Localization has numerous benefits but when it comes to convincing your stakeholders to invest in a localization strategy, it boils down to one thing: ROI (return on investment). Measuring the impact of localization can be challenging as it is just one instrumental factor when entering new markets. There are other costs involved and other forces that will impact the ROI. It can be difficult to distinguish the revenue that’s directly generated from localization—it’s not as simple as “dollars in, dollars out”.

While there is no precise formula for calculating localization ROI, there are several aspects you can take into account when measuring its influence. Here are some key considerations that can help you secure the budget for a localization strategy in your company:

Define tracking metrics

You need to create Key Performance Indicators (KPIs) in order to measure the success of your localization projects. Be sure to involve different stakeholders to help narrow down which metrics can and should be tracked. Some examples of localization KPIs are:

Usage rate in different markets
Conversion rates on localized landing pages
Incremental sales in regions covered by your supported languages
Number of support tickets per language
SEO ranking in key regions

There isn’t a distinct list of localization KPIs. Select the metrics that make the most sense for your product and business and make sure they align with your overall business goals. You should also consider tracking the customer experience in your different markets. Surveys are a great way to see if your customers are satisfied and where localization can be improved.

Identify localization costs

Localization goes far beyond simply paying translation vendors. There are multiple costs to consider when allocating budgets.

Man power. You may have a dedicated localization team in your company or localization experts embedded within multiple teams, from engineering to marketing. You should also take project management time into consideration and gather input from the various teams involved.
Technology. Use a translation management system (TMS) for effective and efficient localization. There are many features that help reduce the cost of translation, automate processes, and increase your time to market. But a TMS is not the only tech investment to consider. Machine translation and integrations may also increase the initial investment but will result in long-term savings.
Strategy. Not all localization strategies are created equal. Using machine translation will influence how you allocate resources and have a huge impact on the bottom line. While you will save on the amount of human translations needed, you will need to allocate resources for MT post-editing and training to reap the long-term savings.
Different market costs. Localization spend will vary by market. Languages in high demand will cost less than low frequency languages.

When determining your localization costs, speak to all involved parties to get a clear idea. You don’t want to end up with surprise costs further down the line.

Determine your revenue potential

In which markets will localization make the biggest impact? How big is your potential audience? You should estimate the expected income generated from introducing a new language into your localization strategy. Actual performance will depend on the extent of your investment. You may choose to localize selected content or products, or you may choose to localize the entire buyer journey.

Setting Benchmarks

If you are trying to convince your stakeholders to adopt a localization strategy, and they want to see numbers, you can estimate how localization is influencing revenue streams with a standard ROI calculation.

While this number will not be definitive, and the formula does not take the complexities of localization into account, the estimation will help build a case on how localization can increase your company’s revenue.

You should also demonstrate the importance of localization through KPIs. A significant decrease in support tickets in a specific language or increased conversions on localized web pages are bound to highlight the value of a localization strategy. Evaluate your KPIs quarterly and you’ll start to see your ROI grow.

Having hard data and being able to demonstrate the positive impact localization will have on your business is key to getting stakeholders on board and keeping them on board.

How to reap the long-term rewards

Remember that localization is a long-term investment. When leveraging TMSs and other translation technologies, you’ll see your translation costs significantly reduce over time. The more content you translate, the less money you’ll spend per job.

Features such as translation memory store translation strings that will be automatically reused when translating similar content. Reducing both time to market and man-power. German e-commerce company Tennis-Point, reduced human translation by more than 90%, not to mention the 30% faster localization cycle thanks to other automation features. Machine translation also has long term benefits. When MT engines are matured, you’ll see higher quality translation output that will inevitably reduce the amount of post-editing needed.

For businesses to reap the benefits of localization requires patience, commitment, and a cohesive strategy that is supported throughout the organization. You may see some benefits of localization instantly, but it will also flourish and grow overtime as you save on manpower and cut costs, while delighting markets around the globe.