Daily active users on Instagram have dropped by 20%. What are the steps you will follow to identify the root cause?

My thoughts on this Facebook problem solving question. 

Interesting. Okay, so daily active users of Instagram declined by 20%, which seems super significant. My goal is to identify why it happened so that we can fix it.

My proposed approach is to first rule out obvious reasons and then define and break down the metric so that we can isolate the issue.

If I were a PM on Instagram, I would surely be aware of seasonality patterns such as (1) weekends being the highest usage days and (2) holidays being highest usage seasons. So I assume the reason behind the drop is not seasonality related. Second, I would assume that if there as a broad service outage the whole company would already be aware of it and working on fixing it. So I also assume this is not the case. Does that make sense?

I assume that by Daily Active Users you are referring to Users who open the Instagram app at least once on a given day. Is this a fair definition? Cool!

Next, I would start breaking down Daily Active Users by a series of variables. Specifically, I would break it down by:

• User type (this will help isolate whether the issue is with e.g. with the registration flow):
  • New
  • Existing
• Traffic Source (this can pinpoint whether there is an issue with any source of traffic e.g. notifications system malfunction):
  • Direct traffic
  • Notifications traffic
  • Search Engine traffic, which shoud be further broken down by SEO and SEM traffic
  • Referral traffic (e.g. from Facebook)
  • Other
• Platform (was there any new feature deployed in any platform that could have caused the 20% drop?)
  • Mobile Apps:
    • iOS
    • Android
  • Web
    • Windows
    • MacOS
    • iOS
    • Android
• Region (to make sure the issue is not with a specific geography)

Clarifying questions:

Assuming it is an app based issue currently..

Was this 20% drop a drastic fall or has it occurred over few months?

Is a similar trend observed in Wapp, FB as well?

If they are not daily users anymore, have they completely abandoned the app? If not how often are they using the app and which feature?

Is there any new feature that has been introduced/old feature that has been discontinued,post which this  drop has been observed?

Out of Instagram feed,stories,ads,IGTV features, which were the ones being used by these users previously before they went inactive?

Are these users of any particular demographics/observed in any particular geo? 

 Probable High Level Reasons:

• User Engagement has become low which is causing a set of people to go inactive
• The users are of a particular age group who are not finding anything relevant to share with their connections
• The daily active users who used to share travel photos and videos are now unable to do so because of external factors like Covid scenario
• A feature introduced into instagram is not being accepted well by 20% of such daily active users
• Users are switching on to a competitive product which has newer features and people are using such hashtags in their wapp status/fb stories

Now, I would prioritise the reasons which are internal to Insta and work on those first.

Hypothesis

1. The DAU number is impacted by lower engagement among users of a particular age group/interest area

Metrics: #followers of the DAU vis-a-vis reaction received on their feed/stories, #story reaction/replies vs #story viewsfor the users who dropped off,#profiles followed as per suggested profiles,# times their profile were suggested on others' insta account,#times they used the most used feature on insta,#interactions with feed/stories of profiles being suggested by insta

2. The DAU number is impacted by a new feature being introduced on the app which is either not easy to use or not received well by the audience

Metrics: #of times the new feature has been launched by the user vs #of times it has been used, #of interactions with followers on the output of this new feature when compared to other feature based posts, % change in follower count before and after this feature use

These metrics would help me reach the Root cause of this issue. 

To conclude, if the drop has been drastic- it mostly points toward a sudden change in a feature/usability. This might be feature addition/roll back or a change in the algorithm causing a change in the performance of the app. The other reason can be entirely external/unprecedented.

If the change has occured over time, for say a few months, it means- the users have gradually lost interest in the app because of lesser interactions with connections/irrelevant follow suggestions/no increase in followers/drop in content shared by connections/not being able to share new content with followers.