For years, SaaS companies have leaned on “active users” as the golden KPI—a simple number that promises growth and validation. But in a world where downloads and clicks are abundant, this metric often serves as little more than a vanity score. In reality, active users can be misleading, masking underlying issues in user engagement and product value. In this post, we’ll explore why active users aren’t the definitive measure of success, introduce better benchmarks like time-to-value and depth of engagement, and discuss how tools like Mixpanel and Amplitude help you dig deeper into your data. Finally, we’ll examine how Calm redefined success by looking beyond downloads to create genuine, lasting impact.
The Problem with “Active Users”
A Misleading Metric
At first glance, tracking active users appears straightforward. A high number of daily or monthly active users suggests that people are engaging with your product. However, this metric often tells only part of the story:
- Surface-Level Engagement:
An “active user” might simply log in without truly interacting with or deriving value from your product. It’s easy to inflate numbers with minimal activity that doesn’t contribute to long-term success. - Ignores Quality of Interaction:
Focusing solely on active users can obscure how deeply users engage with your product. Are they using advanced features? Are they finding value quickly, or are they merely browsing without purpose? - Encourages Vanity Metrics:
When teams obsess over active user counts, they might prioritize superficial improvements—like flashy UI tweaks—over deeper product enhancements that drive meaningful outcomes.
The Resulting Pitfalls
Relying on active users as the primary KPI can lead to misguided strategies. Companies may continue to celebrate high numbers while missing signs of churn, low retention, or poor product-market fit. The bottom line is that while active users can be a useful metric, they are insufficient on their own for evaluating true product success.
Better Benchmarks for SaaS Success
To gain a comprehensive understanding of your product’s performance, consider supplementing or even replacing active user counts with more meaningful metrics.
1. Time-to-Value
Definition:
Time-to-value measures how quickly a user experiences the core benefits of your product after signup. It answers the critical question: How fast does a new customer see a return on their investment?
Why It Matters:
- Faster Onboarding: A short time-to-value suggests that your onboarding process is effective and that users can quickly grasp your product’s advantages.
- Customer Satisfaction: The sooner users experience value, the more likely they are to stay engaged and become loyal customers.
How to Measure:
Track the duration between user signup and the first key action that demonstrates value—such as completing a tutorial, reaching a usage milestone, or activating a critical feature.
2. Depth of Engagement
Definition:
Depth of engagement goes beyond simple logins to examine how intensively users interact with your product. It considers frequency, duration, and the range of features used.
Why It Matters:
- User Commitment: High engagement typically correlates with a deeper commitment to your product, signaling that users are not just passively active but actively extracting value.
- Revenue Potential: Engaged users are more likely to convert to paid plans, upgrade their subscriptions, or recommend your product to others.
How to Measure:
Consider metrics such as:
- Session Duration: Average time spent per session.
- Feature Utilization: The breadth and frequency of feature usage.
- Repeat Engagement: How often users return and engage with different parts of the product.
3. Customer Retention and Lifetime Value (LTV)
Definition:
Retention measures the percentage of customers who continue using your product over time, while LTV estimates the total revenue you can expect from a customer throughout their relationship with your business.
Why It Matters:
- Sustainable Growth: High retention and LTV indicate that your product delivers ongoing value and that customers are willing to invest in it over the long term.
- Efficiency in Acquisition: When LTV exceeds customer acquisition costs (CAC), your growth model is sustainable.
How to Measure:
Regularly analyze cohort retention rates and calculate LTV by considering recurring revenue, churn rates, and customer engagement levels.
Tools That Help You Go Beyond Vanity Metrics
To truly understand and optimize these advanced KPIs, leveraging modern analytics tools is essential. Two industry leaders—Mixpanel and Amplitude—offer robust platforms to dive deeper into user behavior.
Mixpanel
Overview:
Mixpanel focuses on tracking user interactions and behavioral analytics. It allows you to segment users, measure event funnels, and analyze retention trends.
Key Benefits:
- Event-Based Tracking: Monitor specific user actions that correlate with time-to-value and depth of engagement.
- Cohort Analysis: Understand how different groups of users behave over time, highlighting the effectiveness of onboarding and retention strategies.
- Custom Dashboards: Create dashboards tailored to your unique KPIs, ensuring that you focus on metrics that matter.
Amplitude
Overview:
Amplitude provides comprehensive insights into product usage and customer journeys, enabling you to understand not just what users do, but why they do it.
Key Benefits:
- Behavioral Segmentation: Identify and target high-value user segments based on their engagement patterns.
- Conversion Funnels: Visualize the steps that lead to meaningful actions, from initial signup to achieving key milestones.
- Predictive Analytics: Use machine learning to forecast future user behavior, helping you proactively address potential churn or engagement drops.
Both Mixpanel and Amplitude empower you to look beyond simple active user counts, delivering the data you need to make informed product decisions and optimize your SaaS strategy.
Case Study: How Calm Redefined Success Beyond Downloads
Calm, the popular meditation and sleep app, offers a compelling example of how focusing on more meaningful KPIs can drive success. While downloads and active user counts are important, Calm’s leadership recognized that these metrics didn’t fully capture the impact of their product.
The Challenge
In a crowded market of wellness and productivity apps, Calm needed to differentiate itself not just by numbers, but by the quality of user experience and long-term engagement. Downloads were high, but they struggled with retention and deep user engagement—critical factors for a subscription-based service.
The Strategy
- Redefining Time-to-Value:
Calm re-examined the user journey from the moment of signup. Instead of measuring success solely by downloads, they focused on how quickly users started experiencing the app’s core benefits—such as guided meditation sessions or sleep stories. This helped them identify friction points in onboarding and streamline the process. - Measuring Depth of Engagement:
Instead of counting every login, Calm tracked metrics like session length, frequency of meditation practice, and engagement with premium content. These insights allowed them to understand what kept users coming back and what features truly resonated. - Optimizing for Retention:
By integrating advanced analytics tools similar to Mixpanel and Amplitude, Calm was able to segment its user base and personalize content recommendations. This data-driven approach not only improved user satisfaction but also increased the conversion rate from free to paid subscriptions.
The Outcome
By redefining success beyond superficial metrics, Calm saw significant improvements in customer retention and lifetime value. Users who engaged deeply with the app were more likely to upgrade to premium plans, providing a steady, predictable revenue stream. Calm’s focus on quality over quantity proved that true success in the SaaS space isn’t about the number of active users—it’s about delivering lasting value.
Conclusion: Moving Beyond Vanity Metrics
In today’s SaaS landscape, clinging to vanity metrics like active users can obscure the true health of your product. Real success lies in understanding the deeper dynamics of user engagement: how quickly users find value, how deeply they interact with your product, and how long they stick around.
By shifting your focus to benchmarks like time-to-value, depth of engagement, and retention, you can build a more sustainable growth model—one that prioritizes long-term customer satisfaction over short-term numbers. Tools like Mixpanel and Amplitude provide the insights you need to navigate this complex landscape, while success stories like Calm’s remind us that rethinking KPIs can lead to transformative results.
It’s time to stop chasing superficial numbers and start measuring what really matters. In doing so, you’ll not only optimize your product for success but also build a business that delivers genuine, lasting value.