How to Use the Stickiness Ratio to Measure Product Health

Written by Kevin Yanushefski  | 

5 min

 

What makes a ‘good’ product metric? There are many metrics to measure product health, some better than others. Good product health measurements tend to share a few key attributes, including:

Measurable: easy to obtain, without heavy lifting to get the right data
Readable: easy to understand, without needing special context to interpret
Relevant: aligned with key business goals (e.g. If you move the number, will it result in positive change?)

One commonly used metric is user count, sometimes defined as new accounts created or total installs. This metric is easy to get (Measurable) but requires more context before it can be valuable. If a user creates an account but never logs in, that’s not a useful measurement of product health.

A better metric is the number of active users, sometimes measured as Daily Active Users (DAU), Weekly Active Users (WAU) or Monthly Active Users (MAU). This metric satisfies the attributes of Measurable, Readable, but is questionably Relevant. DAU or MAU can give you insight into the quantity of your user base, but doesn’t tell you anything about the quality of those users.

Rather than looking at these metrics in absolute terms, a more useful measurement is the ratio between these numbers, usually DAU/MAU, known as the stickiness ratio. It’s one thing to say, “We had a 20% increase in MAU,” but for your product to get traction and drive growth, you need users logging in more than just once a month.

For products with subscription business models, customers that fail to develop regular, habitual use will eventually churn.

Product leaders can use the stickiness ratio to visualize their product’s natural usage cadence, understand the differences in usage patterns between user segments or personas, and monitor changes in their user behavior over time. Pendo’s recently released Stickiness Widget makes this key product metric available at a glance on any dashboard.

Calculating Product Stickiness

For any given day (for DAU) or week (for WAU), count how many users logged into your app, and divide by the number of users who logged in during the previous 30 days. Expressed as a percent, this is your stickiness ratio. The numerator and denominator recalculate every day, so you can think of stickiness as a moving average of user retention. Pendo’s stickiness widget smoothes out noise by ignoring inactive users, but is granular enough to notice spikes and prompt you to investigate. We also give you the ability to exclude weekends from calculation, so your B2B app isn’t negatively impacted by your user’s natural work schedule.

A simple way to read a product with 25% stickiness is “of the people who log into my product at least once a month, one in four of them will log in on any given day.”

How to Use Stickiness

As with any good high-level metric, seeing your stickiness ratio is an invitation to ask more questions. Here are some suggestions to get you started:

What is my product’s natural cadence?

DAU/MAU and WAU/MAU are the same look at your user base, just a different time frame. For a communications app like Slack, DAU/MAU is probably the right level of granularity, but for an expense management tool like Expensify, WAU/MAU might be the better unit of measurement.

Which users show the most stickiness, and why?

Compare your stickiness ratio between different cohorts of users. Do different personas show different patterns? What about behavior-based segments, like heavy users of Key Feature #1 vs users of Key Feature #2? You may discover that certain features tend to encourage more habitual usage of your product, and that can inform your user retention strategy.

What levers can we pull to increase our product stickiness?

Once you know which personas tend to be most sticky, and which features are correlated with more habitual use, put these learnings to work in your user acquisition programs, in-app feature adoption campaigns, and customer education initiatives. Experiment, monitor changes over time, and include stickiness in your regular KPI review cadence.

Bottom line: the ratio is important, but it’s more important to increase the ratio over time, and understand what changes make the most impact on user frequency and stickiness.

The stickiness ratio was popularized by B2C companies with social media, communication, and gaming apps, but has valuable applications no matter what market you serve. For B2B apps especially, it’s important to remember that while companies may buy your product, it’s their people that use it. Product stickiness is the feedback loop that measures user value, and by extension, enterprise value.

Sticky products aren’t just nice to have or fun to use once in a while, they become part of a person’s daily routine, and that can be the secret to customer retention.