The Rise of DAU/MAU for Apps

DAU/MAU, the ratio of daily active users to monthly active users, is a popular metric for measuring user engagement in apps. This metric gained traction largely due to Facebook's influence, as they used it extensively to evaluate app performance on their platform. Apps with a DAU/MAU exceeding 20% are generally considered good, while those above 50% are deemed world-class.

• DAU/MAU is often used to assess the "stickiness" of an app, indicating how frequently users return to it.
• Facebook's high DAU/MAU, historically exceeding 50%, contributed to its popularity as a metric across the app industry.

Assessing Product/Market Fit with DAU/MAU

While DAU/MAU is a valuable metric, it's important to recognize its limitations. It's not always a reliable indicator of product success, particularly for apps with less frequent usage patterns.

• DAU/MAU is most effective for consumer and bottoms-up SaaS apps, especially those with daily usage, like messaging and social platforms.
• However, it might not be appropriate for apps with episodic usage, where interactions are infrequent but high-value.

Beyond Daily Usage: High-Value, Low-Frequency Apps

Numerous successful apps, including those in the ride-hailing, travel, and professional networking sectors, don't rely on daily usage. These apps thrive on the value generated by each interaction, even if it's infrequent.

• Uber's most profitable rides are often for special occasions or business travel, not daily commutes, resulting in a lower DAU/MAU.
• LinkedIn, with its episodic usage patterns, generates valuable data that supports the growth of vertical SaaS companies.
• Travel apps like Airbnb and Booking, utilized a few times a year, have still spawned multi-billion dollar companies.

Frequency vs. Retention: Understanding App Usage Patterns

Different app categories exhibit distinct usage patterns, with varying frequencies of use and retention rates. Social games, for instance, have high frequency but low retention, while weather apps have low frequency but high retention.

• Social games often experience high initial engagement, but users may churn after exhausting the content.
• Weather apps, while used infrequently, are essential throughout a user's life, leading to high retention.
• Communication apps excel in both frequency and retention, demonstrating the power of daily interaction.

The Challenge of Increasing DAU/MAU

Attempting to artificially boost DAU/MAU through tactics like email and push notifications can be counterproductive. These strategies often increase casual users (MAU) but not daily users (DAU), ultimately lowering the DAU/MAU ratio.

• Focusing solely on increasing DAU/MAU might not be the most effective approach for all apps.
• Instead of striving for a high DAU/MAU, it's crucial to understand the natural cadence of usage in your app category.

Focusing on Core App Users and Network Effects

If your app doesn't naturally have a high DAU/MAU, it's essential to focus on building a strong core user base. Analyzing the behavior of your most active users and identifying strategies to increase their engagement is crucial. This might involve leveraging network effects, content creation, or other methods to enhance user value and frequency.

• Identifying and nurturing your hardcore users, those who engage daily, is a critical step.
• Exploring network effects, such as how the size of a user's network influences their engagement, can be insightful.
• Focusing on content creation or other activities that drive user engagement can lead to increased DAU/MAU over time.

DAU/MAU: Not Always the End-All, Be-All

Ultimately, DAU/MAU is not a one-size-fits-all metric. Success in the app world is not solely determined by daily usage. Apps with a valuable proposition, strong monetization strategies, or network effects can thrive even with lower DAU/MAU ratios.

• Prioritize building a great product that delivers value to users.
• Focus on monetization and network effects to achieve sustainable growth.
• Select metrics that accurately reflect your app's specific value proposition and usage patterns.

Conclusion: Finding the Right App Engagement Metric

While DAU/MAU remains a valuable metric for assessing app engagement, it's essential to recognize its limitations. For high-frequency, high-retention apps, particularly those relying on ad revenue, DAU/MAU can be a valuable guiding principle. However, for apps with different usage patterns, focusing on core users, network effects, and strong monetization strategies might be more effective. The key is to find the metrics that best measure the value your app provides to users and drive its long-term success.