Why Daily Active Users Matter and How to Boost User Engagement

We can all agree that Daily Active Users is a “hot” metric, especially for apps and SaaS companies. Executives, investors, and analysts love to keep a close eye on DAU because it shows the growth potential and indicates the stickiness of your product or service.

A fast-growing number of DAUs is an almost certain promise for revenue. A sustainable base of active users is the bread and butter for new and rapidly growing businesses.

Nevertheless, you need to keep a cool head because fast-growing high DAUs can easily turn into a misleading vanity metric if looked at in an isolated manner. DAU as a core metric is most valuable in correlation with other parameters. Read on to find out how to track Daily Active Users effectively and what the numbers will tell you.

Why tracking daily active users is a must

What can you learn from daily active users about your app?

The DAU functions as an indicator of product health in apps. Apps are intended for frequent use, and you want to make sure that’s happening. Communication apps, music apps, traffic apps, management apps make everyday activities simpler, and people sign in several times a day. Some apps, such as personal finance apps, are useful a few times a week, whereas others, such as travel booking apps, are handy only a few times throughout the year.

Whatever the nature of your app, a steadily increasing number of daily active users is a sign that the product is ‘working’, and therefore is healthy. If the number is stagnant or decreasing, something is missing.

DAUs can provide valuable information about how users interact with your app, depending on the type of activity you chose to track. It can help you understand which activities your users prefer, which features are popular, and if your copy resonates well with users.

How is daily active users different from other engagement metrics?

For your eCommerce or travel business, you also run a website to attract new visitors, so you want to monitor the active users there as well. Here, the number is significant for your marketing. The DAU tells you how many visitors are checking your products, meaning it reflects the number of potential customers.

Make sure to monitor and analyze in conjunction with other metrics. DAU can provide the basis for a variety of analytics tasks, and you need to use it as such. Refer to your DAU as a basis or a starting point, not the whole thing.

Important corresponding metrics to Daily Active Users are Weekly Active Users (WAU), Monthly Active Users (MAU), purchases, downloads, returning users (= retention), content read, songs listened to, meetings held, or whatever your app or website offers.

How do you calculate daily active users?

Start by defining the terms ‘user’ and ‘active’ for your site or app. An app-user is typically any unique user who logged in and carried out an action. For a website, you’d count unique visitors who took at least one action or a series of actions. This is in contrast to total visits, which represents the sum of all visits to your site.

Next up, you need to define what constitutes as an action on your site or app. This is a bit more tricky. The truth is, it’s entirely up to you. An action can be any step your users take, whether they sign in, download, send a message, create a file, access content, share media, or enter a search. Your definition of an action that turns a user into an ‘active user’ depends on your business model and goals.

Dividing your DAUs into new and returning users can be a good idea. Both tell a different story. New users give you a glimpse at how well your platform attracts fresh users, whereas returning users show you how effectively your app retains users.

Typically, marketers will look at the average weekly or monthly DAU, rather than the actual number on a given day.

On the Similarweb platform, you can view your average Daily Active Users according to the period you choose and the country you’re interested in. Also, you can benchmark your performance by comparing DAUs against up to four competitor sites or apps.

For example, social media users tend to interact more frequently on the weekend than during the week. An average number – which represents regular days, weekends, and holidays – is more indicative and provides a more accurate basis for analysis.

How do you define an active user?

Let’s dive into the definition of ‘active’ for your site or app. Is signing-in sufficient? Does reading one piece of content qualify a user as being active? Or does a user have to engage by liking, commenting, sharing, or downloading to be considered active?

The definition is unique to each business. It depends on the purpose of your app and the user actions that are most valuable to your business. There are two main things to keep in mind.

1. The action needs to relate to what you are trying to accomplish with your app or site. Let’s say your app offers vacation home rentals around the world. Someone who frequently reads reviews of popular locations has little value to your business. Entering a search query with specific parameters (such as townhome rentals near me or rental home in las vegas), comparing prices, or looking for coupon codes signifies serious intention and could be considered an action.

Remember, an active user may not always be an engaged user. If engagement isn’t contributing to retention, it may not be relevant.

2. This one can cause serious confusion and mess up your analysis. You need to keep the definition consistent across the board. Make sure everyone on the team and every stakeholder knows what an active user means and what it doesn’t. Also, when benchmarking against the competition, bear in mind that each company has its unique definition.

