What is the DAU/MAU Ratio?
The DAU/MAU Ratio is a user engagement metric that measures the approximate number of days in a month that users perform a specific action.
Presented as a percentage, the DAU/MAU ratio represents the proportion of a company’s monthly active users (MAUs) that engage with a site, app, or platform on a daily basis.
How to Calculate DAU/MAU Ratio (Step-by-Step)
Constant engagement on a daily basis creates opportunities for ecommerce companies to profit from their user base and for the generation of recurring revenue.
The DAU/MAU ratio compares a company’s daily active users (DAUs) to its monthly active users (MAUs) to estimate how active the typical monthly user is on a daily basis.
- Daily Active Users (DAU) → Counts the number of unique visitors that interact with the site, platform, or app on a specific date.
- Monthly Active Users (MAU) → Counts the number of unique visitors that engage with a site, platform, or app within a specified month.
A company-defined action (i.e. views, clicks, logins) is what qualifies a user as an “active user”, which is applicable for modern media companies (e.g. Netflix, Hulu), social networking platforms (e.g. Twitter, Meta), messaging platforms (e.g. WhatsApp), and mobile application companies.
On their own, neither DAU nor MAU are useful for understanding a company’s user engagement — but the DAU/MAU ratio enables management to understand the percentage of unique visitors that continue to return to the platform.
For instance, a social-media company could consistently show high DAU amounts, yet those users could be first-time users, i.e. the company’s users are not actually returning to the platform and constantly engaging with the app or platform on a daily basis.
Over the long run, the inability to make users return to the platform would catch up to the company, as overreliance on new user acquisition for user growth (and monetization) is far less desirable than relying on recurring users.
User engagement is directly correlated with future growth upside, capacity to monetize a user base, and user retention, which are all crucial components of a financially sound, sustainable company.
“I would argue that the single most telling metric for a great product is how many of them become dedicated, repeat users.”
– Andrew Chen, a16z (Source: Blog)