Understanding the problem between localization and ROI

by Adrienne Lumb
3 Minute Read

Creating an ROI model for localization is a pain point for many organizations. We’re dedicated to helping solve this problem and have written a complete guide on the very issue. You can get your free copy here. First, we wanted to spend some time dissecting the complications of localization and ROI. 

Differences in performance goals

Core functions of any organization set performance metrics that are tied to objectives meant to sustain and grow the business. Marketing teams work toward delivering a targeted number of leads to sales teams, who work toward closing a certain amount of deals. Recruiters need to hire a number of people. Engineers have software performance targets. Product development teams work on plans tied to adoption and usage. All are bubbling up to overall business revenue targets set forth by C-suite executives, analysts, and advisers, showing how they prove ROI.

Localization functions, however, aren’t usually factored into revenue goals like the teams above. They’re measured on speed-to-market, production pace, spend, and quality. These are necessary considerations, but that they’re generally the only measurements, is abnormal.

How did localization get left out of ROI?

Localization is seen as a cost center, instead of a revenue well

As organizations form, the focus is often put on establishing and dominating a local market and hedging out the competition. Operational costs, improving efficiencies, increasing margins, product adoption, technological advancements, and brand awareness are all prioritized. This makes sense.

Organizations begin to strengthen, grow, and stand on solid ground. Binoculars are retrieved, and sights set on market opportunities abroad. This is a great ambition.

However, internationalization and global market opportunity are often misunderstood. Companies want to prioritize and may feel an urgency to do so, but they don’t know how.

How will internationalization contribute to business goals? The risks, uncertainties, and unknowns that accompany expanding to a new market seem greater than the reward, so ROI is very loosely considered. Legacy departments that have added to revenue thus far — each with their stakeholder — take precedence.

As localization plans develop, the focal point of the conversation shifts to cost, rather than a revenue opportunity. Investment is measured by reviewing costs associated with:

  • Translating content
  • Localizing software
  • Hiring regional support
  • Quality assurance
  • Engineering resources and time

In reviewing the return on the investments above, performance is measured on time-to-market, translation speed, and cost-savings.

Left out of this review is how localization contributes to business revenue, and customer success metrics such as:

  • Product sales
  • Marketing qualified leads
  • Sales opportunities
  • Customer retention goals
  • Brand awareness

Developing a localization attribution model is essential to understand the impact it has on growth. Metrics such as customer acquisition cost and lifetime value become complicated when costs vary greatly depending on locale. Another consideration includes the lifetime cost of localizing. If done well, most of the localization work comes up front. Translation is cost-effective and affordable to maintain long-term with the right solutions.

Data dichotomy

Analysis of complex data sets is required for any business to make informed decisions. Disparities lie at the root of data analysis between localization and revenue. Either localization teams lack access to the data tools they need, they’re reviewing sets of data disparate to that of the larger organization, or they’re left out of data studies entirely.

This leaves a black box surrounding user insights in targeted locales.

Demand for modernization

Accompanied with this is the need to modernize. Localization practices developed twenty or thirty years ago are still widely in place. Given project requirements, a deadline, and a budget, localization teams have the autonomy to choose whatever solution necessary to achieve the result. Some are inclined to use the same Language Service Providers they’ve been using for years, although their methods may be slower, and more expensive than new solutions.

Meanwhile, the digital and on-demand economy has exploded. Consumers don’t have the patience for faulty technology. Brand loyalty means little if it means having to wait for a product. They’ll adopt another solution that’s readily available.

It’s imperative for localization teams also to modernize their methods to stay ahead of the pace at which the global economy now operates. In tandem with this, they also need the opportunity to grow. Localization leaders are given very few professional advancement opportunities, as businesses de-prioritize internationalization. They hit the ceiling, and stay there.

Companies must prioritize giving localization leaders VP level input. Those that have been the most successful in localizing have taken internationalization seriously from the start.

Localization is profitable. You can measure it.

Having a hard time tying localization to ROI? We've got you. The Ultimate Guide to Measuring Localization ROI covers everything you need to know to tie your market expansion efforts to business goals and revenue.

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