however, not place too much emphasis on MAU as it can get inflated due to the initial promotional push.
It’s especially valuable for businesses that have already established themselves and are looking to improve their value proposition and bottom line.
Now, let’s get to the calculations!
How to Calculate the Number of Monthly Active Users?
Before picking up your abacus, ensure you know what to count!
1. Define Active Users
It’s highly important that you correctly define “active user” or “unique visitor” and other related terms for your business, keeping in mind its nature and growth stage.
For example, a mockup tool may define a user as “active” if they use its designing and simulation tools at least once in a given month.
But why obsess over the definition?
A loosely or ill-defined “active user” can result in inflated values of MAU, which will further paint an incorrect picture of your business’s health.
For example, if that same mockup company counted a customer who only used the designing features (and not the simulation ones) as a monthly active user, it would overestimate the MAU figure.
2. Add the Active Unique Users
Coming up next is the formula to calculate the total number of monthly active users for your product.
Formula:
| MAU = Total Number of Active User Accounts – Number of Duplicate and Spam Accounts |
Here, the number of accounts is counted over a period of one month.
Pro tip: Since you can have hundreds of active users, it is best to employ an analytics software tool such as Google Analytics or Mixpanel to add them up for a 30-day time period.
But how often should you track this?
How Often Should You Track the MAU Metric?
Given that it has monthly in its name, you should ideally track MAU every month.
This lets you make month-on-month comparisons of user activity. If you notice dips, you can quickly take action to course-correct. This is also especially useful when you make large-scale changes to your product. By measuring your MAUs, you can determine if the changes have been positive or need to be reversed.
Is There a Benchmark for the MAU Metric?
The MAU metric directly depends on your SaaS company’s size, type, and current growth stage.
This implies that instead of looking for industry-wide standards, you should compare it with that of companies of comparable size and type.
However, using the MAU metric along with another useful metric – Daily Active Users (DAU), lets you calculate the DAU/MAU ratio, which serves as an important SaaS benchmark:
Supplement Your MAU Results with the DAU-MAU Ratio
The DAU/MAU ratio is given as:
| DAU / MAU = (Number of Daily Active Users / Number of Monthly Active Users )* 100 |
The DAU/MAU metric measures your SaaS product’s stickiness by providing the percentage of users who interact with it daily against the MAU number.
Hold on…
What’s product stickiness?
Stickiness is defined as a product’s ability to engage and provide value to customers, prompting them to keep using it.
For example, If you have 1000 monthly users with a daily active user count of 600, your product’s stickiness rate would be 60%.
Okay, back to DAU and MAU:
Why calculate the DAU/MAU ratio?
DAU/MAU acts as a more credible indicator of user engagement than just MAU by letting you know how many of your customers return to use the app daily.
The average DAU/MAU metric benchmark for SaaS B2B and B2C apps is 13%.
So if your DAU/MAU ratio exceeds this, you’re doing great!
If not, consider adding more in-app nudges and simplifying product usage to keep your users coming back day after day!
Now let’s understand why knowing your numbers does you good:
Why Is MAU Important for Your SaaS Business?
Here are a few key reasons that make MAU a useful metric for your business:
- Acts as a User Engagement Indicator: The MAU figure helps you estimate user engagement. A high MAU count implies that customers are finding value in the services provided and hints at a healthy retention rate and Net Promoter Score.
- Helps Gain Insight into Other Metrics: You can approximate other important metrics through MAU, such as customer retention, monthly recurring revenue, and churn rates. For example, if the number of new users of your mobile app has increased, but MAU remained the same, it could be that the retention rate has taken a hit.
- Helpful for a Product-Led Growth (PLG) Strategy: A PLG strategy aims at helping new users discover the value in your SaaS product themselves instead of being influenced by the efforts of marketers and salespersons.
This makes user engagement critical, as that’s the driving force behind conversions. Here again, the MAU metric will act as a good indicator of how well your PLG strategy is doing because it accurately reflects engagement.
And as we all know, more engagement = more satisfaction!
Let’s better understand the importance of MAU through an example here.
An Example of Effective Use of the MAU Metric
Your company offers a free mobile time tracking tool that a user can upgrade to advanced paid plans. You observed a decline in the MAU count from 80,000 users in February to 78,000 in March.
