Localization is no longer a “good to live” for companies trying to expand globally; It is an important driver for success in today’s competing scenario. B2B companies investing in location can open new markets, connect authentically to the public and establish a solid international appearance. But how do you measure returns on this investment?
The calculation of return on B2B Localization Investment (ROI) may seem difficult to first. However, with the right approach, it becomes a powerful way to justify expenses and improve the location strategy to move on. This guide will show you how to calculate the return for the initiative for location, with action -rich stages and examples, the one to clarify each step.
What Is ROI in Localization?
Return to Roi, or investment, measures the benefits received by investment in relation to costs. For location efforts, ROI shows about the resources used to customize material, products and messages for specific areas provide the desired price.
Localization means some return because it gives you a clear picture of your initiative has an average impact. This allows decision makers to distribute the budget effectively, and shows how location supports the development of the business.
To calculate this, you need two pieces of information:
- Investment Costs: The total amount spent on localization activities.
- Returns or Benefits: The financial gains (revenue uptick, new customers, or market share growth) as a direct result of localization.
ROI is typically calculated with the following formula:
ROI = (Net Profit from Localization – Investment in Localization) ÷ Investment in Localization × 100
A positive ROI indicates that your localization efforts yield more than what you spent, proving their worth.
Factors That Impact Localization ROI
Before jumping straight into calculations, it’s critical to understand the variables affecting your localization ROI. Some of the top factors include:
1. The Scope of the Localization Project
Different localizations require varying levels of effort. For example, localizing a technical user manual will naturally cost more (and yield different outcomes) than localizing a homepage or landing page. Larger projects also involve more teams, such as translators, developers, and marketing designers.
Tip: When setting ROI expectations, define what “success” means for each type of localization effort.
2. Target Market Potential
The opportunity in the markets you’re localizing for plays a significant role. For instance, entering a rapidly growing market in Southeast Asia might bring faster, larger ROI compared to targeting a smaller, stagnant audience.
Key Insight: Analyze market data like demand benchmarks, average incomes, cultural preferences, and digital penetration to evaluate potential returns.
3. Quality of Localization
The quality of the translated or adapted materials can significantly affect your ROI. Poor quality localization causes misunderstandings and alienates potential customers. On the other hand, high-quality localization builds credibility and fosters trust.
Example:
- A poorly localized user interface might frustrate your audience and increase cart abandonment rates.
- A well-executed localization can have the opposite effect, increasing conversions and user loyalty.
4. Marketing Integration
Localization efforts must align with your broader marketing campaigns. Without strategic marketing support, even well-localized content might fail to reach its full ROI potential.
Pro tip:
Combine localized messaging with paid campaigns or organic social media efforts for maximum impact on brand awareness and conversions.
Steps to Calculate ROI on B2B Localization
Now for the practical steps!
Step 1. Identify the Costs
Start by gathering all the expenses related to your localization project. This includes:
- Translation Costs: Payment to translation agencies, freelance translators, or in-house localization experts.
- Tools and Technology: Costs associated with software like translation management systems (TMS).
- Testing and Quality Assurance: Expenses for ensuring the accuracy and quality of localized content.
- Cross-Functional Collaboration: Efforts spent integrating localized content with other business operations like development or social media campaigns.
For example, if your company spends $10,000 localizing a product catalog into three languages, this becomes your investment cost baseline.
Step 2. Measure Localization Revenue
Now, measure the revenue generated by your localization efforts. You can track these benefits through KPIs such as:
- Increase in Sales: Any revenue boost driven by localized content, services, or websites.
- New Customer Acquisition: Measure the number of new clients in localized regions.
- Market Access: Look for revenue generated as a result of entering previously untapped territories.
For instance, if localizing your website for the Brazilian market leads to $25,000 in additional sales, then this is your total benefit.
Step 3. Factor in Non-Monetary Returns
While direct revenue growth is often the focus, don’t forget to evaluate non-monetary benefits that may indirectly contribute to ROI. Examples include:
- Improved brand perception in culturally diverse markets.
- More website traffic through localized SEO strategies.
- Lower churn rates due to improved customer satisfaction.
Track these metrics alongside monetary outcomes to build a clearer picture of localization’s overall impact.
Step 4. Apply the ROI Formula
Using the example above, where your localization investment costs total $10,000 and the additional revenue stands at $25,000, you can calculate:
ROI = ($25,000 – $10,000) ÷ $10,000 × 100 = 150%
This means your localization investment yielded 150% return.
Real-World Example of Localization ROI
Imagine a B2B SaaS company that provides project management software. The company decides to translate its interface into French, Spanish, and German.
Here’s what the ROI breakdown might look like:
- Cost of localization (translation, QA, etc.): $50,000
- Revenue gain after opening new markets in Europe over the following year: $200,000
ROI = ($200,000 – $50,000) ÷ $50,000 × 100 = 300%
With a 300% ROI, the localization project would be deemed a massive success for fueling global expansion.
How to Maximize ROI on B2B Localization
To ensure you’re getting the most out of localization, consider the following strategies:
Prioritize High-Impact Content
Not all content needs localization. Focus on assets like your website, key product features, or marketing campaigns that make the biggest difference.
Leverage AI and Automation Tools
Tools like neural machine translation and AI-powered TMS can reduce costs while maintaining quality.
Monitor and Refine KPIs
Frequently review key metrics to ensure your localization efforts are helping achieve goals like increased engagement or revenue growth.
Invest in Cultural Training
Localization is more than translation. Train your team to understand cultural nuances that could make or break your initiatives.
Start Localizing Smarter Today
Location is a powerful unit that can unlock mass growth for your B2B organization. By calculating the return, you can better predict the results, prove the value and effectively distribute resources.
Begin by focusing on high-power projects, taking advantage of AI tools to reduce costs and adjust the efforts of location with your overall strategy. With these steps, your business can break up obstacles and create meaningful conditions in new markets.
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