Calculating Churn Rate Using Monthly Active Users (MAU), Daily Active Users (DAU), and Daily New User Data

Introduction

When it comes to evaluating the success and sustainability of a digital product or service, churn rate is a critical metric. It measures the percentage of users who stop using a service over a specific period. This article will guide you through the steps to calculate the churn rate using Monthly Active Users (MAU), Daily Active Users (DAU), and Daily New User data.

Step-by-Step Calculation

1. Define Your Time Period

First, you need to decide the period over which you want to calculate your churn rate. Commonly, this is done on a monthly basis, aligning with the nature of digital service usage patterns.

2. Gather Your Data

To accurately calculate the churn rate, you will need to gather the following information:

Monthly Active Users (MAU): The number of unique users who engaged with your product in the last month. Daily Active Users (DAU): The number of unique users who engaged with your product daily. Daily New Users: The number of new users acquired each day.

3. Calculate Total Users at the Start of the Period

For a monthly period, you can use the MAU from the previous month to represent the users at the start of the period.

4. Calculate Total Users at the End of the Period

The end of the period can be determined by accounting for the new users and adjusting for churn. The formula to achieve this is:

Total Users at End Total Users at Start (Daily New Users * Number of Days) - Churned Users

From this equation, you can also isolate the value of churned users:

Churned Users Total Users at Start (Daily New Users * Number of Days) - Total Users at End

5. Calculate Churn Rate

The churn rate is then calculated using the following formula:

Churn Rate (Churned Users / Total Users at Start) * 100

Example Calculation

Let's demonstrate with a real-world example:

MAU from Previous Month: 1000 users Daily New Users: 50 users Number of Days in Month: 30 days

Step 1: Total Users at Start

Total Users at Start 1000 users

Step 2: Total New Users Over the Month

Total New Users Daily New Users * Number of Days in Month 50 * 30 1500 users

Step 3: Total Users at End of Month

Assume you find 1200 users were active at the end of the month.

Step 4: Calculate Churned Users

Total Users at End Total Users at Start (Daily New Users * Number of Days) - Churned Users

1200 1000 1500 - Churned Users

Churned Users 1500 1000 - 1200 1300 users

Step 5: Calculate Churn Rate

Churn Rate (1300 / 1000) * 100 130%

Important Notes

Note 1: A churn rate over 100 indicates that you lost more users than you started with, signifying a serious retention issue.

Note 2: The churn rate can vary significantly across industries and products. It's essential to benchmark against similar businesses to understand your performance in context.

Note 3: With this method, you can effectively calculate the churn rate and gain insights into user retention and engagement.