How to Measure and Maximize Localization ROI

How do you know your localization efforts weren’t in vain? Customers flocking to your multilingual website is a tip-off. A spike in purchases is another tell-tale sign.

But what if none of that happens? Or what if your business is booming and you wish for more? It’s time to calculate the localization ROI and adjust your localization efforts accordingly.

Pro tip: Maximize your localization ROI by incorporating a robust localization management platform, like Centus, into your localization strategy. Learn more.

What is localization ROI?

Localization ROI is a measure of profit derived from localizing a product or service into one or several languages. The calculation of localization ROI involves weighing the financial and non-financial benefits against the costs incurred during the localization process.

Localization ROI formula

Localization ROI is calculated by dividing the profits derived from a localization project by the cost of that project. Thus, the localization ROI formula looks as follows:

Localization ROI = net return on localization / cost of localization ×100%

For example, a localization project that costs $1,000 dollars and brings $2,000 in profit has an ROI of 200%.

When the ROI calculation yields a positive percentage, the localization efforts have been profitable. Conversely, a negative localization ROI percentage means that the localization costs exceed the localization returns.

How to measure localization ROI

Measuring the ROI of localization is a vital step that allows you to assess the efficiency of your localization efforts and make informed decisions about the optimization of your global development strategy.

Here’s how to calculate ROI:

Step 1: Establish clear objectives and KPIs

To properly measure and maximize the return on localization investment, you must first establish clear goals and key performance indicators (KPIs).

To this end, understand your company's overall business goals. What role does localization play in the bigger picture?

Break down your broad localization goals into specific, quantifiable goals. For example, if your goal is to boost product acceptance in a new market, one specific goal could be to achieve a certain percentage increase in user interaction in that market after localization.

Below are common localization KPIs:

• Sales volume in targeted locations
• Upsell and cross-sale rates in targeted locations
• New leads in targeted locations
• Product demos in targeted locations
• SEO keyword ranking in targeted locations
• Page views and visits for a localized version of your website
• Conversion rates for a localized website
• Social media reach, impressions, and engagement for targeted locations

If your localization effort spans numerous countries or regions, modify your targets and KPIs to account for each market's unique features.

Work with key stakeholders from other departments, including marketing, sales, and product management, to ensure that your localization targets and KPIs align with their needs and expectations.

Step 2: Evaluate costs

When it comes to calculating the ROI of localization projects, evaluating the expenses is critical.

This step not only provides a clear financial picture but also allows you to understand resource allocation and discover areas for potential cost reduction and localization investments maximization.

Here's how to efficiently quantify your translation costs:

• Divide the costs of localization into several groups. This could include translation services, software and technology costs, project management costs, in-country review fees, and any other overhead.
• Separate direct costs (specific expenses directly related to localization operations) from indirect costs (associated expenses that may not be immediately apparent but contribute to the entire process).
• Determine the expenses of obtaining, implementing, and maintaining computer-aided translation (CAT) tools, translation memory systems, or machine translation platforms.
• Account for labor costs, such as the wages and salaries for translators, localization managers, project coordinators, and any other team members involved in the process.
• If you operate in different markets, consider fluctuations in currency and inflation rates.
• To accurately assess the impact of your localization efforts, develop a baseline cost that represents the condition of your localization process before implementing any optimization measures. This baseline will be used as a reference point for tracking progress over time.

Step 3: Measure tangible benefits

Measuring the tangible benefits of localization ROI involves quantifying the direct and observable effects associated with your localization efforts.

These benefits are generally easier to quantify because they have a direct influence on the bottom line and may be described in monetary terms. This is how you can efficiently implement this step:

• Monitor the rise in sales or revenue from localized markets vs. non-localized markets.
• Track the penetration of your products or services in new markets after they have been localized.
• Calculate the cost savings from fewer customer support questions or returns as a result of better-localized product information.
• Compare the time required to launch products or campaigns in localized versus non-localized markets.
• Compare the conversion rates of localized and non-localized content.
• Use web analytics tools to evaluate localized content engagement metrics such as click-through rates, bounce rates, and time spent on the page.
• Track customer satisfaction, retention rates, and loyalty to see how localization affects the development of stronger customer connections.

Step 4: Assess intangible benefits

When calculating the ROI of localization projects, it is critical to consider not only the tangible benefits but also the intangible benefits that add to a holistic knowledge of the impact.

Intangible benefits are usually crucial in demonstrating the actual value of localization to stakeholders. Here's how you can evaluate the intangible benefits of localization ROI:

• Conduct surveys or sentiment analysis to determine how the localized content has changed your brand's perception in different markets.
• Pay attention to social media channels to see how localized content connects with local audiences and contributes to greater engagement rates.
• Gather feedback from localized markets to determine how effectively the content aligns with their requirements and expectations.
• Examine the reach of localized content by comparing market presence growth before and after localization projects.
• Determine whether the localized content adheres to cultural norms and values to avoid inadvertent cultural insensitivity.
• Assess the impact of localization on competitiveness by measuring changes in market share or performance versus competitors in localized markets.
• Determine whether the benefits of localization go beyond short-term gains and contribute to long-term success in localized markets.
• Gather feedback from personnel involved in the localization process to better understand how contributing to different markets affects their morale and engagement.

Best practices for maximizing localization ROI

Getting the most out of your localization efforts is not all about crushing numbers. You also need to master the art of finesse, recognize the local pulse, and dance to the rhythm of global markets.

So, let's explore best practices that can skyrocket your localization ROI:

Prioritize content for localization

Not all content is equal. Identify the high-impact content that will win your global audience's hearts and wallets.

What about those product descriptions? Yep.

What about the user guides? Definitely.

Cat memes? Perhaps not.

Focus on what is important and let the rest go.

Involve local experts and in-country reviewers

While you may be an expert in your field, local specialists are your guides to undiscovered language territory. They'll make sure your clever pun doesn't end up as a cringe-worthy error.

These language and culture experts can spot possible blunders and give your content that made-just-for-you vibe.

Use translation memory and CAT tools

Translation memory technologies save prior translations for future use, thereby preventing you from having to reinvent the wheel (or sentence) every time.

Computer-assisted translation (CAT) tools streamline your localization process by recommending translations and maintaining a consistent tone.

Pro tip: Use a professional localization management platform, Centus, to drastically boost your ROI and improve localization quality. Learn more.

Use machine translation and post-editing

Don't discard the robots just yet; they're your reliable aides. Machine translation may not be proficient in Shakespearean verse, but it can produce a rough draft at breakneck speed.

Combine that with a human post-editor who understands nuance and context, and you've got a polished jewel ready to shine. Learn more about machine translation post-editing in our comprehensive guide.