Active Users: Measure the Success of Your Business

What are active users?

Active users are users that you can identify (by an id, email or username) who interact with your business during a specified period.

That’s a very broad definition, so let’s look at this in more detail. For most companies, an active user is one that created an account and is required to login for any interaction.

You can only refer to active users by placing them in a time interval. The time interval is crucial. Here’s why:

measure weekly active users
A whole month’s user activity.

While the definition of active user is pretty straightforward, what constitutes an interaction can differ from one company to another.

Here is how Facebook defines active users:

An active user is someone who visited Facebook.com and logged-in (or has been logged in) or who has taken an action with a Facebook feature (for example, clicked a ‘like button.)

If the users don’t do any of those things for 30 days, they will be considered inactive users.

If all they see are social plugins from across the web, but don’t click anything, they are not considered active users of Facebook, even if those social plugins include social context (for example, friends’ photos, friends’ likes, friends’ recommendations).

Active users are usually reported as:

  • Daily Active Users (DAU) – typical for businesses where users are expected to interact on a daily basis. (email, calendar, games)
  • Weekly Active Users (WAU) – typical for businesses with weekly frequency (forums and social communities, mobile apps, productivity & analytics tools).
  • Monthly Active Users (MAU) – typical to many B2B apps where users are expected interact a few times a month or less (email providers, accounting & bookkeeping).

It’s important to note that users that visit on a daily basis will show up in the weekly and monthly reports as well.

I’ve seen many people analyse the active users report on different display modes (daily, weekly, monthly) like the ones below and think there is something wrong with the data:

measure daily, weekly, monthly active users
If a user is visits your app every day of the week, he is counted as a single user. Not as seven different users.

If daily active users are around 750, they expect weekly active users be 7 times that and monthly active users around 30 times that.

The report is actually right and it shows the fact that most people who interact with the app are returning users with a high frequency.

If a single user interacts with your app every day, you will have 1 DAU, but also 1 MAU (and not 30 MAU). He is only being counted once because he is the same user every day.

Remember: Only an active user can become a customer.

In fact, if your report shows 1 DAU and 30 MAU, it means that every single day a different user visits your app.

For the 30 day period your retention is zero and all your users are becoming inactive or lost users from the first moment they interact with your product.

How can you accurately track active users?

In order to accurately track active users you need to make sure that your analytics service recognizes a user as being yours, regardless of whether he logs in from the office and then from home.

Also, in order to report retention in an accurate way, if he signs up six months from now using a different browser or device, your analytics tool needs to know that he’s the same user.

That’s why, unless they also offer the option to generate a unique ID for each user, cookie based web analytics tools can’t accurately track active users.

The ID needs to be the same, no matter when or from what device the user logs in.

So, what’s the best way to track active users? Make sure that every action you log from their activity is attributed to an ID that is both persistent and unique to each user.

This can be his email address or his username.

There are exceptions though.

Let’s suppose you also monitor the emailing activity of your users. Your system sends an automatic email to George, dues to his recent inactivity. A tracking log is triggered and says that George got an email.

That log should not be counted as activity by George, and neither should be the fact that George opened the email.

However, if he clicks a link in the email and lands in your app, that is activity you want to consider.

So, to make sure you have your active and lost user metrics right, exclude crons and automatic actions that are done in his name, and not by him.

What happens with users when they stop being active?

They become inactive users or lost users. Both names are used but we prefer the latter as it has a more actionable drive. A lost user is a user that left your app and never came back.

Lost users are reported after more than one business cycle has passed since their latest interaction with your business.

If you are a typical SaaS business with a monthly subscription, the business cycle is considered to be a period of 30 days or one month.

For example, if today is 30th November and we have a user that last visited your business on 10th November and one on 15th October, here’s how your active users are reported:

  • October: 1 Active Users that became 1 Lost User
  • November: 1 Active User

The rate at which you lose users is also called attrition rate. Although technically churn rate would be a correct term for it as well, churn rate is mostly used for lost customers and not users.

Types of active users

Active users are of 2 types:

  • New users
  • Returning users

New Users are the users that, in a specified period, interacted with your app for the first time. (eg. created an account)

Returning Users are the users that keep coming back to your app.

Two important characteristics of returning users are: retention and frequency.

Actionable insight
An important thing to note here is that if you manage to recover a lost user, he becomes a returning user.

Takeaways

Only an active user can become a customer.

Make sure your analytics identifies the same user when he logs in from different devices.

Improve the tracking accuracy of your lost and active users. Exclude crons and automatic actions.

Author: Claudiu Murariu

Claudiu Murariu is the CEO of InnerTrends. He is also the curator of The Experiment, a monthly digest for marketers who love to learn by experimentation. You can follow him on Twitter @cllaudiu.

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