The metrics typically advertised by startups are total users, daily active users (DAU), and monthly active users (MAU). While these numbers might be good to share with the press, they are only vanity metrics because they don’t give any real insight into your growth rate or the quality of the users you’re bringing in. Here are 4 metrics you should really be paying attention to if you’re trying to drive sustainable user growth.
Daily Net Change – Daily net change tells you on a daily basis how much you’re user base has grown (or shrunk). In a single graph you can assess new user acquisition, re-engagement, and retention and can easily see the impact of each component on your current growth rate.
Here is the breakdown of the different components and how they are calculated:
New Users: how many new users joined the service today?
Reactivated Users: how many existing users used the service today for the first time in 28 days?
Churned Users: how many existing users last used the service exactly 28 days ago?
Net change: new + reactivated – churned
Net Change Graph
Core Daily Actives – The problem with the daily active user metric is there is not concept of quality users or retention. You will often see DAUs jump from a user acquisition campaign, but it is impossible to tell from the metric if those users are immediately dropping off or if they are sticking around. Core Daily Actives rises above this noise by only counting users that have been using your service on a regular basis. To get this metric, you calculate the number of users that used your service today who also used your service 5 or more times in the past 4 weeks. This metric is much more useful than DAUs because it focuses on the bottom line: growth of repeat users.
Cohort Activity Heatmap – The cohort activity heatmap is by far my favorite because it is the most insightful metric on this list. What the metric shows is how your user retention curve has changed over time. It can be a bit complex to read at first because so much data is crammed into a single graph, but it is very powerful once you know how to use it.
This is how you interpret the graph:
- The unit of the x-axis is days and each column corresponds to the group of users that joined on day X (each group is called a cohort)
- The width of a column on the x-axis represents the size of the cohort (i.e. the wider the column, the more users joined on that day)
- The unit of the y-axis is also days and each row represents Y days after the cohort joined the service. The bottom row of the graph represents day 0, the very first day the user joined the service, and the top row represents day 59.
- The color of each rectangle represents activity level. It is calculated by determining the percentage of users that joined day X and used the service on day Y. The scale ranges from red for a high percentage to blue for a low percentage.
Cohort Activity Heatmap
Conversion Funnel – The final metric is tracking the conversion funnel for flows that affect new user acquisition, retention or re-engagement. A conversion funnel is simply splitting up a process into its constituent steps and tracking how many users make it through each step. This metric is widely used, but it is common to analyze the conversion funnel for a flow once or very infrequently. Really, the conversion funnel for important flows should be tracked on a daily basis for adverse changes because even a difference of a few percentage points can compound over time.
This is an example of the conversion funnel for inviting users to a service.
1) How many users saw the invite prompt?
2) What percent of users clicked on the invite prompt?
3) How many invites were sent per user that clicked on the prompt?
4) What percent of invites were viewed?
5) What percent of invitees clicked on the link in the invite?
6) What percent of invitees that clicked on the link, joined the service?
7) How many new users joined the service as a result of the invite.
This is just a sampling of some of my favorite growth hacking metrics. There are many others and usually the best metrics for you depends on your situation. If you know any metrics that you think should have been on this list, please drop me a line.