How to Measure and Maximize Localization ROI
13 min. read
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.
Read on to learn:
Pro tip: Maximize your localization ROI by incorporating a robust localization management platform, like Centus, into your localization strategy. Learn more.
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 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.
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:
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: Quantify 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.
Measuring localization ROI is an essential tool for businesses that want to succeed in diverse linguistic and cultural settings.
You can enjoy a series of benefits that go beyond the bottom line by quantifying the impact of localization on different aspects of business operations.
Here are the key benefits of measuring the ROI of your localization efforts:
Demonstrating value to stakeholders
Imagine you’re in a room full of executives, all wanting to know why those funds are being directed toward localization. This is your moment to shine!
When you can pull out the data and illustrate how those translated product descriptions increased sales in new areas or how localized customer service lowered churn rates, you're not just talking numbers. You’re also demonstrating value, and stakeholders will nod with approval.
Informed decision-making and resource allocation
Making decisions in the absence of data is similar to attempting to sail a ship blindfolded. When you measure localization ROI, you're essentially giving your decision-makers night-vision goggles.
They will know which markets are hot and which are cold, where to put their money, and where to take a break.
Continuous improvement and optimization
Localization is not a one-size-fits-all project. It is an evolving terrain. When you calculate ROI, you're not just ticking a box. You’re also preparing for a game of continuous improvement.
With the data in hand, you'll be able to identify areas for improvement, fine-tune your techniques, and develop an effective localization process.
Enhanced risk management and adaptation
Just as you wouldn't walk a tightrope without casting a safety net first, you shouldn't enter new markets without first calculating the ROI of localization.
The localization ROI calculation is your crystal ball, detecting future stumbling blocks and highlighting areas that require your attention. This knowledge will help you be versatile and adapt easily to unforeseen circumstances.
Competitive advantage and market differentiation
You're already ahead of the competition if you can show how your products and services fit effortlessly into the cultural landscape of each region.
It's like walking into a party wearing the ideal clothing. Heads will turn, and competitors will wonder how you got the dress code so right.
While the potential benefits of measuring localization ROI are attractive, the task is not without difficulties. Assessing and evaluating the impact of localization projects requires successfully overcoming different challenges. These include:
Attribution and isolation of the impact of localization
Due to the interrelated structure of several marketing, product, and sales activities, attributing specific business outcomes purely to localization projects can be difficult.
Localization is usually just one of the factors impacting customer behavior and market penetration. It might be difficult to isolate the direct impact of localization on revenue, client engagement, or market expansion.
Solution: Use controlled experiments or A/B testing. You can determine the direct impact of localization efforts on customer behavior by comparing localized content against non-localized content within certain market sectors.
Furthermore, you can accurately attribute outcomes to localized content by using unique tracking IDs such as UTM links or referral links.
Varied market dynamics and cultural nuances
Each market has its own set of dynamics, cultural preferences, and language complexities. What works in one market may or may not work in another.
Accounting for these differences while ensuring that the localized content matches the specific cultural peculiarities of the target market is required for accurately measuring the impact of localization.
Solution: Ensure your localization team collaborates with in-country professionals familiar with cultural conventions, market trends, and linguistic preferences.
Data availability and quality
The availability and accuracy of data are critical for accurate localization ROI measurement. Inadequate data collection or varying data quality might mask the underlying impact of localization projects, thereby making meaningful findings difficult.
Solution: Implement comprehensive data collection processes and invest in analytics tools. Ensure you put in place effective tracking and reporting systems to gather key indicators across several marketplaces.
Evolving technology landscape
The localization technology landscape is ever-evolving. New technologies, automation solutions, and advances in machine translation are constantly changing how content is localized.
This dynamic environment can make measuring ROI more difficult because the influence of technology shifts may not be immediately apparent.
Solution: Stay current with market developments and progressively adopt new technologies while continuously evaluating their impact on ROI.
An organized approach allows you to more properly measure the impact of technology on localization performance.
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.
Adapt content for local nuances and preferences
Content that is tailored to local sensitivities, traditions, and humor can ignite a relatable spark. A humorous allusion that tickles the funny bone in one region may raise eyebrows in another, so make your content suit local nuances and preferences.
Regularly review KPIs and localization strategies
In the ever-evolving globalization landscape, what's gold today may be brass tomorrow. Know what’s happening to your localization efforts by regularly reviewing KPIs and adapting your methods accordingly. Flexibility is the key here.
Incorporate feedback for ongoing improvement
Constructive criticism isn't meant for only art courses. It is the secret sauce to localization success. Pay attention to input from your local audience and adapt your content accordingly.
With each iteration, you're not simply localizing. You're also evolving, polishing, and perfecting your marketing strategies.
To Sum Up
Measuring and optimizing localization ROI is not just a financial strategy. It also demonstrates your dedication to embracing diversity and delivering value across borders.
As businesses continue to expand their global reach, the ability to handle the complexities of localization will become increasingly crucial in determining who leads the global stage.
Localization management tools, such as Centus, can help you get more out of your localization efforts by automating tasks, lowering expenses, enhancing quality, increasing control, and boosting visibility. Learn more.
What is the ROI of localization?
The ROI of localization varies according to the company, industry, and target markets. Localization, on the other hand, has been demonstrated in tests to have a hugely favorable impact on ROI.
How do you measure ROI in localization?
There are different approaches to measuring ROI in localization, including:
Establish specific goals and objectives for your localization activities
Select the appropriate metrics to monitor
Gather data over time
Use a localization management platform
What is the value of localization?
Localization is valuable because it enables businesses to:
Find new customers
Enhance brand image
What are the challenges of measuring localization ROI?
Here are the challenges you can encounter when measuring localization ROI:
Attributing sales or other business outcomes directly to localization efforts might be challenging
Measuring the ROI of localization can be time-consuming and costly
It is critical to ensure that the data used to calculate the localization ROI is accurate
What are the tips for improving the accuracy of localization ROI data?
Here are the tips for improving the accuracy of localization ROI data:
Use a reliable data source
Clean up your data
Use the right tools
Consult a localization professional
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