What's the big deal about Monthly Active Users? Some of you might know the answer to this right away, but this metric has quite a bit of nuance to it and often partly eludes new founders especially when they're building a business around an already vibrant and active community.
It's a metric that you hear venture capitalists talking about quite often, and in plain English it's almost as simple as "grilled cheese sandwich", right? The name of the metric is literally the thing that goes into it, where's the ambiguity?
It's that whole active thing, as well as why you want to know that matters. I'm writing this primer because I want to save time on the free 45 minute discovery call that we provide to those interested in being design partners to hear about them instead of them hearing me talk so much.
What's 'Active', Precisely?
Please don't hate me when I say that the definition depends on why you want to know, and that's important because it can be very expensive if you get it wrong. The main reasons for wanting to know are charting growth, reporting to a vendor for billing, or reporting specific kinds of growth to investors.
Let's go over how you'd chart it if I were one of those things:
If I'm A Growth Manager
I'm not really all that interested in the background noise of people who simply hit the product while logged in and do nothing else, in most circumstances. That of course depends on the product, but I generally don't count users as active until I see them coming to the product with a very specific intent.
Someone that hits the site three times and then updates their profile would be active, though, just as someone that logged in from a specific CTA (say, from a landing page or ad) would be counted even if they didn't follow through with whatever the thing was.
I want to see that there are living organisms in my ecosystem that respond to things, and that those organisms multiply.
If I'm A Vendor
I care about every time a human being makes my service do work in order to estalblish that one of your organisms is in fact a human and authorized to see the page they're requesting, if I handle auth for you. Or maybe I care about the number of people that will need SMS codes sent to them if I'm your SMS gateway.
So, my active user count is going to look a bit different from your active user count, because my definition of active is just knowing who a user is and what they're allowed to access.
If I'm An Investor
I want to know that you have a growning developer user base, and that you're able to flip switches that causes them to engage in certain ways. While you may have 100,000 MAUs by your API gateway's definition of active, I only care about the 11% subset that are in a beta group, and only 6% of Those in that group doing a specific thing.
But It's Not A Relative Metric?!
It, well, generally isn't for reporting purposes. You'll find a way to define it that excludes noise effecitvely without too much squelch, but that's only going to matter to you internally. You may say "Wow, I have 100,000 MAUs!!!! ZOMG WOWS WOWS" and you should feel great about that!
Just keep in mind that your vendors think you've got twice that many, and investors might look at you like you just dropped a crazy valuation on Shark Tank when you tell them how you're actually defining it.
In modern times, a data lake with tools to query it are your best bet, along with plenty of help from scientists to separate signal from noise. Something that excites me daily are new platforms that make spotting gems in the data mine much easier, and we'll be talking more about them soon in a new series about growth hacking coming up next month!
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