The Importance Of Meaningful Activities When Defining Active Users

Active users is undoubtedly one of the cornerstone metrics of analytics. Not only is this metric very often used in marketing analytics, it serves as the north star for countless companies and provides investors with insights into a company's growth trajectory. However, the metric of active users can easily be distorted if not defined and implemented properly. Let's delve into the nuances of this crucial metric and why defining meaningful activities is key to avoiding its distortion.

As an analytics concept, active users represent the count of users who have engaged with a product within a specific period (such as daily, weekly, or monthly). What really matters though, when looking at active users, is how "active" is really defined. This definition and its execution when calculating the metric will inevitably have (sometimes undesirable) implications.

When the concept of activity hasn't been thought through extensively, the most common approach is to define an active user as someone who has performed any kind of interaction with the product. This broad definition might include something as simple as opening an app or viewing a web page. While adding all activities as part of the active user measurement can be the quickest route, it unfortunately opens the door to manipulation and introduces a level of "noise" into the metric.

Let's illustrate this with a hypothetical scenario involving a music app. This app has a substantial user base with many users signed up to receive communications such as emails and push notifications. Sending out a communication will inevitably prompt users to open the app. But let’s assume that, in this specific case, the communication was for some reason not really well tailored to what users expected. As a result, the majority of users closed the app immediately after opening it. Even though the communication led users to open the app, it did not lead to any meaningful engagement within the app. And this is where the noise in an all-encompassing active user definition starts to appear. Because the user activity count will include any user with any type of interaction, all the users that opened the communication but did not do anything in the app afterwards will be counted as active. This will eventually create a spike in the active user count on that day which might cause confusion if you were not aware of this specific communication being sent.

So, what can you do to avoid this? Well, you can look into “meaningful” activities! These are all the activities that a user performs which really show some level of engagement with your product. If we go back to the music app example, meaningful activities could include actions such as browsing for a song, listening to a song, or adding a song to a playlist (in real life, the list would obviously be more exhaustive). These actions, because they are actual interactions with the product, provide a better indication of the user's engagement with the app and its core functionalities. By ring-fencing the definition of active users to only include these meaningful activities, you can ensure the signal of this metric is much more accurate. And therefore provide a truer reflection of the active user base growth over time!

In addition, tying the user activity definition to meaningful activities has other positive implications. Activity tends to correlate with other core metrics such as revenue. This means that, the more reflective of real engagement your active user definition is, the more likely your activity will end up correlating with further core metrics including revenue. So not only are you making the active user metric more “reliable” by using meaningful activities, you are also creating a better signal that can be used for predicting further key outcomes with data science and AI models.

The next time you define a metric such as active users or any other core metric, take a pause to consider what truly lies behind the metric. This will enable you to define better metrics and ensure that the story they tell is more consistent and insightful over time. So, what are the meaningful activities of your product?