The goal of every startup is to get users to keep coming back for more. This is a sign of your “stickiness” – or how frequently users engage with your product.
While you could try measuring this by looking at your Daily Active Users (DAU) or Monthly Active Users (MAU), a better method may be instead to consider the relationship between these two metrics: your DAU/MAU Ratio.
In this article, we’ll explore what the DAU/MAU Ratio is, what you can use it for, and whether it is right for you.
DAU is a measure of how many unique active users you have in a single day. Meanwhile, MAU is a measure of how many unique active users you have in a single month. Therefore, by taking the ratio between these two metrics, you can find the proportion of monthly active users who use your app daily.
The DAU/MAU Ratio is expressed as a percentage of MAU. If your product is meant to be used just a few times a week, you can replace DAU with WAU (Weekly Active Users) instead. The goal being to track stickiness.
Finding your DAU/MAU Ratio is straightforward. All you have to do is divide your DAU by your MAU, then multiply the result by 100 to get a percentage. Here is that formula:
(DAU ÷ MAU) x 100 = DAU/MAU Ratio
So, for instance, if you have a DAU of 1,000 users and an MAU of 10,000 users. This would give you a DAU/MAU Ratio of 10%:
(1,000 ÷ 10,000) x 100 = 10%
Of course, calculating this number requires you to already have your DAU and MAU metrics on hand. In case you don’t, here’s a quick reminder on how to get those.
DAU refers to the total number of unique users who visit and interact with your website or application within a given day. This means they not only open or log in to your product, but engage with it in some meaningful way. Here’s a basic formula for determining DAU:
Unique New Users + Unique Returning Users = Total DAU
In this formula, new users refers to any person who has not previously used your product before, while returning users refers to those people who have previously used your product. Keep in mind that both of these are unique, meaning that if a person comes back and uses a feature multiple times throughout a day, they will still only count once.
Like DAU, MAU is a measurement of the number of unique users who visit and engage with your website or app in some way. The only difference is that MAU measures them across a 30-day period.
And also like DAU, it can be helpful to break users down into those who are new and those who are returning. This would give you the following formula:
Unique New Users + Unique Returning Users = Total MAU
A defining characteristic of DAU and MAU – and, by extension, of the DAU/MAU Ratio – is what makes a user “active.” This can vary widely across different companies.
For some, this may be a simple action, such as opening an app or logging in. For others, it may be something more specific, such as using a certain feature or UI element. Some may have even more particular requirements, such as a series of multiple different actions a user must take. Here are how some popular companies define their “active users”:
Spotify: Listened to a song or podcast
Instacart: Placed an order
Airbnb: Booked a house
Medium: Read an article
Ultimately, deciding on what action or actions a user must perform in order to count will depend on several factors, such as your product or service, the different ways users can interact with it, and, most importantly, the goals of your company. After all, the point of measuring DAU and MAU is to define a metric you can use to increase product usage, improve user retention, and grow your company. Because of this, it is essential for you to define it using an action that directly impacts your success.
Calculating your DAU/MAU Ratio is so useful because it allows you to see how well your product is retaining users. This, in turn, tells you how much they value it.
By themselves, DAU and MAU can give you a good snapshot of user activity. Measured and tracked over time, they can even help you identify helpful growth patterns. However, in order to see how frequently users are returning to engage with your product, you need to use the DAU/MAU Ratio.
What’s more, if you are able to break users into unique cohorts based on their activity (e.g., users who use one feature versus another), then you can gain important insights into how well different aspects of your product or service are engaging users. This will help you build an even more strategic roadmap for improving user retention.
So what is a good DAU/MAU ratio to aim for? Obviously, the closer you are to 100%, the better. In reality, any company that can achieve a DAU/MAU ratio of 25% or more (meaning 1 out of every 4 users returns) is considered exceptional. But even this number is highly dependent on your particular industry, product type, and the way you are defining “active.”
Let’s consider industry and product type first. Some products are naturally inclined to have a higher rate of retention than others. For example, users are likely to use a weather app daily or weekly to check on the forecast, whereas they are less likely to use an ecommerce website as frequently to purchase clothing.
But what are some good benchmarks for your DAU/MAU? Based on a comprehensive report from Mixpanel, here are the median ratios for the following four industries:
There is also the question of how “active” is defined – which can become extremely important when trying to compare the DAU/MAU Ratios of two companies.
Companies with a more permissible definition of activity, such as simply opening an app or using a prominent feature, will likely have a higher DAU/MAU Ratio than companies that use a more explicit definition, such as performing a series of actions. Even when you are careful to compare DAU/MAU Ratios of two companies within the same industry, this is why having different definitions of “active” can skew the results heavily.
While measuring DAU/MAU Ratio can be a useful tool for knowing how well you are retaining users and delivering value to them, it may not be for everyone.
Because it measures Daily Active Users against Monthly Active Users, the DAU/MAU Ratio will inherently favor apps and products that promote daily use (like our weather app example above). But what about those products, applications, and companies that are built to deliver value without daily use?
This is an important limitation of the DAU/MAU Ratio to keep in mind. While social media and communication products live and die by frequent (day-to-day, sometimes minute-to-minute) engagement, many others don’t need to be used daily to remain successful. Perhaps they have found other ways to monetize or otherwise deliver value to their users.
If this is the case, then DAU/MAU Ratio is likely not the best metric to track. Fortunately, there are plenty of other kinds of metrics you may want to measure, depending on your business model.