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DAU Growth Rate

It's a metric that gives your business an idea of the active users throughout a set period, typically monthly.

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SaaS KPI Example - DAU Growth Rate Metric

You may be unfamiliar with a few key concepts if you're new to the subscription-based business model. One of those fundamental concepts is the DAU growth rate. For many software-as-a-service businesses, the DAU (Daily Active Users) growth rate is an important KPI to consider. 

SaaS business models operate on a subscription-based system to accurately gauge their earnings. Active daily user count serves as a key SaaS metric for estimating revenue generated from each user and helps develop core strategies. This approach enables businesses to obtain a precise indication of their earnings and make informed decisions based on user activity. 

What is DAU Growth Rate?

There's nothing too complex about the DAU growth rate notion. Essentially, it's a metric that gives your business an idea of the active users throughout a set period, typically monthly. 

The Formula for DAU Growth Rate

Calculating your DAU growth rate is extremely simple. Here's an example. Say you have 10,000 active users at the beginning of the month, and then you end the month with 10,800 users. 

To get your DAU growth rate, you want to subtract the end-of-the-month users from the beginning of the month and then divide that number by your original active users from the start of the month. 

It will look something like this (10,800-10,000)/ 10,000, giving you a DAU growth rate of 8%. Not too difficult, right? 

What's The Purpose of DAU Growth Rate?

The purpose of the DAU growth rate is to give online businesses a general idea of how active their community or customers are on their website over a while. The percentage helps show growth or lack thereof within the time you measure it. For websites, it's critical to understand how visitors interact with your content and store so you can improve it.

Why Is DAU Growth Rate Important? 

The more information you have about how your consumers interact with your content, products, or services, the better. Your DAU growth rate is crucial because it can help you make essential decisions regarding features and content on your website. 

For example, if you release a section of articles on your website that viewers show no interest in, you'd want to know so you don't continue making the same content that your viewers don't like. It's the same with your services and products. 

How Does DAU Growth Rate Help Your Business?

The data you get from the formula is enough to help a business of any size understand how the current state of its website, service, or online store is doing. You're doing fine if your daily active user count is higher. If it's not, something needs to change. 

The data doesn't help on its own, but it serves as valuable information that enables a business to move forward on specific plans. For example, a company may change its marketing strategy or adjust certain features of its services to improve its DAU growth rate. 

Can You Use DAU Growth Rate To Measure and Predict Success?

It's possible to use your DAU Growth rate to measure the success of your software or service. A higher DAU growth rate means your service is attractive to your consumers and vital to their day-to-day operations. 

For some businesses, especially smaller ones, it's essential to test whether or not your service is having an impact on your current clientele. If it is, you'll notice an extremely positive DAU growth rate. From that, you can analyze how and why your service is important to your consumers.

You'll then have a great idea of how and whom to market your product/service directly to. Additionally, it's important to note that a higher DAU growth rate does point to signs of success, but you have to consider other factors. What if the months you measured were outliers? 

Since you use previous data to measure your DAU growth rate, you should measure it through multiple quarters instead of just a few months. Often, small businesses jump the gun when they see early positive trends, but the interest in their service dies down over the next few months. 

Get a good range of months to determine whether you should move forward with added features and marketing efforts. Be patient when using your DAU growth rate to measure and predict the success of your service. Remember, the more data, the better. 

What Factors Affects The DAU Growth Rate?

The facts that affect your daily active users depend on your website, market, and services, but generally, there are universal elements that play into your DAU growth rate. Regardless of what you do with your website or store, these factors play a significant role in your daily user count.

Accessibility 

The accessibility of your software or store is one of the most significant factors that affect your daily average user growth rate. If your customers struggle to navigate or understand your software, they likely will use it sparingly. Similarly, if you can't navigate the store to buy products or use services, your visitors will leave in frustration.

Features

Another factor is the features of your service. If the features your software provides aren't necessary for a consumer to use often, then you'll find that your daily active users will be manageable. 

You'll need to add more content or features to compensate. Low DAU isn't always a bad thing, but for SaaS businesses and content creators that rely on daily active users, it is. 

Price

If your website content is free for users to consume, then you'll find that your daily active uses will increase as long as the content is worth their time. 

For SaaS businesses, your customers may look for more affordable alternatives if a product is too expensive or not worth the cost, negatively impacting your DAU growth rate. 

What Factors Show Positive DAU Growth Rate? 

Knowing how to measure your DAU growth rate percentage is critical. But identifying the factors that indicate a positive growth rate is just as important. Focusing on improving those factors can make a significant impact. 

Here are some critical indicators to help you achieve a positive DAU growth rate. 

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The Speed at Which Users Sign Up for Your Service

If daily users are constantly coming to your website or subscribing to your service, then it's a good sign that your daily active users are growing, and you can expect a healthy DAU growth rate.

Customer Engagement

High customer engagement is another positive sign. Customers engaging with your content or service contribute to your active daily users. If engagement is low, consider sending reminders to your viewers and subscribers. 

Retention Rates

Like customer engagement, low retention means that users are actively leaving or no longer using your service after a short period. While high retention rates mean that you're doing a fantastic job keeping your concurrent visitors and subscribers., which is good. 

How Do You Improve Your DAU Growth Rate?

Depending on your target demographic, improving your daily active users can be tricky. Generally speaking, there are specific tactics you can use to help improve the growth rate of your website or service, but you must use them sparingly and correctly. 

Adjust Pricing

The most common, and sometimes most drastic, measure a business can do is adjust its product or service pricing. If they find that their competitors are providing more value for the price of the service, then it would be wise for you to adjust your pricing accordingly. 

Create Incentives 

Boosting your DAU growth rate is offering users incentives. These incentives encourage users to engage with your website, consume content, and purchase your products. For example, you can provide login rewards or daily discounts on products to incentivize users to visit your site. 

Understand Your Product’s Purpose 

Certain products or services cannot engage users daily. Therefore, it's essential to identify the primary purpose of your product or service and explore ways to enhance it or incorporate additional features that will motivate your consumers to use it consistently. 

It's essential to consider ways to create a daily habit around your product or service, offering value that keeps your consumers engaged and continually coming back. 

Look for Technical Issues

To increase consumer engagement, it is essential to address any glitches or technical issues that may be hindering the usage of your service or website. By performing regular quality assurance checks, you can ensure that every aspect of your product, service, or website is functioning as intended. 

This will improve user experience and increase the likelihood of repeat usage and customer loyalty. 

FAQs

You may still have plenty of questions regarding the DAU growth rate, so here are some answers to some questions you may still have. 

What is a reasonable DAU growth rate?

DAU growth rate higher than 40% is typically satisfactory for most businesses. If you want healthy results that show a significant growth rate, you'll want a DAU growth rate of over 51%. If you want excellent results, aim for a daily growth rate of over 60%+. 

What's a good number of daily active users?

Ideally, you want more than half of your customers to use your service daily. It depends on your SaaS business model, but you likely wish for over half of your consumers to engage with your service daily to ensure good customer retention. 

What is the best way to visualize your DAU growth rate? 

Regarding data visualization, the best way to visualize your DAU growth rate is through charts and graphs, such as bar and line graphs. Most businesses will have an easier time using a line graph to visualize their DAU growth rate. 

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Bottom Line

A healthy DAU growth rate opens up great opportunities for businesses dependent on active users. Take the time to calculate and understand your daily active user count to adjust your services and content accordingly. 

Your visitors and clients are significant, so don't shrug off a low daily active user count. Figure out why users aren't interacting the same way they did previously and better your content, services, and products for their sake and your own. 

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for you and your team.

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