Understanding the importance of Monthly Active Users (MAU)
What is Monthly Active Users (MAU)?
Monthly Active Users (MAU) is an engagement metric referring to the number of unique users that have interacted with a product or service within a given month. As a key performance indicator (KPI), MAU is an important aspect of measuring the health of many businesses.
The definition of terms like “users” and “active” might vary from business to business, since there is no industry standard. But, below are some general guidelines of how they are determined.
Users: when a business is determining MAU, a user is an individual who has performed some sort of in-app or on-site action during a 30-day period. This action could include logging in, completing a specific conversion, or executing a certain number of interactions. This individual will only be counted once regardless of how many interactions they have.
Action: Any business can determine how they want to define an action. But, in many cases, an action included in MAU can be opening an app, logging in, or performing a set number of interactions with a product or service.
Examples of How to Calculate MAUs
Oftentimes MAU becomes a more general count of “How many users do I see in my product each month?” but that can be less meaningful especially if there are events that don’t necessarily correlate to value. It’s important to define your MAUs not just based on their login or viewing a page but more tied to the value your product provides them. General examples include definition like:
- Users Who Complete a Task
- Users Who View/Interact with Core Feature
Retail/E-commerce MAU
In a Retail business MAU definitions are often:
- Users who viewed a product
- Users who logged in 2x
- Users who purchased an item
These definitions are good ways to assess the value of the visit and ensure the users within your product are close or getting close to making a 1st, 2nd and 10th purchase. Users who visit your site and immediately leave or only view 1 page should not have the same weight as users who meet your MAU definition. Better segmenting a true MAU vs. the general traffic also helps you measure things like % of Total Users who were MAUs and assess if the user base you attract is graduating to the MAU segment.
Streaming MAU
Video streaming has it a bit easier when determining MAUs as the number of things you’re asked to do within the product is singularly focused on watching content most often.
In Streaming Media we see MAUs defined as:
- Users who Watched at least X seconds/minutes/hours of content
- Users who Watched at least X episodes of content
Segmenting users based on how often they are consuming content becomes a core part of how you measure MAUs when you’ve adopted this type of approach. Additionally you’re able to understand the share of all users who meet this criteria and you’re able to more accurately monitor growth of MAUs vs. all users.
Why is MAU important?
For most businesses, it is important to know how users interact with their product or service. A high MAU can generally indicate a good rate of product engagement and positive retention over a certain period of time.
By measuring MAU, a business can also determine the effectiveness of its marketing strategies, product iterations, and customer experience. MAU can also be used to determine other engagement-related KIPs including:
- Retention
- Churn
- Growth rate
- Conversion rate
- Revenue per active use
On top of the many internal uses for MAU, it can also be used by outside sources to determine the overall health of a company. Public organizations like Facebook and Twitter regularly publish their MAU numbers in order for investors to view the performance of their user base.
When Should You Use MAUs?
Counting the number of users visiting your product and/or website is a valuable way to monitor overall health and growth, but is an MAU metric always necessary? It really depends on the product you’ve built and does an interval of Monthly actually align with how you intend your users to leverage it. Let’s see a few examples of when you should and shouldn’t use an MAU metric.
When Should You Use MAUs?
- When your product is something that is intended to be used frequently, either at a daily or monthly interval.
- When your product is a utility and part of major workflows for multiple users within your customers.
- When your product’s pricing model is based on a Monthly or Annual billing schedule.
When Shouldn’t You Use MAUs?
- If your product is seasonal or specific to a point in time and doesn’t require frequent usage.
- Good examples of these would be Tax Software, Mortgage Software or Seasonal Sports/Events.
- If your product isn’t something that multiple end users will leverage and is highly specialized software.
- If your product’s pricing model is more consumption based and less reliant on calendar dates.
Why Kubit Uses MAU
Kubit uses MAU as the key metric to determine pricing for our customers. Using MAU as a basis for pricing gives Kubit’s customers cost predictability and freedom to use all of the collected data transparently. Other vendors in the Product Analytics space would typically charge per data volume which leads to unpredictable costs and sometimes would force users to start sampling their data. Kubit looks to avoid these issues by providing an easy, scalable, MAU-based solution to pricing.
To learn more about Kubit’s services and how we calculate our pricing, click here.
