Engagement MetricsvsNorth Star Metric

Engagement metrics measure how actively and deeply users interact with your product. The most important is the DAU/MAU ratio (Daily Active Users ÷ Monthly Active Users), also called the 'stickiness ratio.' A 50% DAU/MAU means half your monthly users come back every day. Facebook's DAU/MAU is 66%, making it one of the stickiest products ever built. For SaaS, a 13-20% DAU/MAU is average, 20-30% is good, and 30%+ signals exceptional engagement that predicts strong retention.

Your North Star Metric is the single number that best captures the core value your product delivers to customers. Airbnb's is 'Nights Booked.' Spotify's is 'Time Spent Listening.' When this metric goes up, everything else follows — revenue, retention, referrals. It aligns the entire company around one measurable goal.

The trap is tracking surface-level engagement (page views, sessions) instead of meaningful engagement (core actions completed). A news site with 10 million page views but 2-minute average session time has shallow engagement — users skim headlines and leave. A project management tool with 500K sessions where users create tasks, assign team members, and complete workflows has deep engagement. Vanity engagement metrics (views, clicks) correlate poorly with retention; value-delivered metrics (workflows completed, goals achieved) correlate strongly.

The biggest mistake is choosing a vanity metric as your North Star. 'Total Users' sounds impressive but ignores whether those users are active or getting value. Zynga had hundreds of millions of registered users but collapsed because their North Star should have been 'Daily Active Players,' not sign-ups.

Define your 'engagement stack' — 3 tiers of user engagement: (1) Passive: user logged in / opened the app. (2) Active: user performed a core action (sent a message, created a document, ran a report). (3) Power: user used advanced features or collaborated with others. Calculate DAU/MAU and track all three tiers separately. Target: at least 40% of MAU should be 'Active' tier. Set engagement alerts: if a user drops from Power to Passive, trigger a Customer Success touchpoint within 48 hours.

Pick a metric that reflects VALUE DELIVERY, not revenue directly. Test it with this framework: (1) Does it measure the value users get? (2) Does it predict long-term revenue? (3) Can every team influence it? If yes to all three, you have your North Star. Rally the entire team around this single metric.