If your app has a subscription model, you need to track key metrics to understand user engagement, growth potential and churn. These metrics should also be part of any product or marketing teams' KPIs — Daily Active Users (DAU) and Monthly Active Users (MAU). But how are they used differently? Which one is more important? And why should you be reporting on both?

What is considered an active user for mobile apps?

We need to begin by making clear what an ‘active user’ is in the first place. In the world of mobile, the term relates to a user that has accessed an app within a given period. Each user that performs this action is counted as a unique data point, giving developers or product teams a precise count for how many people are engaged with their app.

Daily Active Users (DAU) definition

To put it simply, DAU is a measurement of your total number of active users in a day. It is a key component for tracking how engaged your users are with your app, and how much use they find in it.

Used on its own, Daily Active Users is not that valuable to track performance, and can easily fall into the waters of being a vanity metric. To ensure you’re getting the full picture of user engagement you need to use it alongside Monthly Active Users and Cohort Analysis.

Calculating DAU

Take the total amount of unique visitors who logged in or entered your app on a given day. Most analytics software will provide this metric for you to just export without doing any manual calculation.

However, if this is for some reason, not the case and you want to work out daily active users from monthly active users, for example, all you need to do is:

Why Daily Active Users is important to track app usage

It shows fluxes between days

Tracking DAU can play an important part in analyzing the impact of product development — when, for example, a new feature is released and the Product Manager wants to see how it impacts usage and retention from the moments after its release — in other words, the product’s stickiness.

It helps identify when users are on the app

As a result, you'll have a better idea of why people are using it. For example, a card delivery app may see spikes in daily usage around particular days of celebration, while social apps will see daily usage at a high level every day. This enables marketing teams to understand the behaviour of their ideal customers — when and how to target them.

Provides clarity on assumptions about user behaviour

When a company is still figuring out its audiences’ behaviors, there may be a lot of assumptions and guessing on what it could be like, but you’ll never know for sure until you measure and analyze app usage — DAU is one such measurement that’ll help prove or disprove an assumption.

How to interpret changes in Daily Active Users

A significant rise in DAU

This may be a sign that your app is going through ‘growth’ and developing a level of stickiness for users. However, keep in mind that spikes in usage could be due to temporary events (like PR coverage) and then fizzling out quickly. A continuous rise in your DAU is confirmation that your app is growing. But look at other metrics to ensure you aren’t being misled.

When DAU is falling day after day

A possible indication that you have a churn problem. Users have stopped using your app and are not coming back. What’s the remedy? Ensure that you’re offering a sufficient customer experience throughout the user journey & implement a retention strategy. Start by improving how you speak to your users — being more effective in solving their issues and getting back to them on their channels of choice.

Monthly Active Users (MAU) definition

This is the measurement of your total number of active users in a 30-day period.

It gives you the larger picture of trends in engagement and is crucial when you want to see the impact of certain events like marketing campaigns. The measurement is also a key KPI when tracking performance, growth, and changes in user acquisition.

The best thing to do is to analyze it alongside retention rates to find the customer lifetime value — which is the most actionable and valuable metric for any report on growth. However, MAU is still important as a standalone metric because it gives a good picture of how you're acquiring or churning users.

The teachings MAU provides a mobile app business

Monthly Active Users is what a lot of investors look at when they want to see the performance of a company with a mobile app at its core. But beyond that, MAU helps you spot:

The impact of marketing

Let’s say you’ve just launched a new user acquisition focused campaign for your mobile app to bring in new users. The campaign runs for a few months and you need to track how successful it has been during and shortly after that period in achieving your goals. By MAU, a rise in the active user rate month after month will show that your campaign has had an impact on user acquisition. If your MAU stays flat over those months, your campaign has failed to make any progress.

User Retention rate

The MAU of your app is important to track app retention as it shows your active users across a period. When put against the DAU as a ratio, you can see the proportion of those monthly active users who come onto your app daily — and are thus ‘retained’. This is something that product managers and investors also look at when analyzing a product’s stickiness.

Growth potential

As mentioned previously, MAU is a metric favoured by investors when undertaking their due diligence of a company’s performance. This is because a continuous rise of MAU that’s greater than the churn rate over several months is evidence that the company is growing and has the potential to get even bigger — making it investable.

What does changes to Monthly Active User mean?

Many factors can impact your MAU numbers. It all depends on whether you’re keeping, losing, or re-engaging your users.

When your user acquisition is higher than your churn, you will see a positive change to your MAU number — indicating growth.

On the other hand, when your churn is higher than your user acquisition, you will see your MAU numbers drop. This may indicate a lack of stickiness of your product, poor customer experience, or low user loyalty. If you see this in your results, it’s an alarm bell going off and requires immediate attention.

Conclusion on MAU & DAU

Both Monthly Active Users and Daily Active Users are equally important for a business analyzing its user engagement strategy. They show things from a different angle and are useful when you’re trying to figure out different behaviours or influences.

What’s more, neither of these numbers should be used on their own. By doing so, you’re ignoring their limitations and potential to warp the reality of your business’ performance.This is why it’s advised to report on the DAU/MAU ratio, customer cohorts, ARPU, and the CLTV to get an accurate picture of your app’s performance.

What’s more, this breadth of quantitative data is useful to keep track of trends, patterns and changes to your growth numbers, but it won't uncover the reasons for why anything is happening. You need qualitative data for that — and you can gain this type of data by analyzing user sentiment in feedback & reviews.

Find out why customer sentiment analysis is important here