Get Your Money Back: Optimizing ROI for Localization

Return on investment (ROI) drives most business activities, projects, and localization should not be an exception: This is our guide for the first look into your localization ROI.

If you’re going to spend time and effort in readying your app or website for new markets and languages, you want to be sure that it’s all for a good reason. Likewise, if you pay external translation agencies to turn your text strings into Spanish, you want to see your dollars (or euros, yen, rubles, etc.) coming back with friends attached. If the concept of a localization ROI is new to you, here’s a simple definition. Return on investment is the comparison between the net amount of money you get out of a project (your return) and the money you put into it (investment.) The ROI is often expressed as a percentage. So, for example, if after deducting all your translation expenses you end up with a net profit of $5,000 after having invested $50,000, then your ROI is 100% x $5000/$50000, i.e. 10%. A bigger, positive ROI is usually better. If your ROI is negative, then you spent more money than you made, which is no way to run a business over the long term!

What Choice Do You Have?

Most of your potential market or audience across the world does not speak your language (even if that language is English.) Consider the following statistics too:

  • Over 72% of consumers said there was a bigger chance they would buy from a website if it was in their native language, according to a recent eight country survey.
  • 42% of European Union consumers do not buy products or services presented in a foreign language, even if they are fluent in that language.
  • 95% of Chinese consumers do not buy products or services presented in a foreign language, even if they are fluent in that language. And remember, there are also different versions of Chinese within China too. Meanwhile, there are now considerably more Chinese web users than US web users.
  • The dominance of English as an Internet language has dropped to 3% or less in recent years, compared to a 26% margin in 2000.

So, localization in general may not be a choice, but a necessity. However, ROI considerations may push you towards a certain priority for your localizations. Naturally, it makes sense to serve bigger, more profitable markets for your app or website first.

Making Your Sales Estimates

Whether Japanese, Georgian, or Javanese should be your first choice for a localization depends on your app or website, and your marketing objective. Your first step in calculating return on investment for localization is to decide where you want to sell, which may be a totally different country or region, compared to somebody else’s choice. Next, you must estimate sales revenue from the markets for which you are planning localization. This is a tricky proposition at the best of times, but information to help you do this may include:

  • Population size/number of web or mobile device users in the market for localization
  • Comparison of a market you’re aiming at with a market you already know. For example, if the new market has twice the number of smartphone users as your home market, a correctly localized version of your app might attract twice as many customers compared to your home market.
  • Data from online tools like Google Global Market Finder and Google Trends to see how popular relevant keywords are in different languages. You may want to check out different versions of such tools for different regions, where Google is not the main player (as in China, for instance.)
  • Specific market or country regulations concerning apps or websites. In sectors like healthcare and finance, you may find that regulations effectively prevent you from launching a localized version of your app. In that case, cross that country off your list and look for others instead.

How A Simple SWOT Analysis Can Help

SWOT is a marketing and business term that stands for strengths, weaknesses, opportunities, and threats. Checking out these four aspects can help you decide if a particular localization is likely to be good business or not. For example, let’s say you are considering a localization into Spanish of your app that helps users learn how to play drums. Then your SWOT analysis might look like this:

  • Strengths. Your app localization will cover all the content that Spanish people want to know about, including Latin rhythms and techniques of specific interest to them.
  • Weaknesses. You don’t have a native Spanish speaker in your team to ensure that your localization will be up to the standards expected by native speakers – although good translation management with a competent, professional translation agency may let you overcome such a weakness.
  • Opportunities. The Spanish-speaking market has been vocal about needing better tools for learning how to drum (and your marketing department has statistics, press clippings, etc. to prove it, right?).
  • Threats. You have a couple of competitors with decent apps of their own, who have also announced plans to move into the Spanish speaking market. You’ll need to check your pricing remains attractive to your target customers compared to that of your rivals.

On a relative basis (compared with other projects you know about) or in absolute terms (when you can quantify impacts and dollars), your SWOT analysis can help you decide if you’ll make money, and how much.

Timing Trade-Offs for Localization Investments

Accepted wisdom says that any necessary investment should be made as close as possible to the launch of a product, and that all possible revenues should be collected as soon as possible after launch. That way, you avoid tying up investment too early and having to wait for returns, whose value will be eroded by inflation over the time you have to wait for them. However, there are other factors that you should consider too:

  • Internationalization, which is the preparatory work to make your app or website ready for any specific localization afterwards, is often best designed in from the start. Just like security and quality, it is often more difficult to add in or layer on internationalization at a later stage, and the results may not be as good, either.
  • The basics of internationalization, such as the separation of content and the use of functions to automatically format units and quantities for foreign languages, may also need relatively little effort, when they are done at the same time as the development of the code.
  • Localization itself, meaning the translation or “transcreation” of text and other content, can be then be done shortly before the planned launch date of a version of your app or website in a given language. So, if you are planning a launch of a Spanish-localized version of your app in April, you might wait until February before spending time and money on getting translations done and running quality checks, thus keeping this part of the investment closer to the launch date.

Cost Management for Localization ROI

Return on investment basically depends on two things. The first is making more sales revenue and profit. The second is properly managing your localization costs. So, your next goal is to run a tight project ship for each localization. This means monitoring time, expense, and progression towards deadlines to ensure that localization projects are kept on track towards goals and that costs are contained. You can also plan cost reduction actions to help boost your ROI even further. This does not mean omitting essential tasks or deliverables, or trying to grind partners into the ground for the lowest possible prices. Doing this will make quality suffer and could cause your localization to flop in the market.

Translation Cost Reductions

Some cost reductions make sense all around, especially in terms of cost-efficiency in translation.

  • Localize only those parts of content that cannot be matched by existing locales. For example, the two locales of US English and UK English (en-us and en-gb) overlap to a great extent. If you already have a full en-us version, it makes more sense to only localize the en-gb parts that are different, and to have the en-gb local default back to the en-us locale for all the parts that are the same.
  • Use translation memory. Translation management platforms now offer facilities to hold previously translated strings and to prompt translators to use them again. This avoids extra effort and cost, and also helps produce a more consistent translation each time (also important for maintenance and upgrade releases.)
  • Use translation glossaries. Some terms may be not need to be translated or else their translation will always be the same. By preparing a translation glossary of such terms, you can reduce effort and cost. In the right format, these glossaries can also be included in translation management platforms, making it easy for translators to click “OK” and move directly to the next phrase to be translated.

The Final Step to ROI – Merchandizing to Make Sales

After you have made sure marketing and development are firing on all six cylinders to help generate a positive ROI, you will need to make sure that your merchandising is up to the job as well. Put it this way: if customers do not know that a localized version of your app exists for them, they will not think of buying it. So, as a marketing expert once said, do not release your product on an unsuspecting market. Your advertising, PR, and other suitable forms of content should be the wakeup call your market needs to sit up, pay attention, and start thinking about all the things they will able to do as the proud owners of your localized app. Meanwhile, with the ROI and profit you’ll now make thanks to all the tactics above, you’ll have extra funds to develop an additional new blockbuster app or website, complete with suitable localizations!

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