Localization and translation ROI: How to measure impact and optimize investment returns

Our blog often overviews the general benefits of localization, such as raising trust and visibility, spreading services to customers worldwide, etc. In this article, we want to discuss a more tangible topic — localization ROI (Return On Investment) — as it is one of the leading indicators of the process's success. Also, we will overview separately one of its fundamental parts - the translation process and its ROI.

→ Just a tiny reminder. Translation implies only converting content from one language to another, while localization goes further and includes adapting content, design, sales and communication channels, etc.

The ROI formula ((Net profit​/Investment value)×100) shows the success level of the business activities in terms of earnings. Regarding the release of goods, for example, the ROI can be easily calculated - divide all your net profit (profit minus salaries, manufacturing, etc.) by the investments and multiply by 100. Regarding localization and translation, the process can be a bit complicated. Below, we will describe why and how to solve this challenge.

Measuring localization and translation ROI. Main challenges

When it comes to calculating localization ROI, we can use the main formula. This method gives us the general picture without a precise understanding of deeper processes and without the ability to find the strong and weak elements inside them.

To overview more comprehensively, we should start with the KPI, which can be based on business goals, project/team type, and activity sort. For instance:

Translation KPI

• Number of localized pages/words per period
• Delivery rate
• Number of localization errors per page/number of words, etc.
• etc.

Market sharing KPI:

• The keywords positions/number of keywords
• Traffic/page views (for online businesses)
• Number of leads
• Social media engagement
• etc.

Business-specific KPI — Anything related to the specific business direction, such as the number of customer support requests or positive feedback, can be included.

Not all KPIs above fit the classic ROI formula. For example, there is no transparent profit from the "number of localization errors" or "social media engagement." But all these tiny parts build a big picture.

The next step is correctly counting the investments for each localization and translation KPI. The general categories of the spending are:

• Employee fees;
• Tools and software;
• Sales and marketing additional activities;

Also, it is essential to define a precise and transparent understanding of the results. For example, the translation team's delivery rate may not match the technical team's delivery time to the end user. Splitting the responsibilities of each department is critical to having an objective vision.

So, as an intermediate conclusion, to measure localization and translation ROI, you have to do three steps:

• Define financial objectives;
• Calculate the spendings
• Measure the benefits.

In addition to the quantitative metrics, it is also important to consider qualitative factors:

• Brand reputation;
• Customer satisfaction;
• Internal processes success and convenience.

How to optimize localization and translation efforts to maximize ROI?

Regardless of which figure you get after the ROI calculation, the optimized process can constantly improve it.

1. Define the prioritized directions for your business.

Having localized ROI numbers lets you see the best and worst-performing markets. This knowledge allows businesses to distribute efforts and split the markets into the following categories:

• Rising stars — these are promising markets that show excellent performance and can provide more profit by adding additional efforts.
• Stable directions (cash cow) — the markets that are already on their success plateau or growing constantly and slowly.
• Undefined (question mark) — regions that don't show stable directions yet.
• Decline — markets that do not show growth and demand. For these directions, the optimal approach is to recheck the existing strategy and perhaps develop and launch a new one.

One of the most famous examples of failed business localization is Starbucks's experience in Australia. Long story short, they spent 23 years and millions of dollars to get the first profit.

You can read more about their case in our article about standardization strategy.

2. Use the speed-up translation tools.

If you can optimize something, you should do that — this is the fundamental law for rising profits. Accelerating the translation process reduces the cost spent on text adaptation and, as a result, boosts the ROI by cutting the investment sum. The most popular solutions for this task are:

• The machine translation and pre-translation tools. They allow fast prefilling of the content and simplify the task for translators when proofreading instead of starting from scratch.
• The translation memory tool's primary function is to collect and reuse all translations to save time.

3. Automate the quality assurance processes.

Mistakes during translation start the process of continuous iteration, which requires much more time from translators, managers, and developers to fix and exchange data. The automated quality checks solution prevents most human errors and minimizes the time needed to provide perfect content. At Lingohub, we offer a solution that automatically tracks the following: text length, terms usage, content duplication, extra spacing, HTML tags, placeholder usage, and much more.

4. Integrate your localization and translation into the development pipeline.

Team communication sometimes reaches around 60% of the working day, and the localization process is no exception. Periodically, the priority of tasks can change, and new segments and features that require translation arise. In this case, the best option is to build a continuous localization process and integrate it into the development CI/CD. Just look at how this can work based on the example of the Lingohub translation management system.

Moreover, Lingohub allows synchronization with the different Git branches, allowing isolated localization for project parts.

4. Build a collaborative environment for your team

. Well-built collaboration can improve product quality by around 30%. At the same time, bad communication is often defined as a primary stress factor at work.

Lingohub provides a thoughtful environment where all localization participants can easily get and share the needed information without stress. The pool of tools for communication includes:

• Discussion tool where the team can communicate about precise projects or text segments;
• Segment descriptions to share essential notes about the text;
• Context-providing tools like a glossary, style guide, and UI screenshots.

5. Automate the efforts tracking and provide transparency for all participants.

One of the main parts of the ROI-improving strategy is constantly checking progress to notice bottlenecks and issues in time. Additionally, with the data at hand, managers can better build the localization process and predict the deadlines.

To simplify the data management task, Lingohub provides a pool of tools that include the following:

• Project overview report where visible progress per project, language, branch, and issues detected by automated quality checks;
• Work reports that provide the data per user, including efforts they spent;
• Cost report that automatically creates the transaction for translators based on the custom rates and efforts.

To sum up

Localization ROI is a key indicator to consider when entering new markets. Perfection is limitless; therefore, Lingohub has designed various tools to enhance the ROI for your specific needs.

Try everything yourself with a 14-day free trial, or book a demo call with our team where we can discuss your case and find the best solution. Let's grow together.