DAILY ACTIVE USERS (DAU)

Daily Active Users (DAU): A Crucial Metric for Measuring Product Success

What are daily active users (DAU)?

The daily active user (DAU) metric provides insights into the number of people who actively use your product on a daily basis. It represents the unique users who log in and engage with your product, making it a valuable indicator of user engagement.

While some may consider "active users" as a mere vanity metric, almost every SaaS company relies on this metric, along with related metrics like weekly active users (WAU) and monthly active users (MAU), to evaluate their performance.

To ensure a more comprehensive definition, many organizations define DAU based on specific user actions, such as completing tasks or generating reports, rather than simply logging into the platform.

Why is it important to measure DAU?

Measuring DAU plays a critical role in evaluating the success of your product. It answers the fundamental question: Are your customers actively using your product? During the development and planning stages, it is challenging to gauge product usability for everyday users. Once your product is operational, you want customers not only to purchase it but also to use it regularly. Monitoring DAU helps you assess your product's performance and identify areas for improvement if usage rates are low.

To truly understand how customers use your product, it is essential to measure daily active users. While you may have assumptions about user behavior, data analysis is necessary to gain accurate insights into their actual usage patterns.

This aspect is particularly crucial for SaaS brands aiming to pinpoint areas for improvement and predict potential churn. By analyzing DAU, you can identify obstacles, drop-off points, and unnecessary or overly complex product features.

Moreover, many SaaS companies charge based on the number of active users, allowing them to estimate product usage and price it accordingly, depending on the company's size.

Ultimately, every SaaS business should strive to create a valuable product that resolves user pain points, leading to a robust and sustainable user base.

How to calculate daily active users?

To calculate DAU, you must first define the criteria for an active user specific to your platform. Additionally, you need to establish what actions define user activity on your platform. For most SaaS companies, an active user is a unique visitor who has logged into the platform, be it through the desktop or mobile app. However, as different platforms serve different purposes, the actions considered as user activity may vary. For example, creating an email on an email marketing platform might count as user activity, while generating reports and visualizations might be the key actions on a business insights platform.

There are two methods to calculate DAU – 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, new users and returning users provide separate insights into how quickly the platform attracts new users and retains them. The specific functionality of the platform and user access can influence these numbers.

Unique New Users Formula:

[Total number of new user signups] – [total number of churned users] = Unique New Users

This formula helps product teams measure their success in acquiring new users and maintaining their engagement with the platform.

Various analytics tools can track the number of daily active users. If you only have monthly traffic or usage data, divide the total number of unique visitors by the number of days in the month to estimate DAU. For instance, if you have 2,600 unique monthly sessions in April, dividing it by 30 gives you an approximate count of 87 active users.

How to increase daily active users

To increase daily active users for your product, consider implementing the following strategies:

• Focus on areas that require improvement to enhance your product's overall user experience.
• Continuously update your product with new and relevant features to keep users engaged and interested.
• Conduct user research to gain a deep understanding of your target audience's needs and ensure your product meets their requirements.
• Collaborate with other teams within your organization to promote your product effectively and maximize its reach.

Incorporating DAU metrics into your business strategy can provide you with significant insights into your product's success, user engagement rates, and areas for improvement. By understanding and actively managing your DAU, you can drive the growth and sustainability of your subscription-based business.