Localization ROI: No Magic Formula

This is a dilemma many professionals in the language industry rack their brains about – how to prove localization return on investment (ROI)?

The short version is there is not one single answer. The long version is, the answer will depend on what challenge you aim to solve with the answer to this question.

Depending on who you are, whether a localization department manager on the buyer side or a language services provider (LSP) trying to Jedi-mind-trick your client into spending money on localization for Korean, the arguments used will be different. Nevermind the desired outcome is the same for both categories  – spend more on localization in order to reach more consumers and grow your brand or product.

Before venturing into any discussion about how to prove the ROI of localization, let’s talk about metrics – it’s knowing what your company’s (or client’s, if you’re an LSP) key performance metrics are, which helps you build a case around proving how localization affects them.

Here are a few examples of metrics companies track in order to prove localization ROI:

  • The increase in hotel rooms booked if the website is localized
  • Annual revenue generated by a browser language A in market B against ongoing translation expense
  • User engagement (as opposed to just user base growth) in select territories if the product is localized correctly
  • For game developers, it can be a combination of metrics – from increase in regional sales when a language is launched, to cost per install

Example of how the insertion of Korean localization one year after launch of other markets propelled sales in Korea for the game developer Charlie Oscar. Source: Sergei Klimov, Gamasutra

There is no one magic formula, when it comes to proving localization ROI. That does not mean it’s impossible to prove. While different companies in different industries will have different methods of calculating it, the common denominators will be the usual suspects (and a variation thereof) – revenue generated in the target country and the cost to localize and to market.

Learn to track the data that matters and the magic formula will come to you naturally. Even better, when you’re facing a situation where you don’t have any historical data on localization you can draw conclusions from – see how others have been doing it. While their product and services are specific, you can at least get an approximation of localization ROI.

What is your experience? How does your organization track (and prove) localization ROI? Reach out to the Nimdzi Research team if you have a use case to share or need advice on how to build your case for a larger localization budget.

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