Types of Active Users.

There are two types of active users; New Users and Returning Users.

1. New Users: These are the users that are visiting a website for the very first time.
2. Returning Users: These are users that have visited a website in the past and are visiting again.

Why should you measure your active users?

Some may consider it a vanity metric, but I’d tell you this, every company should have a solid goal to reach as many eyes that fit into your buyer personas, to build a strong user base, brand authority and loyal supporters.

But how do you measure the effectiveness of your marketing efforts and the user experience of your product/service?

Well, knowing the number of active users you have is a vital step towards that goal.

For example,
When you measure your active users, you can determine key performance metrics like your churn rate and customer retention rate, and the lifetime value of your customers cannot be calculated without knowing your retention rates, and customer retention rates rely on discovering whether users are active over time.

So plainly, the number of active users provides a measure of the general fitness of the business and serves as a basis to calculate more informative metrics.

Like Andrew Chen, Angel Investor said:

“I would argue that the single most telling metric for a great product is how many of them become dedicated, repeat users.”

So why ignore it?

What you should know before measuring your Active Users!

The first thing you should realize is that how you measure active users heavily depends on the long term growth goals of your company.

For instance – Let’s say KIRA is a startup eCommerce store that uses 100% reusable materials for their products.

KIRA’s main aim right now is to create awareness, and the best way for them to measure their active users would be to measure number of unique people that view/login to their site or mobile app.

While another eCommerce store, YAni sells similar products with 100% recyclable materials, but have been in the game longer than KIRA.

YAni’s main aim at this point is to get more sales, their Active User (AU) measurement would be the number of unique users that add to a cart or make a purchase from their website or mobile app over a given period.

So, if a visitor does not add to cart or make a purchase from the website or app of YAni, they might be considered an inactive user.

You, therefore, have the power to decide what action makes a user “Active” according to your company’s growth goal.

Here is a table showing how different the measurement of active users can be, it’s up to the vision of your company and CEO to determine how to define what “active users” means. Here are some examples:

But are you limited to having just one goal when calculating your active users?

No.

You can have two, three or even four growth goals.

For example:
Let’s say a start-up eCommerce, KIRA has grown in awareness and now, they want more sales but they’re also aiming for new leads.

Meaning they have two growth goals.

All they have to do now is decide what action suits each goal like this;

If 200 unique people create an account or log in to their site but only 50 unique users add to cart or make a purchase from their store, their Active Users according to their sales goal (ie acquire more sales) would be only 50, but their active users according to their awareness goal would be 200.

You can segment your audience according to what they do and what goal their actions or inactions helps you achieve.

The sine qua non to this is using the appropriate action for the goal it fits.

Once you figure out the exact goal(s) you’re aiming for, you can then proceed to measure your active users and progress towards your goal.

How to measure Active Users.

There are three main ways to measure active users in a given period. They include;

1. Daily Active Users [DAU].
2. Weekly Active Users [WAU].
3. Monthly Active Users [MAU].

Daily Active Users.

DAU is a term used for the total number of unique people that take action within your website or mobile app on a given day.

Always have in mind that “Take action” is very relative, it depends heavily on the kind of company and its goals.

If you run a SaaS used for scheduling meetings and your long term goal is to get over 10,000 people to schedule meetings through your site,

Your DAU would be;

The number of unique users that make use of your software to schedule a meeting on a given day.

Anyone that logs in without scheduling anything will be considered an inactive user.

Whereas if you aim is to get views on your site, the unique amount of individuals that log into or visits your site will be considered as active users.

If a single user visits your app or website more than once a day. They are counted as 1 active user when calculating your DAU because it is the number of unique users that visit or perform an action.