DAU (daily active users) is a metric that you should pay attention to if you have a subscription-based business model. If your DAU is high, it’s usually a good sign because it means that your customers are using your product regularly and that more customers are signing up. However, if the number of daily active users starts to decline, it could be an indicator that customer churn is about to happen.
What are daily active users (DAU)?
The daily active user metric lets you know how many people log in and use your product daily – with one unique user counting as an “active user”. This metric can give you some valuable insights into the number of people who find your product or service users on a day-to-day basis.
You might hear some people say that “active users” is just a vanity metric, but almost every single SaaS company out there uses this figure to measure their performance – alongside other similar metrics like weekly active users (WAU) and monthly active users (MAU).
Organizations often rely on more specific actions, like completing a task or creating a report, as their definition for DAU rather than just logging into the platform. This is because simply logging in may not be considered a defined action.
Why is it important to measure DAU?
Measuring DAU (daily active users) is a critical way to gauge product success. Essentially, it asks the question: Are your customers using your product? This metric is important because, during the R&D and planning period of creating a product, you likely aren’t inviting outside users to come in and test to see if it works for an everyday individual. Once the product is up and running and your team is happy with that iteration, you hope that customers will not only purchase the product but also use it daily. By tracking DAU, you can get a sense of how well your product is performing and make necessary changes if usage rates are low.
When thinking about how your customers are using your product, it’s important to keep in mind that you need to measure daily active users to get an accurate understanding. You may have an idea of what you think they should be doing, but until you measure and analyze the data, you won’t be able to tell for sure how your product is being used.
This is especially important for SaaS brands, who need to uncover areas for improvement and spot when and where churn is about to happen. By doing this, you’ll be able to reveal hurdles, drop-off points, and features in your product that may not be necessary or too complicated.
Other SaaS companies also charge according to the number of active users, which not only allows them to gauge whether the product is being used but also to price it according to the size of the company.
The aim of every SaaS business should be to create a valuable product that provides a solution, leading to a strong and sustainable user base.
How to calculate daily active users?
Before you can calculate your DAU, you need to establish who qualifies as an active user by setting your own specific set of credentials. Additionally, you need to define what a user is about your platform. For most SaaS companies, a user is considered a unique visitor who has logged into the platform – whether that be the desktop or mobile app version. However, because different platforms serve different purposes, the actions associated with being an active user will vary. For example, on an email marketing platform, creating an email might count as being an active user while on a business insights platform, pulling a report and creating a visualization might be the action that designates a user as being active.
There are two ways to calculate daily active users – using the total number of unique users or the total number of new and returning users.
DAILY ACTIVE USERS FORMULA:
[Unique new users] + [unique returning users] = total DAU
Within DAU, there are new users and returning users—together, they equal the total DAU. They both separately allow a window for the product team to look into and measure how fast the platform is attracting new users and keep them coming back. Now, this can be different depending on the functionality of the platform and the access that is granted to users.
UNIQUE NEW USERS FORMULA:
[Total number of new user signups] – [total number of churned users] = Unique New Users
This formula helps product teams measure how successful they are in acquiring new users and keeping them engaged in the platform.
You can use different analytics tools to see how many daily active users you have. If you only have monthly traffic or usage data, you can divide the total number of unique visitors by the number of days in the month. For example, if you have 2,600 unique monthly sessions in April, divide that by 30 to get around 87 active users.
How to increase daily active users
There are a few key ways you can increase daily active users for your product. These include:
– Focusing on key areas of improvement for your product
– Make sure your product is constantly being updated with new and relevant features
– Conducting user research to ensure that your product is meeting the needs of its users
– Working with other teams within the organization to promote your product