How to Measure User Engagement for Subscription Businesses (DAU/MAU)

The Daily Active Users (DAU) to Monthly Active Users (MAU) Ratio measures the stickiness of your product – how often people engage with your product.

DAU is the number of unique users who engage with your product in a one day window. MAU is the number of unique users who engage with your product over a 30-day window (usually a rolling 30 days).

The ratio of DAU to MAU is the proportion of monthly active users who engage with your product in a single day window.

How to calculate DAU/MAU Ratio

DAU/MAU Ratio = [DAU] / [MAU]

The best thing to measure the growth rate of is revenue. The next best, for startups that aren’t generating revenue or only offer Freemium, measuring user activity level. That’s a reasonable proxy for revenue growth because whenever the startup does start to make money, their revenues will probably be a constant multiple of active users.

Many in the analytics world consider DAU and MAU metrics as vanity metrics and rejected them as meaningless. You can ignore the DAU and MAU individually but please do pay attention to the DAU/MAU Ratio to monitor the  “stickiness” or your product, which is a measure of how much users are engaging with the product.

What is really important is that you do NOT use “login” as the sole definition of “activity”. It’s absolutely key that you define “activity” as action related to the users “desired outcome”, the very reason they subscribed to your product.
If you are offering a knowledge product like email automation, you want to measure if users have selected an optin form, setup [email flows], if email list have been setup, etc. Measuring DAU/MAU ratio on such “activities” are really helpful in understanding if a user is a potential “churn” and need your help.
A ratio of 1 means that every user who visited in the last month is active again today.

Depending on your industry or vertical, you can determine what a good benchmark DAU / MAU ratio is. For example, for a mobile app, 20% DAU / MAU is considered average. Over time you will develop a sense of what a good ratio for your business looks like but in any case, what you are looking for is an improvement.