In response, you worked on adding new features to the app and making the grievance resolution system more efficient. This was reflected in the MAU count in April as the number of active users rose to 79,500.
Now, let’s talk about the roadblocks in our journey!
2 Limitations of the MAU Metric
Even though MAU can help you predict user retention and churn rates, there are some areas where it falls short.
Let’s get to them.
1. Lack of a Consistent, Industry-Wide Definition
No universal standards define what “active users”, “interaction”, and other related terms exactly mean in the SaaS context. This can cause misleading results if you use the metric to compare your SaaS business with others.
For example, two companies that offer an employee productivity management solution may define their “active” users differently.
Company A may consider someone who just uses its basic time tracking feature as a monthly active user, whereas company B may require them to use its geofenced time tracking feature as well.
This will lead to company A having a relatively higher MAU count, making its comparison with company B irrelevant.
2. Not a Good Indicator of User Quality
Although MAU lets you know how many users interact with your SaaS product as a whole, it doesn’t go beyond that. This keeps you from knowing how much they use that feature or who’s a better fit for upselling or cross-selling.
For example, a video editing software company may have two active users who remain logged into its app for an equal period of time. However, one uses the basic features while the other uses it for professional editing.
MAU will treat both of them equally if logging in is seen as “interaction”, and you won’t know the difference in the app usage quality of the two. This becomes a problem when you want to prioritize sectors of your user base for further marketing and sales activities.
Additionally, in case you have referral systems in place, you need to reach out to power users on a priority basis as they’re the most likely to recommend you to their network. Your MAU metric won’t help you identify who these users are.
Let’s see if we can get you better mileage here! ⛽
4 Effective Tips to Help Improve Your Company’s MAU Count
Tracking your monthly active users is important, but what’s more crucial for your SaaS business’ growth is to improve this metric.
Here are some tips that can help you increase the number of monthly users for your product.
1. Keep Your Communication Personalized
You can send a personalized push notification, in-app message, or email instead of generic promotional communication to increase app usage among your user base.
Remember, you’re dealing with a real human user base here, not homogeneous robots, and your company’s revenue directly depends on how valued its customers feel.
This can be done by dividing your user base into cohorts (groups of customers) guided by behavioral analytics.
You can define the cohorts by user preferences, language, region, and behavior. You can then tailor your communications and social media marketing efforts to the targeted group.
2. Deep Link the Interaction Points
Your customers may stay away from your products if they cannot directly access the intended features mentioned in the advertising or promotional message.
For example, sending an email notification about a new feature in your app without providing a direct link to access it may decrease the app usage.
That’s why it’s important to streamline your app’s user experience and make your most valued features front-and-center.
3. Focus on Re-Engaging the Existing Users
It’s possible that some existing users may not find the value in your product that they initially did due to a change in requirements or preferences.
This naturally results in a drop in your MAUs.
So what can you do?
Conduct a thorough analysis of changing customer needs and your product’s performance to keep the number of lapsed users low.
For example, you can conduct user surveys to understand users’ needs and requirements.
Addressing this can usually help you attract lapsed users back and boost user retention, keeping your monthly recurring revenue secure.
But wait.
When it comes to adding new features, you need to be careful.
You must effectively and timely communicate the introduction of new features, either through a push notification, personalized message, or social media marketing.
Why?
Because introducing new features is useless if your customers don’t know about them!
4. Fix Bugs and Maintain the App’s Performance
A sluggish or malfunctioning app can be the perfect revenue assassin by reducing customer engagement and the MAU count.
According to a study, 70% of users uninstall a mobile app that takes relatively longer to load.
Employ frequent testing to keep your SaaS app bug-free and obtain user feedback about its performance.
Get Your SaaS Business in the Top Gear with the MAU Metric
The MAU metric helps you gain insight into how sticky your product is and how valuable your customers find it.
However, remember that the MAU metric on its own won’t tell you much.
Pair it with the rest of your SaaS metrics, such as daily active users, weekly active users, and activation rate, to get an accurate reflection of how you’re doing.
Once you do that, you’ll be cruising smoothly toward growth and profitability.
