Whether you just launched a SaaS solution, or you’re a few years into the journey, active users is one of the handful of metrics you should track over time, as changes from one reporting period to the other can be a reliable indicator of whether you’re heading in the right direction in terms of both product development and marketing.
Two elements make up active user metrics: the duration of the sample, and how your business defines “active.” The former is usually a day, a week, a month. Accordingly, you will often see the acronyms DAU, WAU and MAU to indicate the time frame during which users are counted. Of the three, MAU is the most common, as it balances a meaningful sample size with actionable immediacy.
The definition part can be a little trickier to determine, but it’s essential that your criteria reflect your business model. For example, both Twitter and Facebook have altered their AU definitions to exclude API calls, because, the users driving those calls aren’t on their websites or apps, and therefore aren’t being exposed to, or interacting with the ads that keep the lights on at those two companies.
Freemium and premium SaaS solutions, on the other hand, can include activity from third party sources, as long as those sources are being monetized in a manner similar to the application’s direct users.
There’s a tendency among SaaS stakeholders to define active users in a way that casts their business in the best light - especially when they’re courting investors - but, long-term reality tends to reveal itself in the form of financials that don’t reflect your AU numbers, which is typically not something you want to have to explain to a potential funding source.
Now that we’ve established some ground rules, what are some things you can do to keep your users engaged, and your MAUs growing?
If you’re a browser-based SaaS solution, consider deploying iOS and Android apps. If you’re an app company, think about what you can do on the web to to replicate, extend, or enhance your native experience. You don’t necessarily have to mimic the existing product’s features and functionality on the new platform - adding additional or unique capabilities to the new platform can work as well. The idea here is to be available when and where you’re needed.
Don’t ignore retention
It’s easy to be myopic about acquisition. Acquiring a user is a big win. It’s more exciting, and dare I say, sexier than keeping users you’ve already convinced to engage. Besides, you can’t really grow from just keeping the same customers forever.
While that is technically true, retention pays dividends by providing a foundation of predictable recurring revenue on which to expand your user base, and the longer you keep paying customers, the further you defray the cost of acquisition. A high retention rate is a great validation that the product is providing ongoing utility to the user base.
Iterate and update
One of the beauties of a SaaS solution is the ability to release new features and enhancements on a continuous basis, which impacts active user count in two ways.
First, new features should be prioritized based in-part by their ability to make the software more sticky, but be judicious with the pace of updates, too many enhancements in too little time can upset otherwise loyal users.
In addition, significant updates give you a reason to initiate a conversation and generate enthusiasm among your users, and if you can do that without up-charging, all the better!
Measure, segment and target
Be sure to capture as much source and demographic data as possible from day one, as it will be very useful in correlating loyalty with user characteristics like how or where they found out about you, their age, level of education, gender, etc., which in-turn will allow you to target your marketing to those who are likely to sign up, and stick around.
Give them a nudge
A little automation goes a long way here. Feed your engagement stats into your email and notification systems, and set a frequency threshold below-which the user receives messaging geared toward reengagement.
Test and adjust
While it may seem complex on the surface, testing your messaging, creative, frequency and targeting only requires a rudimentary understanding of the scientific method, e.g. form a hypothesis, test the hypothesis, analyze the results, and come to a conclusion. Many platforms, from email marketing to landing pages have A/B and/or multivariate testing built right in.
While some of the tactics outlined above will work will work better than others, it’s unlikely that any one is going to be a silver bullet, so my suggestion is to try as many as you can in various combinations and investment levels, and continually optimize and improve them over time.