14 January 2025

Measuring the ROI of localization for businesses in 2025

Measuring the ROI of localization for businesses in 2025

With many businesses now engaging with a global consumer base, the importance of localization has become increasingly self-evident. What is localization, you ask? Simply put, it’s the process of adapting products or services to meet the linguistic, cultural, and regulatory demands of different markets.

However, as with any business investment, it’s crucial to measure the return on investment (ROI) of localization efforts. Understanding the ROI helps businesses make informed decisions about where and how to allocate resources for maximum impact. That said, it can be tricky to understand exactly how to measure the business results of localization processes, as they are often tightly embedded in marketing and sales endeavours, making it complicated to discern which results should be attributed strictly to translation and adaptation.

Understanding ROI and localization

ROI in localization can be defined as the financial return gained from localization efforts relative to the costs incurred. The formula is as follows:

ROI = (current value of localization – cost of localization) / cost of localization

By understanding both the costs and the added value, businesses can assess the effectiveness of their localization strategies. As already mentioned, tracking the current value of localization isn’t always a simple process. Luckily, there are a number of key performance indicators (KPIs) that businesses can use.

 

KPIs for localization ROI

To effectively measure localization ROI, businesses should track a variety of KPIs. Here are some examples:

  • Revenue-related KPIs:
    • Increase in revenue: Monitor revenue growth in specific markets post-localization. This is especially useful if a business was already active in a region before undergoing localization.
    • Incremental sales: Track additional sales generated in targeted regions.
    • Average revenue per user (ARPU): Measure the revenue generated per user in localized markets.
    • Average order value (AOV): Assess the average transaction size in localized regions.

 

  • Market and SEO KPIs:
    • SEO keyword ranking: Evaluate the performance of localized keywords in search engines. Do consider that the search terms might need to be modified substantially in different regions. Look for a localization partner that can offer more than standard keyword translation in order to see the best results.
    • Market share: Analyze the share of the market captured in new regions.

 

  • Customer-related KPIs:
    • Customer acquisition cost (CAC): Calculate the cost of acquiring new customers in localized markets.
    • Lifetime value (LTV) of a customer: Estimate the total revenue expected from a customer over their lifetime.
    • Customer retention rate: Track the percentage of customers retained over time.
    • Customer support cases: Monitor the number of support cases to assess customer satisfaction. This number should decrease once guides and tutorials become available to users in their native languages.

 

  • Engagement and conversion KPIs:
    • Page views and conversion rates: Track website traffic and conversion rates in localized markets.
    • Social media engagement: Measure engagement levels on social media platforms in different languages.
    • Email opt-in rates: Monitor the rate at which users subscribe to newsletters or updates

Further considerations for measuring localization ROI

Estimating potential revenue from localized products

Making accurate sales estimates is crucial for maximizing localization ROI. Businesses should consider factors such as population size, relevance to their business, and comparisons with existing markets. Tools like Google Trends can provide insights into market interest and demand. Additionally, understanding local laws and guidelines in new markets will help to avoid any regulatory barriers.

 

Additional metrics and considerations

Beyond traditional KPIs, businesses should estimate the time given back to internal teams by outsourcing localization tasks. Conducting user testing studies can also provide valuable feedback to improve localized products and services.

 

Understanding the costs of localization

Localization involves various costs, including translation, technology, and human resources. Accurately tracking these costs is essential for calculating ROI, but the world of localization can be difficult to navigate alone.

Partnering with a professional language service provider can help consolidate these costs, making them much easier to track. Alpha CRC offers an ‘under one roof’ model, centralizing all localization projects and enabling easier budget control for clients.

 

Strategies to maximize localization ROI

To maximize the ROI of localization efforts, businesses should adopt strategic approaches:

  • Market research: Conduct thorough research to identify high-demand markets and prioritize languages spoken in those regions.
  • Early internationalization planning: Plan for the internationalization of digital functions early in the process to avoid costly retrofits.
  • Prioritize critical content: Identify and localize the most critical content first to ensure maximum impact.
  • Leverage technology: Consider using machine translation with post-editing for specific content to reduce costs.
  • Optimize for international SEO: Improve visibility in new markets by optimizing for local search engines.
  • Utilize translation management systems (TMS): Streamline the localization process with TMS to enhance efficiency.

Localization is a powerful tool for businesses seeking to expand their global reach. By strategically measuring and maximizing the ROI of localization efforts, companies can ensure their investments yield significant returns. Continuous evaluation and adaptation of localization strategies are key to thriving in diverse international markets.

Businesses are encouraged to start evaluating their localization efforts today. By implementing the strategies outlined in this guide, companies can enhance their global presence and achieve sustainable growth in new markets.

 

About Alpha CRC

Alpha CRC offers clients high-quality localization services that blend the best of human creativity with the speed and power of technology.

From translation to content creation, Alpha CRC enables clients to engage with their global customer bases and improve their reach.

Looking to get localization advice or begin a project today? Contact us.