Some examples of actions and where they’re relevant:

• • On social media platforms, any form of engagement counts as an action: likes, shares, comments, tweets, and tags.
  • For online publications, a simple login or page view may constitute an action. Saving or sharing a story shows the content is valuable to the reader.
  • Entertainment apps, such as gaming or music streaming apps, may consider creating an account as an action, but playing a game or listening to a song and sharing with friends should follow in the cohort analysis.
  • SaaS applications. There are tons of activities on SaaS apps and the steps to consider are very different, such as creating a demo account, adding a task, uploading a document, sharing content, creating a meeting, inviting a member, etc.
  • Navigation, restaurant, and travel apps would define a search query, an order entry, or a call to a vendor as an action.

What additional metrics measure usage?

Tracking DAU is useful but doesn’t provide enough valuable information to back up decision-making. To get a better picture, you should measure DAUs in conjunction with other metrics.

1) Websites

– Visits
Compare single visits to active users to get an idea of how frequently they visit.

– Unique Visitors
Track how many different visitors you get and how many of them are active.

– Pages / Visit
See how many pages a user visits in one session in order to understand the scope of their activity.

– Bounce Rate
Evaluate your bounce rate relative to your DAUs to make sure that you are attracting the right crowd and that your content is engaging.

2) Apps

– Weekly Active Users (WAU)
The total number of active users in one week. Comparing DAU and WAU lets you assess how many of your weekly active users engage on a daily basis.

– Monthly Active Users (MAU)
The total number of active users in one month. Discover how many of your monthly active users (including on iOS) get involved daily. Understand how ‘sticky’ your product is.

– Usage patterns
Investigate the time of day users are most active, the length of time they are active, and the way they navigate through your apps.

What is a good DAU/MAU ratio?

Calculating your DAU/MAU ratio is an excellent method to evaluate the stickiness or ability to encourage visitors to stay longer. The rate shows the portion of monthly active users who are active in a single-day window.

Whether or not your ratio is good depends on the type of app you are running. If your app is designed for daily use, then you want to see a high percentage to indicate frequent return use. A retail app for electric appliances, in comparison, is useful perhaps only several times a year, and therefore the percentage will be much lower.

According to Andrew Chen, anything over 20% is considered good. Facebook has around 50% DAU/MAU. Music streaming and news apps are also on the higher end of the scale. Apps for navigation, photo & video, banking, books, or health show a medium level percentage. On the low end, we see retail, food, education, and travel.

Another factor to take into consideration is the value of an action. Many less frequently used apps generate a high value from a single interaction, whereas activities on daily used apps generate low value.

6 Tips to increase your website or app user engagement

1. Make your website or app fast and easy to navigate.
2. Leverage micro-copy and UX writing to convey your message.
3. Engage users throughout the customer journey.
4. Gradually expose new product lines or product features based on your users’ app usage.
5. Offer multiple ways to engage with customers (such as text, video, podcasts, social, etc.).
6. Collect customer feedback/behavior directly on your website or app through tools such as heatmaps or live chat.

Where can you see your active users?

On the Similarweb platform, you will find your Daily Active Users under App Analysis. Access Usage and Downloads, followed by Engagement. The Daily Active Users tab shows a numerical value, which reflects your average Daily Active Users over the last 30 days.

An additional metric to pay attention to on the Similarweb platform is Time Per User. It shows the daily time spent in the app per user (on average). How is this different from DAU? DAU counts the Daily Active Users (a numeric figure), whereas Time Per User lets you understand how much time people spend on the app.

Two more interesting metrics are Install Penetration, which shows the percentage of users in the specific market who currently have the app installed on their phones. and Usage Penetration, which displays the percentage of users in the specific market that opened the app.

How can you track, monitor, and increase your DAUs with Similarweb?

Unlike other tools, with which you can track your DAUs, Similarweb lets you compare to competing sites, as well as the category at large. Not only can you monitor your own numbers, but also the numbers of similar sites and apps and weigh them against each other. Then, you’ll want to create periodic reports to export and share internally.

Discover where your engagement is lower than your competitors and use that as a basis for competitive analysis. Find the sites and apps with the highest activity and learn from them how to increase your DAU. The data you receive from Similarweb helps you improve your stats and rise above the competition.

Ready to get started? Want to learn more about measuring your user engagement? Let our team show you how it’s done.

This blog post was written in collaboration with Ruth M. Trucks.

FAQ

Why should I care about Daily Active Users (DAU)?

Daily active users indicate the overall health of apps and SaaS companies. It shows the growth potential and stickiness of your product or service.

What defines a DAU?

A daily active user is any unique user who logged in and carried out an action.

What should my average DAU be?

Measure your daily active users in conjunction with Monthly Actives Users (MAU). Any DAU/MAU ratio ver 20% is considered good.

How can I see my DAU on Similarweb?

Find your daily active users under App Analysis. Access Usage and Downloads, followed by Engagement. The Daily Active Users tab shows a numerical value, which reflects your average Daily Active Users over the last 30 days.