A product without users is a failure, and to be successful, companies need all the users they can get. With the evolution of web-based products, what qualifies as a user has changed dramatically.
Leveraging user data is key when evaluating the success of a product launch or update. Tracking active users shines a light on other metrics such as retention and conversion rates, and understanding your users' tendencies when using your product can lead to revolutionary insights.
Monitoring daily active users (DAU) and monthly active users (MAU) is the first step toward understanding other KPIs, and we'll dive into how DAU and MAU can affect your business.
Defining active users is the first step in the process of tracking DAU and MAU. Of course, anyone can define an active user, but not every company identifies them the same way due to product differences. For example, Netflix will not define its active users the same way as Toucan does.
Let's take Toucan as an example. An active user throughout our product lifecycle could be:
Because each company is in different stages of the product lifecycle, measuring active users in one or a few standard units of time is essential. For example, for an analytics firm, MAU may be more important to see how many users are starting to adopt a product. On the other hand, for a mobile game app, DAU may be more beneficial to emphasize due to the volatile usage of mobile applications.
We've already mentioned that active users influence other KPIs, but how exactly does that happen? Here are some ways that active users affect other areas of your product:
Using an analytics tool like Toucan to monitor the number of active users is the most effective way to understand the product performance and decrease churn. Your DAU and MAU metrics must update in real time, especially when tracking DAU, to get an accurate daily reading of your users' interaction with your product.
Modern analytics solutions can segment and track groups of active users with various definitions, giving a business insight into which groups of users are finding their product most valuable. Every improvement in a product stems from understanding how users are interacting with it, and modern analytics can help expedite that process.