Discover the Hidden Insights: Are Product Engagement Metrics Indicator of Supercharged Growth?
Product usage impacts virality of the product
Introduction
While pitching our funding story, we were asked many pointed questions and some of them were to ascertain the health of business. This naturally brought up the topic of DAU(daily active users) and MAU(monthly active users) of our business. While initially we thought that these metrics were mere instruments to ascertain if people were in fact using our product, there is a deep science into these metrics.
History
During the late 2000s, companies like Facebook and Twitter started using daily active users as engagement metrics. It was then that DAU and MAU became popular as a means to evaluate a “good startup”.
Why should Founder worry about engagement metrics ?
TLDR - Users who find value in the product, are more likely to spread the word about the product.
Engagement Metrics are an indicator of how much the user likes your product and uses it. For some products, like our AI project documentation tool, DAUs and MAUs might not have been the best north star but for many social networks, engagement metrics like DAU and MAU are measured to assess the product’s stickiness. There is an interesting side effect of high engagement, engaged users are product’s evangelist and mouthpieces. Some companies like Notion, have utilized these super engaged users as brand ambassadors and build whole communities around them.
How do super engaged users impact the growth of the product?
According to Nir Eyal, users who continually find value in a product are more likely to tell their network about it. If the user is frequently engaged with the product, then the product team has more chances to design into the product; opportunities to invite their network, broadcast content and share through word of mouth. For such reasons, companies like Substack provide users ability to embed articles on websites, and provide easy tweeting of the authored articles on twitter and other social platforms. Super engaged users also have an impact on the virality of the product. Viral cycle time reduces drastically for products with high engagement.
Super engaged users help you to build your data moat in many cases including ours. Power users who are actively using the product; are also leaving a digital footprint behind. This digital footprint, technically called clickstream data, enables data science teams to personalize the experience the user has on your platform. Also as the data, in the form of notes for our tool or tweets by the creators on Twitter/X, builds a certain pull/affection/dependency by users for the product. The data history in most cases is enough to pull the user back for renewed usage. Example: we can’t abandon our favorite ecommerce site completely, because, not only because personalizes the experience, but we can’t abandon our reviews, purchase history etc.
Why hyper - focus on DAUs and MAUs can be detrimental for your business ?
Many founders often start focusing on DAUs and MAUs as an indicator of business success. While for social networks, it is indeed the go to metric, for many it turns out to be a fake metric. Product’s engagement metric needs a deeper understanding on what reflects the real value of the product to the user. For instance, we enabled data scientists to document the project as notes so the true north star metric was the number of notes documented by the data scientist.
It is also important to note that metrics you track change as the startup progresses. During very early stages of the startup, we used the strategy of tracking a certain stage as the customer progressed through the onboarding funnel. Initially, we focused on tracking the number of visitors to our website as the north star metric. This approach enabled us to test our terminology we should be using to attract users to our product.
In case of comments and feedback, reach out to the author - Priyanka at pn@vevesta.com or LinkedIn
Reference
Nir Eyal - Hooked
Experience from the field