The DAU/MAU ratio is a metric used to define the engagement level of your user base. It stands for Daily Active Users divided by Monthly Active Users. The result comes out as a percentage that tells you how frequently your monthly users are returning to your product on a daily basis.
In the startup world, this is often referred to as stickiness.
If you have 1,000 users who log in at least once a month, and 500 of those users log in every single day, your DAU/MAU ratio is 50%. This is a straightforward calculation, but the insights it provides are complex. It helps founders answer a fundamental question regarding product value.
Are users making your product a habit?
Defining Active Users
#Before running the math, you have to define the variable. The most dangerous thing a founder can do is have a loose definition of what constitutes an active user.
Does opening the app count? Does the user need to perform a specific action like posting content, creating a report, or messaging a friend?
If you define active simply as opening the application, you might see high numbers but low value. If you define it as a completed transaction, the numbers will be lower but more indicative of revenue.
Be consistent with this definition. Changing it halfway through your growth stage will break your historical data and make it impossible to spot trends.
Interpreting the Benchmarks
#There is a tendency in the tech ecosystem to look at the metrics of giants like Facebook or WhatsApp and assume those are the standard targets. Facebook famously had a ratio hovering near 50% or higher in its growth phase.
That is an outlier.
For most SaaS (Software as a Service) businesses, a ratio between 10% and 20% is common. If you are building a social app or a communication tool like Slack, investors might expect something closer to 40%.
However, you must look at these numbers scientifically. A lower percentage does not always indicate failure. It indicates the frequency of the problem you are solving.
Contextualizing for Your Startup
#Not every business needs to be a daily habit. This is where many founders get lost in the data. You have to ask yourself about the nature of your solution.
If you are building tax software, nobody should be logging in every day. If you are building a travel booking platform, a daily login might actually indicate frustration rather than satisfaction.
Compare DAU/MAU against your intended use case:
- High Frequency: Social media, email, project management, fitness tracking.
- Low Frequency: Insurance, tax filing, travel booking, real estate purchasing.
If you force a high DAU/MAU goal on a low frequency product, you will end up building annoying features like excessive push notifications that actually drive users away.
The Relationship to Retention
#While DAU/MAU measures intensity, it is not the same as retention. Retention measures if a user comes back at all over a long period. DAU/MAU measures how obsessed they are right now.
A product can have high retention but low DAU/MAU. Think of a service you subscribe to and use once a month like clockwork. You are a retained user, but you are not a daily active user.
Use the DAU/MAU ratio to detect changes in product health. If the ratio starts dropping while your total user count grows, it means you are acquiring less engaged users. This dilutes the quality of your community and often foreshadows a churn problem down the road.