Practise vocabulary for DAU/MAU, activation rate, retention cohorts, k-factor, and north star metrics.
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A DAU/MAU ratio of 0.45 indicates:
DAU/MAU ratio (stickiness): Facebook targets ~60%, WhatsApp ~80%. A productivity tool might accept 20-30%. The 'right' ratio depends on whether the product is designed for daily use. Slack, GitHub, and Figma aim for high DAU/MAU; a tax software might accept low (it's seasonal).
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Activation rate in SaaS metrics is defined as:
Activation definition varies by product. Slack: a team sending 2,000 messages. Dropbox: uploading first file. The activation event predicts whether a user will retain. Example: 'Activation is defined as a new user creating their first dashboard within 7 days of signup — we track this as our leading retention metric.'
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A retention cohort analysis for the Q1 cohort with '6-month retention of 62%' means:
Cohort analysis tracks groups of users who joined in the same period: Q1 2024 cohort, Q2 2024 cohort. Comparing cohorts reveals whether product improvements are changing retention: 'The Q3 cohort has 5pp better 3-month retention than Q2 — the onboarding redesign is working.'
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The k-factor (viral coefficient) measures:
k-factor = invites sent per user × conversion rate of invites. k=1.0: each user brings one new user — the product maintains its size through virality. k>1.0: viral growth loop (exponential). k<1.0: need additional paid/organic acquisition to grow. Many B2B SaaS products achieve k=0.3-0.5 from referrals.
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A North Star Metric (NSM) in a SaaS product is defined as:
NSM examples: Airbnb = Nights Booked; Slack = Messages Sent; Spotify = Time Spent Listening; HubSpot = Seats Managing Active Contacts. The NSM should capture customer value (not vanity). 'Accounts created' is not a good NSM — it doesn't indicate whether customers got value.